Full text of Diaries of Henry Morgenthau, Jr. : Volume 595 : Part 1

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DIARY

Book 595

December 9 - 11, 1942

-AAirplanes

Book

Page

595

213

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

Appointments and Resignations

Vassar list of eligibles for appointment sent by
Miss Newcomer - 12/10/42

CChina

Stabilisation Board makes first request under 1941
agreement for $10 million - 12/10/42

240

Commerce Department

Census Bureau: Reimbursement for statistical tabulation
of United States exports to and imports from areas
whose funds are frozen discussed in Commerce-Treasury
correspondence - 12/11/42

368

Correspondence

Mrs. Forbush's mail report - 12/11/42

322

-Exports

See also Commerce Department

To Russia, Free China, and selected blocked countries,
during 10-day period ending November 30, 1942 12/10/42

228

-FFinancing, Government

1-3/4% Bonds: Analysis of commercial bank subscriptions 12/9/42

96

Non-defense Expenditures: Conference; discussion of
Farm Security Administration and National Youth

Administration - 12/10/42
Government securities - recent changes in prices and
yields: Haas memorandum - 12/11/42

War Savings Bonds:

Philadelphia papers thanked for cooperation - 12/9/42

Army delays in delivery: STARS AND STRIPES to be asked

to carry statement exonerating Treasury - 12/10/42.

Series F and G combined report for October and
November - 12/10/42
Present Drive:
Sproul asked for advice on ending date - 12/11/42
C.S. Young
Eccles

-

-

Jesse Jones asked for statement endorsing - 12/11/42
(See also Book 596. page 29)

209

318

90,91,92.93
168

207

271

276
279
293

- F - (Continued)
Financing, Government (Continued)
War Savings Bonds (Continued)

Book Page

"Any Bonds Today?" and "Everybody Every Payday":

Broadcasting companies permitted to use - 12/11/42. 595

Lewisohn (Sam) passes on suggestion for buttons
indicating purchases beyond 10% - 12/11/42

Hawaii: December 7 goal of $1 million in sales
increased to $5 million - 12/11/42
Skyroll Allotment Plan:
War Department progress report - 12/11/42
Analysis - 12/11/42
Sales, December 1-10 - 12/11/42
Foreign Funds Control

299

305

308
310
313
316

See Commerce Department

Jewish Joint Distribution Committee: Poland shipments
of food approved by State Department - Irving Lehman-Ben Cohen--Foreign Funds Control correspondence 12/10/42

219

-HHawaii

See Financing, Government: War Savings Bonds

-Iran

Conference; present: HMJr. Minister of Iran accompanied

by Minister of Finance, representative of State
Department, Bell, and White - 12/10/42

165

-Jewish Joint Distribution Committee
See Foreign Funds Control

Joint Distribution Committee

See Foreign Funds Control

Jones, Jesse
See Financing, Government: War Savings Bonds

-LLend-Lease

7th report for period ending December 11, 1942

362

U.S.S.R.:

Shipment of planes and tanks to - 12/9/42
December report sent to FDR - 12/11/42

United Kingdom: Federal Reserve Bank of New York
statement showing dollar disbursements, week ending
December 2, 1942 - 12/11/42
Lewisohn, Sam

See Financing, Government: War Savings Bonds

100
357

363

-M-

Military Reports
British operations - 12/9/42, etc

Book

Page

595

104,242,
243,371

"The War This Week, December 3-10, 1942* - Office of

Strategic Services report
Monetary Stabilisation

245

See Post-War Planning

Munitions of war

See War Department

-P-

Philadelphia, Pennsylvania
See Financing, Government: War Savings Bonds

Poland

See Foreign Funds Control
Post-War Planning

Monetary Stabilization: Eccles, Wallace, and Hull
invited to meeting December 15 - 12/11/42

338

Procurement Division

See War Production Board

-Revenue Revision

School teachers to conduct night classes on income taxes
suggested by HMJr to Sullivan, Gaston, and Odegard 12/9/42

49

a) Gaston, Sullivan, Helvering, and Odegard discuss.
b) Second conference - 12/15/42: See Book 596, page 171

288

1) Odegard memorandum: Book 596, page 175
2) Memorandum to HMJr: Book 596, page 273

c) Publicity conference; present: HMJr, Sullivan,
Helvering, Cann, Mager, Odegard, Kuhn, Gaston,
and Lemmon - 12/16/42: Book 597, page 14

1) School teachers not to be used - see
memorandum: Book 597, page 18

Attorney General, at Cabinet meeting, "blocked" by HMJr

in handling of future tax legislation - 12/9/42

Tax program as discussed by Gilbert (Office of Price
Administration), Cohen, Hansen, Colm, Harold Smith, Stark,
Altmeyer, and Helvering - 12/10/42

282

286

-S

School Teachers
See Revenue Revision
Shipping
See War Production Board
Statements by HMJr

Before House Committee on Appropriations, on Treasury

appropriation for fiscal year 1944 - 12/10/42

146

-TBook Page
Tanks

See Lend-Lease: U.S.S.R.
Taxation
See Revenue Revision
Teachers, School
See Revenue Revision

-UU.S.S.R.
See Lend-Lease

-Vassar College

See Appointments and Resignations
-W--

War Department

See also Financing, Government: War Savings Bonds

Munitions of War: Policy with respect to proposed

legislation limiting military control of procurement
of - 12/11/42

595

342

War Production Board

Sise of Army and shipping needed to be discussed by
HMJr, Nelson, and Nathan - 12/11/42

(See also Book 596: Inflation)
Procurement Policy Board to be established - Mack to
represent Treasury - 12/11/42

268

335

War Savings Bonds

See Financing, Government
Weizmann, Chain

Thanks HMJr for hospitality - 12/9/42

99

1

December 9, 1942
10:15 a.m.
WAR BONDS

Re: North Carolina Speech
Present: Mr. Gaston
Mr. Kuhn
Mr. Mager
Mr. Gamble

Mr. White
Mr. Odegard

Mrs. Klotz

H.M.JR: Did you have to work very long, Herbert?
MR. GASTON: Yes. (Laughter)

H.M.JR: When did you get to bed?
MR. GASTON: One o' clock.

H.M.JR: That shows how young you are. (Laughter)
Have these other people seen it?

MR. GASTON: No. I have not had it ready for

many minutes, and they have been tied up.

Do you want to have it read aloud, or do you want

to read it to yourself?

H.M.JR: I will just read it.
"It is an honor and a great pleasure to be introduced

to the people of Winston-Salem and North Carolina by

the distinguished Chairman of the Ways and Means Committee
of the House of Representatives, the Honorable Robert M.

Doughton. In this time of National stress and National

2

-2peril Bob Doughton - your friend and my friend - is

one of the stanch and true wheel horses of our common

effort." Could you call Doughton a "wheel horse?"
MR. ODEGARD: I question that.

H.M.JR: No, I wouldn't call him a wheel horse.
else. MR. GASTON: Well, we will call him something

that.

H.M.JR: You have got to do a little more than
MR. GASTON: A "wheel horse" means the man that

pulls the load.

MR. ODEGARD: It is a term used with reference

to political machines - political wheel horses.
MR. MAGER: Yes, that is right.
him?

H.M.JR: What else do you think you could call
MR. GAMBLE: Call him "soldier."
MR. WHITE: "Leader."

MR. ODEGARD: "Leader" would be all right.

(Mrs. Klotz entered the conference.)
H.M.JR: We can change that. Supposing I read on.
"He and I have shared labors together over these recent
eventful years. We share now burdens and responsibilities

in financing America's part in this greatest of wars - a
financial task greater in scope than any this Nation or
any nation has ever before faced. But it is not the task
of any two men or of any dozen men. It, like the task
of producing the tools of war, is the job of all Americans.
It is the task of you people of North Carolina, the

3

-3responsibility of you citizens of Winston-Salem."
out.

MR. ODEGARD: I would cross that whole sentence

MR. GASTON: The thought is the task of financing

the war. You don't flatter yourself that you or two
or three people have to do it; it is the job of the

American people.

MR. ODEGARD: Yes, I would stop there, "It, like

the task of producing the tools of war, is the job of

all Americans."

MR. GASTON: I was just bringing it home to the

people of North Carolina that they, too, have a respon-

sibility.

H.M.JR: "It is to pay a tribute to the way the

people of North Carolina have gone about that job -

the way particularly the workers in the factories of

North Carolina have gone about it - that we are here

tonight. We have come to present to the men and women
who make up the working forces of North Carolina factories

flags which will bear testimony to the fact that the
workers in the industries which fly them, constituting

all of the large factories in this State, have pay-roll

deduction plans under which 99 percent of their employees
are contributing regularly to the purchase of War Bonds;

that all of this 99 percent are enlisted as patriotic
soldiers on the financial side of this war against
tyranny."

Is it ninety-nine percent?
MR. KUHN: Yes, of the big factories with over

five hundred employees.

MR. GASTON: Those are the ones to which we are

presenting flags, is that right?

MR. GAMBLE: There will be others who are receiving

the flags.

4

-4MR. KUHN: The record in the small factories is

not good enough to brag about.

MR. WHITE: The sentence istoo long.

MR. MAGER: I think it is awkward; it can be-H.M.JR: "It is only a few days more than a year
ago that the treacherous blow struck at Pearl Harbor

by a crafty and unscrupulous enemy shocked and aroused

the people of this Nation. With war forced upon them
they arose to meet the challenge, seeking eagerly the
ways in which they could meet it most efficiently. "
I question that paragraph.
"To fortify America against a threatening war
our people a year ago had been subscribing voluntarily
to Defense Bonds at the rate of about $300,000,000 a

month. With the upsurge of fighting spirit after

Pearl Harbor sales went to more than 500 million dollars
in September and to more than a billion in January."
MR. KUHN: It should be December instead of
January.

H.M.JR: I don't like the billion in January, because

we took a flop then.

MR. WHITE: It looks as though we had not made any
progress since then.

H.M.JR: I would cut out January. I have been trying to apologize for failing to meet quotas all year.
MR. KUHN: "With the upsurge ... more than nine billion
dollars of war bonds have been purchased since January

of this year."

H.M.JR: What is that, Ferdie?
MR. KUHN: Couldn't you combine those two sentences,

"With the upsurge of fighting spirit after Pearl Harbor

5

-5more than nine billion dollars worth of War Bonds have
been purchased since January of this year."
MR. GASTON: That is a long jump.
MR. ODEGARD: I think the two sentences help.

It starts out with three hundred million, and then
"since January more than nine billion dollars worth

have been purchased."

H.M.JR: We will go on and see. "Since January

of this year more than nine billion dollars' worth

of War Bonds have been purchased. Remember that I

am speaking not of purchases of all types of Government securities, but only of War Savings Bonds,

which represent direct participation in the financing
of the war by millions of working men and women.

I take it that you run this stuff in at the
beginning,
isn't
it? this War Bond stuff, that is obvious,
MR. GASTON: Yes.

H.M.JR: "A year ago pay-roll savings plans for the

purchase of War Bonds were in effect. In December of
last year approximately 700,000 workers in some 9,000
establishments were participating in them. They were

investing 4 percent of their pay, a total of five

million dollars a month.

"Today, payroll savings plans are in effect, not in

9,000, but in 160,000 establishments; the number of
workers participating has increased from 700,000 to more

than twenty-five millions and instead of five millions

at an average of four percent of the pay envelope, the
monthly purchases are at a rate of about 9 percent,
amounting to nearly $400,000,000 a month from this one

source. But we have not reached our ultimate goal. I
am confident that the number of payroll investors can
still be greatly increased and the average contribution

increased to ten percent or more. We have now not a few

6

-6but many thousands of workers buying at rates much higher
"

than 10 percent of their pay.

There is one thing that I want to say which I
than two or three figures." He never does. There are
too many
statistics here. These people can't get them
over
the air.

learned from the President. He says, "Never use more

"The story of this pay-roll savings program is a
success story of the first magnitude. More than that

it is the story of our progress in patriotism and
devotion to our country in its time of trial and struggle.

Less than a year ago the Pay-Roll Savings Plan was an

experiment. It was an experiment filled with immense

difficulties. Today not all but most of those difficulties
have been surmounted. Labor and management working together
on them have discovered a new sense of partnership which

has been reflected not only in increased sales of war
bonds but also in better understanding and increased

efficiency on the production line. I like to feel that

this new labor-management partnership sets a pattern for
the future under which labor and management will cooperate
in industry problems for their common good and the good
of the Nation.

"Important though the pay-roll savings plan is,
it represents but one phase of our over-all bond campaign.
Millions of farmers, self-employed artisans, and businessmen are purchasing war bonds regularly. All in all 50
million Americans invested in war bonds during the past
year. More than 50 million Americans now have a direct
and personal stake in the finances of their government.
To my mind the significance of this can hardly be overestimated. Not only should the wartime sacrifices of
today emerge as the new homes, new comforts, and new

standards of living for the morrow, but the piling up
of a nest egg of savings to fall back upon if need be

will be a source of comfort and reassurance.

7

-7"But War Bond purchases do not tell the full story
of the financial mobilization of the American people.
"On the first of December the Treasury launched a
program to borrow nine billion dollars including money
from the sale of War Bonds, which with revenue from

taxes, will carry us through until February. Nearly
half of this vast sum, over 4 billion dollars, was
raised during the first week of December. I am happy
to announce that as of today, this total has reached
.

"Credit for these records must go to tens of
thousands of willing volunteers throughout the nation
who have given their time and energy to sell these bonds
and to the millions of Americans who have enlisted their
money in the service of their country.
"The successful financing of the war means real

sacrifice for all of us.

"Great as our resources are, we haven't enough

to buy all we want for ourselves and still put all we

need to put into winning the war. We have a decision
to make, whether we shall deny ourselves all the comforts we would like to have or deny our boys at the
front - your sons and mine - the tools and the weapons

they need to meet the enemy. We have to choose also
whether we shall finance the war over the rough and

cruel road of inflation or by sober thrift that will
protect our present and our future. The steep road of
self-denial will be the short road to victory.
"Just a few weeks ago I believed that we faced a

long war. Now I believe that we can make it a relatively
short one - if we pull together on the job. My mind was
changed about the prospects after a visit of two weeks

over there - in Great Britain. One of the influences in
changing my mind was what I saw of the British people

and what they are doing for victory. I had been told,

as you have been told, and as the enemy wants to believe,
that they were a decadent race, incapable of organizing
to meet and to conquer a stern and cruel aggressor.

8

-8. But the British people have undergone a baptism of fire
and with an indomitable courage have risen from it a
new race, vibrant with youthful energy and an unconquerable spirit. They have, from statesman to factory girl,
a sure religious faith, not that God has chosen to be

on their side, but that they are fighting in a righteous
cause and that they are on God's side in a war to make
the future of humanity more bright.
"I gained new assurance also from the American

soldiers and sailors I saw in England. They are magnificent representatives of our democracy, trained and fit
for the job they have to do. They will acquit themselves
with glory, as have their comrades at Bataan, on Wake
Island, on Guadalcanal, in North Africa and in China.
If we 'over here' are to be worthy of them, we have a
high mark indeed at which to aim.

"Since my return I am more than ever convinced that

we 'over here' will prove worthy of them. On the production lines, in mines and fields and factories, we are.

giving an increasingly good account of ourselves. We
have harder tasks ahead; we shall have our own trial of
blood and sweat and tears, but I believe we shall meet

our trial trimphantly and play our part in building a
world in which men can be free to live worthy lives.

Well, I think we are all going to have to do a
little more work on it. There is no sense in tying
you up on this, Ted. I had you here last night, but you
have lots to do and I will excuse you.
MR. GAMBLE: Fine.

(Mr. Gamble left the conference.)
MR. ODEGARD: The Secretary of the Treasury has

just returned from England, and this is the first time

he has spoken since he got back. They have read about

it in the paper, and so forth, and so on. This begins,
I think, with something of a let down to them. They are

9

-9 not going to hear what they might, I think, and probably
will, logically expect to hear, something about what you
saw in England and what effect it had upon you.

H.M.JR: Let me argue with you a minute. I think,

in the first place, that the people have forgotten that
I went to England, unless we want to resurrect it. We
can or cannot, as we want to.

But I think you have got to talk about - what am
I going down to North Carolina for? The primary reason
that I am going down there is to try to make a friend
of Mr. Doughton for the Administration; and, second, to

acquaint Mr. Doughton's constituency with what War Bonds
has accomplished since July 1941.

The English thing comes first - I can't help it

that I am on that program. The program is only two
weeks old, and yet I don't understand why a program
which is called "Over Here," that is supposed to be

broadcast to our soldiers - I mean, I would take it
that the purpose of this is to acquaint our "overseas"
boys of what is going on in the United States.
MR. ODEGARD: It has a dual purpose.

H.M.JR: It isn't very clear in my mind particularly

why there is a program called "Over Here, If which is

solely broadcast for the soldier.

MR. ODEGARD: As I explained, we tried to get a
command performance for rebroadcast here, but we were

unable to get it.

H.M.JR: But look, that is purely an entertainment

program. You want to know what I want to do?
MR. ODEGARD: That is right.

H.M.JR: What I want to do is, first, I want Mr.
Doughton - the sole thing is, I have told the President
that - I am out on the end of a limb and I am going
to go down and sell Mr. Doughton on the Administration,

10

- 10 on the Treasury, and so forth, and on myself. Now,

that is the first job. I want his community to feel

pleased that I have come there, pleased that the
Secretary of the Treasury comes down to pay his respects

to Mr. Doughton. That is the first thing.

The second thing is to sell the country on what

we have accomplished in a year and a half on war bonds.

Now, third and last, if I can, as part of our we have got to say something about the whole nine-billiondollar program. I can't go on in the middle of a ninebillion-dollar
Victory drive and not say something about
it.
You know what I said about Kansas City, "Give us

something which will help us sell." I think the thing
that I can say to the country as investors, which will

make them invest more readily and pay the taxes, is that
I think after having been to England, what I saw and
what I learned, I am convinced that this is going to be
a comparatively short war, and, therefore, the quicker
they get the war paid for, and so forth, and so on, the
quicker we can get it over with. I mean, the many things

which I saw and listened to in England made me convinced

that we can win this war in a couple of years instead of

five or ten years. I am willing to say that.

MR. ODEGARD: Do you think it wise to say that

over a Nation-wide hook-up?

H.M.JR: Why not? The President said it. I forget

exactly, but somebody said last week that he said

something - there was some definite remark that he made
on that.

MR. KUHN: I know for a fact that when people
have questioned him about the length of the war he has

tried to shut them off; he never talks about that.

11

- 11 -

H.M.JR: I am willing to say it.
MR. KUHN: I think it would be bad to say it as
it is in here, because it suggests that you are very

gullible in your estimate of the English. It suggests
here that you believed, until you went over there to
see so
with
and
on.your own eyes, that they were a decadent race,
MR. WHITE: That sentence could be cut down and

easily fixed.

MR. KUHN: But it has certainly strengthened
your convictions.
Now--

H.M.JR: Anyway, Odegard asked me what I wanted.

MR. ODEGARD: Of course, I raised this question.

It is a collateral question, as to whether or not you
should say that as a result of your trip to England
you think this war could be won in a shorter time,
because I think we oscillate here. Reports show
very definitely that the public has the impression the

Administration has oscillated between almost manic
depression and euphoria and they move in sort of a

cycle. I think that it is almost as bad to say that
it is going to be a short war now as it was for Mr.

Bard and the others to keep yammering about losing the

war. I think it is an important question that ought
to be carefully considered.

MR. WHITE: He isn't saying that it is going to
be a short war; he is saying that after his experiences

abroad he has more hope and he believes now that it is
going to be shorter than he thought it was going to be

earlier.

MR. MAGER: It leaves a bad implication, an implication that by buying more bonds we can win the war, which,

of course, is not a military element.

12

- 12 MR. ODEGARD: It says here in just so many words,

"Just a few weeks ago I believed that we faced a long
war.
I believe that we can make it a relatively
shortNow
one--"

MR. MAGER: I am not speaking of the actual text;
I am speaking now of the idea raised by the Secretary,

that is, he wanted to raise this point, namely, that by
buying more bonds at the present time the war can be
hastened to a conclusion. Now, I think that unless

itbad
is taste
dealtinwith
very, very delicately, that can leave a
the mouth.
H.M.JR: May I just interrupt a minute? I have

said right straight along that I didn't want to talk

about my trip to England; I am not desirous about

talking about it. Kuhn did a speech entirely on his

own, and he came in about this England stuff.

MR.KUHN: I started off in little different terms
about the English stuff.
H.M.JR: Kuhn didn't want me to talk about England

when I came back.

MR. KUHN: I wanted you to talk about your impressions

of that trip some time.

H.M.JR: Personally, I have no particular desire

to talk about it.

MR. WHITE: I don't think anybody - news is so
rapid these days that it seems like a long time ago
when you were there, and it would be all right to
talk about England if you told them some interesting
facts or some interesting episode, some outstanding

episode. The one interesting thing that he might tell
them, and it could be worked in in a paragraph, or two,

or three, with some slight changes is "By the way, I

have recently been to England and I was greatly encouraged" - something along that line, and avoid that

difficulty Mager said--

13

- 13 H.M.JR: When I landed from the clipper, they
asked me about it, and I said, "I have come back very

much encouraged." I said it then; it is a month old.

MR. MAGER: I think it is a case of resurrection,
too, news is not only rapid, but-H.M.JR: What they are trying to do to me, because
I happened to be on a program called "Over Here" -

which I still don't understand, and it is only two weeks

old and doesn't make sense to me, with all due respects and why should I resurrect something about the other thing.

Now, it is a Treasury program, and if I want to go
on the program and talk about narcotics - I mean, after

all, I am asking for fifteen minutes time on that program.

MR. ODEGARD: That is absolutely right.

H.M.JR: And certainly if I want fifteen minutes
of that time, I can talk about narcotics and Secret
Service if I want to.
MR. ODEGARD: Sure, but you can't guarantee that

people will listen to it, Mr. Secretary.

MR. KUHN: It will set you - if it is too financial,

to my mind, that audience won' listen. I am also thinking

H.M.JR: Listen, gentlemen, let me say this, that

every time, while on my own as Henry Morgenthau, Jr.,

I have been able to get the best spot on the radio
Sunday night at nine o'clock when I want it; and every
time I want to speak the radio companies are willing

to give me any time that I want. So, as far as
being listened to, I don't have to have a lot of
jazz singers and everything else in order to get an
audience.

14

- 14 MR. KUHN: I don't think I made my point clear,

Mr. Secretary.

H.M.JR: Every time that I have gone to the radio

company, entirely on my own without any one-hour pro-

gram or anything else, a lot of cheap stuff - I mean,
to me it is a handicap to be on that program. I have

got to throw off Durante and all the rest of the stuff
to make the thing dignified; I don't need that stuff.
MR. GASTON: I don't think you need to pay too

much attention to that idea of "over here" and "over

there." If I understand this proposition about "over
here, it is not to be programs addressed to the
soldiers and the people abroad; it is to be programs
that will represent what is going on in the United
States in connection with the war effort. They look
in on something here, and they don't ask the people

here to talk to them. They want to look in at what
these people are talking about in their own business in
connection with the war effort.

So, there is no point to addressing it particularly
to a foreign-MR. WHITE: I am impressed with the Secretary's

analysis. There is not time to make the kind of a

great speech over a national broadcast or the kind
of excellent speech which would constantly be referred
back to and which would take - at least there doesn't
seem to be anything from my point of view in any of the
drafts that have been written that take on that character.
Therefore, I would strike for a more limited objective and

be successful in that more limited objective. I think
that the Secretary's outline of that limited objective
is the one to hit for. He is going down there to make

Doughton and Hanes feel good, and he is going to report to

them on the condition of the sales campaign. I think
he can preface it in just that way and they will be

interested in it. "I am in the midst of one of the

largest campaigns that has ever been undertaken, and

want to report to you as of" such a time - that can

I

15

- 15 -

take three or four sentences; the shorter, the better.
In seven, eight, nine, or ten minutes he will accomplish
that, and some references, I think, might well be
included, as long as it is "by the way" about his
embodying the content of that one paragraph referring

to England. I think it could be worked in nicely.

This nice phrase here, this "difficulties" reference,
I think that is excellent; and with a few other such
things, I think you have your ten-minute talk. It
will be interesting. People will listen for ten minutes.
MR. GASTON: This is pretty close to a ten minute
space, and maybe a little bit over.

MR. WHITE: I think you will have a good talk.
You take any man's talk, the President's or anybody

else's, and you line them up, you will find that lots

of them are in no sense Battle of Gettysburg speeches.
They have a limited objective. Many of them hit that

objective, and I think that is what should be the that would rule out kind of an inspiring speech which
requires a lot of work, and, I think, more time than is
available.
MR. GASTON: You can't, it seems to me, start in
with this somewhat emotional thing about the tonic
experience of contact with the British people and then

let down into a discussion of what the War Bond Campaign

has accomplished in North Carolina and the Nation. If
you want to use that note I think you have to end on
that, as the Secretary suggested last night.
H.M.JR: Look, Ferdie, as far as this England
business is concerned - I mean, if this thing bothers
you so, I would much rather not go on the air at all.
MR. KUHN: No, it doesn't, Mr. Secretary. May I
make my point? I have said this many times, that I

feel that it is not good for you, with the public, to

to making all your speeches exclusively on dollars and

16

- 16 cents, on putting yourself before them as the money

raiser. That is why I liked the Worcester speech

so much, because you put yourself before them with
something that was more "you.' If

H.M.JR: That was two years ago.

MR. KUHN: A year ago. I was only hoping in this
speech, which is a great opportunity with a Nationwide audience - and with the folks in North Carolina that you would use some of these experiences which you

have given to us in the Treasury. You gave them to
the Overseas Writers, but you have never given them to
the American public. It is good to have the power of
example held before them, and it is, I think, good
for you with the public to give them some indication

of the breadth of your interests.

MR. WHITE: I find myself on the opposite side of

the table. If I listened to the Secretary of the Treasury,
I want to listen to Treasury business. However, and
this is very true, and I agree with you here, there are
occasions - and they should be made special occasions,
two times a year, let's say, with the proper kind of an
audience, with the proper amount of time, with a lot of
time spent in preparation - when I should not discuss

finances, but should discuss some very broad fundamental

principles.

In the past you have made a couple of speeches in
which you departed completely from your role as Secretary
of the Treasury and you became a member of the Govern-

ment, a Cabinet man, or a man who is thinking on these

large problems. That kind of a speech requires a lot
of careful preparation and a lot of headaches. You need
to begin at least a month ahead of time, and you have
got to have a better audience and more time than this.

17

- 17 -

I think when you do that sort of thing two or three
times a year, it is quite adequate, and the rest of
the ten-minute talk you devote to what is more or
less the particular business in hand, coupled with

the local situation.

I don't think the people are particularly inter-

ested in the sort of things the Secretary would say
over the radio. They would be interested in the things
he could say, but for a number of reasons it isn't
politic for him to say them. I mean, the minute you
begin to repeat what he can say about England, you

either ascend to that kind of spiritual generalization,
which to me is uninteresting, or you find that you
continually trim down - you take this out, because

he can't say this, "Sure it is true, but it is a secret,"
and "This he ought not to say," and the first thing you
know, you are left with very little.
MR. ODEGARD: Could I come back for a minute to

the purpose for which this speech is being prepared?
I; apparently, have misunderstood the purpose. I

thought that it was at least a two-fold, and probably

a three-fold purpose; first, to insure the friendship
and continuing cooperation of Mr. Doughton. Now,

if that were the only objective, there is no reason
under the sun for putting it on the air. You can do

that by going down to North Carolina and meeting with
this group and presenting these flags, having a perfectly magnificent ceremony, and so on.

H.M.JR: May I interrupt you? What was the place

I spoke at in Virginia?

MR. ODEGARD: Roanoke.

MR. KUHN: That wasn't a National broadcast.

18

- 18 -

MR. ODEGARD: I thought that it had another purpose

in addition to this relationship with Mr. Doughton,
and that was to help convey to the people in the rest
of the country, who have been working on the War Bond

program - particularly since this is a War Bond meeting some sense of your appreciation and your - well, congratu-

lations, if you wish, to them for the work they have done.
They need it very badly. They have taken all sorts and
manner of buffeting in the last few months, and I thought
that one of the purposes of this was to contribute toward
sustaining their interest and enthusiasm.
Finally, I thought that the purpose was to indicate

to the American people as a whole, quite apart from these
War Bond people or the national people, some idea of your
confidence in the outcome of the war as influenced by
your recent trip abroad.

Now, any one of those objectives is a perfectly
legitimate objective or purpose for a meeting - a speech and any one of them could take a half hour to do; but
iftowe
to do all three - what I was trying to do was
do try
all three.

H.M.JR: Well, Peter, I would drop the last about
the war.
(The Roanoke speech was brought in to the Secretary

by Mrs. McHugh.)

H.M.JR: Let me just take a look at this. Of course,

what I did in the Roanoke speech - Kuhn and I sweat blood
over this speech, as he knows. I put into one paragraph

what I had seen for five days in a camp. If I were just
stepping off the plane from England, I could say one

paragraph on the thing; but I am not. I stepped

from the plane and said what I had seen in the last

five days. So that is out. Now, I start in here,

"You in Roanoke have done your full share in equipping
and maintaining this Army of ours. You have not only
furnished your share of men, but your War Bonds have
helped to pay for the weapons that the Army will use in

battle. And in the buying of War Bonds your city has

19

- 19 -

set a record and an example for other cities to follow.
Roanoke is the first city in the United States in which
every company can claim that at least ninety percent of
its employees are buying War Bonds regularly out of

current earnings through a pay roll savings plan. Every

company or labor union that can show such a record is

entitled to fly the blue Minute Man flag, and these two

hundred Minute Man flags which I see before me today are
the symbols of a great achievement.

"I am especially glad that this has been accomplished

in the home city of Congressman Woodrum, and that he is
here with us today. I have looked upon Congressman
Woodrum as a friend ever since my old days at the Farm

Credit Administration back in early 1933 when I first
came before his committee for an appropriation. In the
years since then he has always been a friend of the

Treasury; he has been a friend of sound finance who has
helped to create a sound public understanding of our
financial problems. It must make him especially proud
to see his own city buying "A Share in America" regularly

week after week, for he believes, as I believe, that if

millions of Americans own Government securities they

will take a more active and helpful interest in the way
their money is being spent, not only now but in the

years to come."

That is all I say, but I work into it - I mean,
Kuhn and I worked very hard on this one. I first paid

my respects to the community. And if, between now and

then, they have some outstanding examples like this
high school here the other day, where the boys went

without lunch in order to buy stamps, if there was
something outstanding, something unique, which was

done in that community, you could say, "Well, they
have done it here, and they have set an example which
can be done in the rest of the country." I mean something
unusual - I don't know whether they have. Then I pay
my respects to Mr. Doughton in very similar language and so forth and so on.

20

- 20 -

Then this is the way I think I would construct
it; I would go on and talk about our being in the

middle of a nine billion dollar financing and that
the thing is going very well, and if there is some
news - if we have the figures right up to the last
minute, which we might or might not use - and the
rest of the thing. I would say - I mean, I wouldn't

take so much the attitude of these people having to
be congratulated; I would say, "From May first to
December first" - I don't know how many months that is,
eighteen or twenty months - "this is what has been

accomplished. We have gone from seventy thousand

factories" - or whatever it is, seventy thousand

workers - "to twenty-three million workers" and how
the thing has grown and is still growing, and is continuing to grow, and so forth and so on.

I personally think that this was a well-constructed
speech; they liked it - the community liked it - Woodrum

liked it, and so forth.

MR. KUHN: There is only one difference, Mr. Secre-

tary, that that was on a local hookup, and this is a
coast-to-coast affair.

H.M.JR: Well, I can't help it if they turn it off
and wait until the jazz comes back on again - all right,
I can't help it, Ferdie.
MR. ODEGARD: I don't think they will do that.
MR. WHITE: There are two things of national inter-

est that he is saying, that will be of interest all over.

One is the growth of the pay roll savings plan. You can
make much of that, as there are here, two or three or

four paragraphs. It will be highly desirable if there
is time. I quite agree to get one or two personal
incidents which show either in a particular factory or
a particular manner - something of that kind. If that
could be supplemented, that would be fine.

21

- 21 -

And secondly, he is reporting to the Nation on the

state of this nine billion dollar campaign; he is giving them the latest information which he has, as a report to the Nation of the largest borrowing program in
the history of the world. Those two things are to the

Nation; that is enough.

H.M.JR: Could I just - you fellows here all approved

an ad - "The most important announcement the Treasury has
ever made" - was that what it was called?

MR. KUHN: That is what it was called.

H.M.JR: Now we are in the middle of a nine billion
dollar Victory Fund drive, and I go on the air. The
people want to know how it is going. "Well, as of the

night of the 12th - twelve days after we started - it is
so far; and so far it is a success." I can't give them
any sensational news. But I think, myself, being cynical and the rest of us being cynical - I think the other thing
which we forget, and I would like to drive this home - I
am standing in the community where the chairman of the
committee that makes up and passes and originates all tax

legislation - now that is where I am.

MR. WHITE: That sentence can be in there somewhere.

H.M.JR: "I am standing in the community where Mr.
Doughton, the chairman of the committee, who originates

and passes on the tax legislation of this Nation - now
that is where I am standing, gentlemen. Now, I am right
here and he is by my side, and this man Doughton, in
his position as chairman of this committee, is one of

the key figures of this country."

MR. WHITE: And serving the Nation - not only this

committee.

H.M.JR: "And I have come down here to pay my
respects to this man because this man has been most

helpful to me as Secretary of the Treasury."

22

- 22 -

MR. WHITE: That is right.

H.M.JR: You can't - whether we like him or don't
like him, I am standing in this man's community.
MR. GASTON: I think that should be the first thing

you should say.

H.M.JR: Now, everybody is interested in taxes.
From my standpoint, what are they interested in? They

are interested in taxes. "All right, here I am in the

home of one of the most important figures, which

affects the lives of everybody listening to me, and I
want you to know what kind of a fellow this is. This

fellow, he is an upstanding, self-made, hard-working
man, who takes his work seriously. He works from six

in the morning until six at night, and I am standing

here in this community - which is a typical community,
the backbone of the country-MRS. KLOTZ: That is what Mr. Mager as much as did.

He started off just that way.

H.M.JR: That is number one. Everybody wants to

know what kind of a fellow this fellow Doughton is.
They will say, "By golly I didn't know - Morgenthau is

right down there. I didn't know all tax legislation has
to start in this man's community. If

And two, "How is the Victory Fund going?" "It is
going all right." "
"Now, what about all this War Bond stuff and what

about all this pay roll deduction stuff. Are you
going on with it? How is it going?"

"We expect thirty million people and we have got
seventy percent of them, and we in the Treasury think,

as you are partners in this twenty-three million twenty-four million people - that this thing is a great
thing to have thirty million people who are deducting
this thing - fifty million people owning bonds."

23

- 23 -

That is the way to save the market - to have fifty
million
people
embellish
it. - and that is enough. Embroider and
MR. MAGER: I think I have included that in that
draft, Mr. Secretary.

MR. WHITE: It sounds a little bit, I think-H.M.JR: I mean, we can be cynical, about Mr. Doughton,

but the fact is that the legislation has to originate

with him, and I have gone down there in his community.
MR. GASTON: Would you like to discuss the nine

billion dollar program before you get into the pay roll

deduction and war savings?

H.M.JR: Herbert, I would like to say a little
something about this district. That is, the district

runs from the mountains in western North Carolina down

to - it takes in - it is a typical American district.

You have in it the mountains of North Carolina; you have
got the frontiersmen; and down here in the part where

I am standing, you have got the factories; it is a typical district. And this man, on the one hand, has this
whole thing; here it is right in the heart of America.
Now, I should think, with this talent around here,

they could give me twelve hundred words on that.

I

don't see why I have to - normally I don't want to do

more than one thought in a speech; I have got to do two
thoughts in this speech.
MR. KUHN: Peter had the Victory Fund thing well

brought in in his draft last night. We will take a
crack at it.

H.M.JR: Who can do something on this - work on

this? Then we can see it again.

MR. MAGER: I have the time, but--

24

- 24 H.M.JR: But what?

MR. MAGER: I don't know that I want to take the

responsibility, at this late stage of the game, of
trying to produce it.

H.M.JR: This isn't late; what I call late would

be about Saturday morning. (Laughter)

MRS. KLOTZ: And it has happened before.

H.M.JR: As far as I am concerned, you have got

nothing else to do. Peter, do you want to take another
couple of hours?

MR. ODEGARD: I could, Mr. Secretary. I think
that it would be probably a better procedure to let
Mr. Mager go ahead and try to incorporate these ideas
that you have suggested. I think that you could do a
great deal with the Chairman of the Ways and Means

Committee. I think that you can build Mr. Doughton up

by building up the position that he holds, rather than

building Mr. Doughton up as a person. He grows by
nature of the job he holds. That can be done easily enough.
H.M.JR: What do you think, Ferdie?

MR. KUHN: I think so. I would be glad to get in
on it. Harold and I could work together on it and bring
you one late this afternoon.
H.M.JR: What do you think, Herbert?

MR. GASTON: I think that is all right. I would be

glad to see them work on it. I think we should be a
little cautious about not going too far on the Doughton
thing - occupying too much of the speech on it. I think

we can say what we want to say in a relatively small com-

pass. Would you eliminate all reference to your British
observations, even as a closing thought?

H.M.JR: I think so. I think it is extraneous, and
I think
fit
in. it is just bringing in something which does not

25

- 25 MR. GASTON: I don't think we have room enough, and

I don't think we have detail enough to make that British
end a significant portion of the speech. There might
be, perhaps, a slight reference to it.

H.M.JR: I think the note - you absorb this stuff,
don't you - I mean, you get it?
MR. MAGER: Yes, sir.

H.M.JR: I think the note to close on is this, that

just as long as we have American communities like the
one I am talking about, which will do what this community
has done - not only buy War Bonds - his secretary could

find out what munitions factories there are right there

who buy bonds, as well as building whatever the things are as long as there are communities like this - or even something about the number of soldiers or something of that

sort. If you call up his secretary, I feel sure you can
get some figures on his district.

I think you will find that Gamble has sent a newspaperman from this office down there; he could get it

in the district. Sort of list what this district does,
and this is just one of thousands of districts in the

United States; and as long as we have people in the
Congress of the United States like Mr. Doughton, we have

got nothing to fear in this country. And that, I think,
is the way I would close. I mean, list a few of the

things. We have got a man - you (Odegard) can help him call this man to give us some local material - some local
examples of some outstanding small factory.

The most thrilling thing White and I did was to
go in a factory of sixty employees in Birmingham.

Instead of using England, gentlemen, as an example to

the country, let's use Doughton's district as an example.
We have got a fellow down there, and if he is any
damned good, in a half a day or a day he ought to be
able to get some local material. I understand he has
been sent down there.

26

- 26 MR. ODEGARD: Walter Shedd.

H.M.JR: Let's use this district and Doughton as
a typical American in Congress - "and here I am, standing in this community, and this fellow--" who went
down there?

MR. ODEGARD: Walter Shedd.

H.M.JR: Is he any good?
MR. ODEGARD: Yes.

H.MR. He can go to the local newspapers and tell
them what I want. In an hour he could get the stuff,

and let's use this district as an example. That is your
"here" stuff for the rest of the country. As long as
the communities are doing that kind of thing, Democracy

will live, and we can go on and face the rest of the
world and win this war.

MR. MAGER: May I briefly summarize, Mr. Secretary,

what I think you want to include in this speech? Then
we will know exactly what to do.

First, start with a tribute to the community and

to Doughton.

H.M.JR: Right.
MR. MAGER: Secondly, emphasize the voluntary effort
of the campaign, and what it has accomplished during the

last year; a tribute to the various committees that have

worked - volunteer committees, and so on.

Thirdly, some reference to the Victory program and

the effort; and lastly, returning again to the community

and to Doughton.

H.M.JR: Yes.
MR. MAGER: All right.

27

- 27 -

H.M.JR: Now, the only thing I want is last minute
information as to where the Victory Fund stands, as of
Saturday night. And you have got to get an inventory

of what is going on in the district and don't forget,
in talking of Doughton, it is his position.
MR. MAGER: That is right.
MR. KUHN: Would you like to clear Doughton's

introduction, or can I send it over to him.
H.M.JR: I would like to hear it.

MR. KUHN: Except the last paragraph - that was.to
lead into the England stuff Peter had.
(Mr. Kuhn read "Suggested Draft of Mr. Doughton's
Introduction at Winston-Salem", as follows.)

"Tonight the people of North Carolina are honored
to be speaking to the whole country on this nationwide
radio program. We are only one State out of many, but

we are doing our full share in the battle on the home
front "over here". We in North Carolina have known
from the very beginning what this war is all about. I

remember a statement that Secretary Morgenthau made many

months ago "War is never cheap, but it's a million times
cheaper to win than to lose". That is the way we in
North Carolina feel about the cost of fighting and winning
this war.
"I feel especially pleased and honored tonight to

have Secretary Morgenthau here with us in North Carolina.

The Secretary and I are old friends and colleagues in a
common cause.

H.M.JR: May I interrupt? Say "partners" instead

of "colleagues."

MR. KUHN: (Continuing) "Year after year we have

worked together on tax legislation and on other aspects
of our government financing. There is no more devoted

S

28

- 28 -

public servant and no better friend of all the American
people than Secretary Morgenthau, who is now shouldering

the greatest financing burden in history.

"The voluntary War Savings program that brings us
together tonight has one aspect above all others which

appeals to me. War Savings calls for thrift, and thrift
calls for economy in our everyday lives. As you know,

I have advocated economy in government year in and year

out since I first came to Congress 34 years ago. When
millions of people own government bonds -- I believe the
number is now more than 50 million -- those people are
bound to take a more alert interest in economy in government in the years to come."
Then there is one very short paragraph saying that
you recently came back. from a visit to England, and I
thought we were going to start the speech in the other way,

but I can substitute something for that.

H.M.JR: Now, incidentally, did you see what Doughton

said in the "United States News" this week? It says:

"Should a Drastic Forced Savings Plan Be Included in New
Tax Legislation", and Doughton answered it:

"A drastic form of forced savings might seriously

affect the Government's revenue and unduly burden some
taxpayers, who could not pay heavy taxes and buy bonds

at the same time. If a drastic enforced savings plan
would have the effect of making it impossible for the

taxpayer to meet his tax and other necessary obligations,

I would certainly not be in favor of it.

"The voluntary purchase method gives the taxpayer

an opportunity to purchase bonds according to his ability.

Whether this should be superseded by a forced savings
plan depends upon the amount of burden we feel each

individual can bear. "

Then he goes on: "The Government will be on a
sounder basis if every taxpayer keeps enough in reserve
to pay his taxes and meet other necessary obligations

29

- 29 -

instead of buying bonds when he is unable to meet his

tax and other obligations. I feel that this matter

should be thoroughly studied from every angle before
reaching a final conclusion.

"I have never thought it either safe or wise to

try to write tax measures alone or without the thorough
and full consideration by the committee responsible for

initiating revenue legislation."
What is the matter with it?

MR. ODEGARD: I just think it doesn't say anything,

Mr. Secretary.

H.M.JR: Well, it is just significant that he is

holding out for the volunteer plan against Walter George,

who has gone the other way.

MR. ODEGARD: Except that he puts savings over as

against taxes; I think that is bad.

MR. WHITE: Do you have to quote the Secretary in

saying, "War is never cheap"? I, personally, don't
like that expression. "Cheap" is not a word that fits
with war at all. Could you say that war is always
costly? I mean, paraphrase it, but - "No matter how
costly it is, it is less costly than--' " I don't know
whether I am right - it is kind of a personal reaction.
To say that war is never cheap is like talking about the

market place.

MR. KUHN: It happened to be a slogan that was used,
and Doughton is the one who meets the cost of the war

through tax legislation. I can paraphrase it.

MR. WHITE: I don't know whether you get the same
reaction.
me.

H.M.JR: I liked it. Say it again; it didn't bother

30

- 30 -

MR. KUHN: (Reading) "I remember a statement that
Secretary Morgenthau made many months ago, 'War is never

cheap, but it's a million times cheaper to win than to
lose. That is the way we in North Carolina feel about
the cost of fighting and winning this war.' "
H.M.JR: There never was any criticism of that,

Harry.

MR. WHITE: If the others don't feel it, then I am
wrong.

H.M.JR: Does it bother anybody else?
(Map handed to the Secretary by Lt. Comdr. Stephens.)

H.M.JR: You see, it goes from clear up in the

mountains practically down to--

MR. KUHN: Winston-Salem is not in that district.

H.M.JR: He knew that. I wanted to go to Statesville,
the county seat, but he didn't want me to.
How does it stand now - you (Mager) are going to try it?
MR. MAGER: Mr. Kuhn and I will work together.
MR. KUHN: May we come in late this afternoon?

H.M.JR: You know what I am doing late this afternoon.

I am starting at four. I think this, that I would - I

go up on the Hill tomorrow morning at ten, on appropriations. - I will have to get up early tomorrow morning and
meet you gentlemen here. There is no use doing it this
afternoon - I am available at three-fifteen, and maybe
we could get together.

MR. MAGER: I think we will be ready by three-fifteen.

I have a feeling that a lot of the stuff can be incorporated.
H.M.JR: I hope each and every one of you appreciate what
I am doing. When I go through this I get very much upset, as

31

- 31 -

Kuhn knows, until the thing is done. So let's say

three-fifteen, and we will try it again. I am not

worried about the speech because this time I know what
I want to say.
MR. ODEGARD: That is the main thing.

H.M.JR: At least, I know what I want to say.

4th drafted

big H.gaston
It is an honor and a great pleasure to be introduced
to the people of Winston-Salem and North Carolina by the
distinguished Chairman of the Ways and Means Committee of

the House of Representatives, the Honorable Robert M. Doughton.

In this time of National stress and National peril Bob
Doughton - your friend and my friend - is one of the stanch
and true wheel-horses of our common effort.

He and I have shared labors together over these recent
,

eventful years. We share now burdens and responsibilities

part
in financing America's share in this greatest of wars - a
financial task greater in scope than any this Nation or any

nation has ever before faced. But it is not the task of any
two men or of any dozen men. It, like the task of producing

the tools of war, is the job of all Americans. It is the task

33

-2-

of you people of North Carolina, the responsibility of you
citizens of Winston-Salem.

It is to pay a tribute to the way the people of North
Carolina have gone about that job - the way particularly the
workers in the factories of North Carolina have gone about

it - that we are here tonight. We have come to present to
the men and women who make up the working forces of

North Carolina factories flags which will bear testimony

to the fact that the workers in the industries which fly

them, constituting all of the large factories in this State,
have payroll deduction plans under which 99 per cent of their
employees are contributing regularly to the purchase of War

Bonds ; that all of this 99 per cent are enlisted as patriotic
soldiers on the financial side of this war against tyranny.

34

-3It is only a few days more than a year ago that the
treacherous blow struck at Pearl Harbor by a crafty and
unscrupulous enemy shocked and aroused the people of this

Nation. With war for ced upon them they arose to meet the
challenge, seeking eagerly the ways in which they could meet

it most efficiently.
To fortify America against a threatening war our people
a year ago had been subscribing voluntarily to Defense Bonds

at the rate of about $300,000,000 a month. With the

upsurge of fighting spirit after Pearl Harbor sales went to
December

more than 500 million dollars in September and to more than
&

billion in January. Since January of this year more than

nine billion dollars' worth of War Bonds have been purchased.
Remember that I am speaking not of purchases of all types of
Government securities, but only of War Savings Bonds, which

35

-4-

represent direct participation in the financing of the war
by millions of working men and women.

A year ago payroll savings plans for the purchase of
War Bonds were in effect. In December of last year approxi- mately 700,000 workers in some 9,000 establishments were

participating in them. They were investing 4 per cent of

their pay, a total of 5 million dollars a month.
Today, payroll savings plans are in effect, not in
9,000, but in 160,000 establishments; the number of workers
participating has increased from 700,000 to more than 25

millions, and instead of 5 millions at an average of 4 per
cent of the pay envelope, the monthly purchases are at a
rate of about 9 per cent, amounting to nearly $400,000,000
a month from this one source.

But we have not reached our

ultimate goal. I am confident that the number of payroll

36

-5investors can still be greatly increased and the average contribution increased to 10 per cent or more. We have now not

but

a few many thousands of workers buying at rates much higher

than 10 per cent of their pay.
The story of this payroll savings program is a success

story of the first magnitude. More than that it is the story
of our progress in patriotism and devotion to our country in

its time of trial and *struggle. Less than a year ago the
Payroll Savings Plan was an experiment. It was an experiment

filled with immense difficulties. Today not all but most of
those difficulties have been surmounted. Labor and management
working together on them have discovered a new sense of

partnership which has been reflected not only in increased
sales of war bonds but also in better understanding and increased

efficiency on the production line. I like to feel that this

37

-6new labor-management partnership sets a pattern for the
future under which labor and management will cooperate in
industry problems for their common good and the good of the
Nation.

Important though the payroll savings plan is, it repre- sents but one phase of our over-all bond campaign. Millions
of farmers, self-employed artisans, and businessmen are

purchasing War Bonds regularly. All in all 50 million Americans
invested in War Bonds during the past year. More than 50
million Americans now have a direct and personal stake in the

finances of their government. To my mind the significance of
this can hardly be overestimated. Not only should the wartime
sacrifices of today emerge as the new homes, new comforts, and

new standards of living for the morrow, but the piling up of
a nest egg of savings to fall back upon if need be will be a
source of comfort and reassurance.

-7-

38

But War Bond purchases do not tell the full S tory of
the financial mobilization of the American people.
On the first of December the Treasury launched a

program to borrow nine billion dollars including money from
the sale of War Bonds, which with revenue from taxes, will

carry us through until February. Nearly half of this vast
sum, over 4 billion dollars, was raised during the first
week of December. I am happy to announce that as of to-

day, this total has reached
Credit for these records must go to tens of thousands
of willing volunteers throughout the nation who have given
their time and energy to sell these bonds and to the
millions of Americans who have enlisted their money in the

service of their country.
The successful financing of the war means real

sacrifice for all of us.
Great as our resources are, we haven't enough to buy

all we want for ourselves and still put all we need to put
into winning the war. We have a decision to make, whether

we shall deny ourselves all the comforts we would like to
have or deny our boys at the front - your sons and mine the tools and the weapons they need to meet the enemy.
We have to choose also whether we shall finance the war

-8-

39

over the rough and cruel road of inflation or by sober

thrift that will protect our present and our future.
The steep road of self-denial will be the short road to
victory.
Just a few weeks ago I believed that we faced a long

war. Now I believe that we can make it a relatively
short one - if we pull together on the job. My mind was
changed about the prospects after a visit of two weeks

over there - in Great Britain. One of the influences in
changing my mind was what I saw of the British people and

what they are doing for victory. I had been told, as you
have been told, and as the enemy wants to believe, that
they were a decadent race, incapable of organizing to
meet and to conquer a stern and cruel aggressor. But

the British people have undergone a baptism of fire and with
an indomitable courage have risen from it a new race,

vibrant with youthful energy and an unconquerable spirit.
They have, from statesmen to factory girl, a sure

religious faith, not that God has chosen to be on their
side, but that they are fighting in a righteous cause and
that they are on God's side in a war to make the future
of humanity more bright
I gained new assurance also from the American

soldiers and sailors I saw in England. They are magnificent

-9-

40

representatives of our democracy, trained and fit for the
job they have to do. They will acquit themselves with
glory, as have their comrades at Bataan, on Wake Island, on

Guadalcanal, in North Africa and in China. If we "over
here" are to be worthy of them, we have a high mark indeed
at which to aim.
Since my return I am more than ever convinced that

we "over here" will prove worthy of them. On the production lines, in mines and fields and factories we are
giving an increasingly good account of ourselves. We have

harder taska ahead; we shall have our own trial of blood

and sweat and tears, but I believe we shall meet our trial
triumphantly and play our part in building a world in
which men can be free to live worhty lives.

41

December 9, 1942
11:20 a.m.
TAXES

Present:

Mr. Bell
Mr. Graves
Mr. Gaston
Mr. White

Mr. Sullivan

Mr. Blough
Mr. Friedman
Mr. Surrey
Mr. Shere

Mr. Bernstein
Mr. Haas
Mr. Murphy

Mr. Lindow

Mr. Tickton

MR. BELL: Due to the fact that we are late, I
didn't suppose you had time to go over all the charts
in detail.
H.M.JR: All right, Dan, please go ahead.
MR. BELL: This is just a short agenda. (Agenda
handed to the Secretary, copy attached.) Ne thought
that you would say just a few words on the purpose of

the meeting, and then we would pass around this kind
of an agenda to everybody present. There would be in

front of you this agenda, broken down into more detail,
so that you could follow the discussion as we went

along. The problem would be handled by Mr. Lindow,
and the charts that he would present would give the gap

and also the fiscal picture.

I don't know whether you want to hear any of this
discussion now or whether you want to see the charts,
just quickly.

42

-2H.M.JR: Are you going into the gap business?

MR. BELL: Yes, that is the first thing on the

program, to say what the gap is; and unless there is a

lot of discussion, it will only take a few minutes.
MR. HAAS: 18-a somewhat new approach.

MR. BELL: And also the fiscal picture. That
gives you the Treasury's problem of financing the war
expenditures for the calendar year of 1943; and that

will tie in with the figures in the gap picture.

That will be followed by Tickton, showing all the

War Savings Bonds charts that he showed at the meeting

last week, with one additional chart, I believe, showing

what we have done in "ar Savings Bonds and the various
categories.

Then Mr. Blough will take up the burden of the

present personal taxes, breaking that down as much as

he can and discussing it from its various angles.

This will be followed by alternative fiscal measures -

what you can do in the income tax - and I believe Blough

has the sales tax in there, also, and a number of
others.

H.M.JR: Have you got those things prepared on the

various income tax levels? That is not for this meeting,
is it, a sheet showing what a man-MR. BLOUGH: Yes, for the existing law we have a

sheet which indicates the nature of the thing. It shows

the non-refundable items, victory tax, Federal income
tax; and New York State income tax; then the refundable

items, victory tax credits, the pay-roll tax, the war

bond deductions, and the total refundable; and then all
items, excluding New York State and Federal income and

the victory tax, and the total.

MR. BELL: That is the burden on various income
groups.

43

-3MR. BLOUGH: This is shown for a married couple
with no dependents, from eight hundred dollars up to a

hundred thousand dollars. That will be blown up into
a big table.
H.M.JR: Are you going to explain it?

MR. BLOUGH: I will explain it, that is right.
That will be the basis of the discussion of the present
burden. It does not go into the whole burden of taxation, but it is the present burden of personal taxes,

you might say.

H.M. JR: Bell, let me just put this to you.
What is the net result you are trying to get into these
people's brains when they leave?

MR. BELL: We are trying to get before them and
get them acquainted with everything that the Treasury
has done up to date on the bond program and the taxes.
Then from there on we will discuss various alternative
proposals, taxes, and forced savings, and so forth,

in a general way, and try to bring out discussion of
those various plans, so as to get everybody's view.

H.M.JR: I think this - of course, I haven't been
in on these previous meetings - I will just get un and
I will thank everybody for coming, say to treat it as
confidential, and so forth, and so on, and then turn
the meeting over to you. (Bell)

MR. BELL: All right. I think you ought to say

as the purpose of the meeting that you thought that

everybody should come and see what the Treasury has done

and then to show various programs that it has studied.
Then we will just follow the agenda from that point on.

H.M.JR: It is an inventory of the position of

the Treasury of today.

MR. WHITE: Is that what it is today? I didn't

gather that that was the objective, to inform them what

44

-4the Treasury had done, but rather to present the picture

of the problem as we see it and to provide for a clarification of the various aspects of the problem.

H.M.JR: That is what I am trying to find out,

myself.
date.

MR. BELL: Plus what the Treasury has done up to

MR. WHITE: That would strike a little of the wrong

note, it would seem to me, because that would make it
appear that you have invited them here to show what is

being done, not that we did it - the Treasury bond
program, what the fiscal picture is - to tone down any

role that we have had in it - but rather that this is
something that is of interest to all the people there.
MR. BELL: All right, I agree with that; call it
the fiscal side of this picture.

MR. BLOUGH: What is the problem we face, what are

some of the ways, fiscally, that that problem could be

met, and what would it mean in magnitudes. Then one

thing we had expected to do, Mr. Secretary, is to take

that first plan, number one, which Mr. Paul, I think,
gave you some time ago. It is a plan which involves
three billion dollars of additional income tax and fifteen
billion dollars of compulsory lending. We will show

what that would mean, as a sample - not as a program,

but as a sample - people have been talking in terms of
that around town - of what it would mean to individuals

if you did that sort of thing. We have that also drawn
up to present, if that meets with your approval. In
addition to the alternatives for filling the whole gap,

what would this particular one do in terms of burden.

H.M.JR: And to show them the growth of the war
savings program and that some of these other programs

would kill it; and in order to get something, it has
to be that much bigger than the war savings.

45

-5MR. BLOUGH: That seems to me to be one of the main

purposes, to get some realism in their thinking about
the lending program.

MR. WHITE: I should be inclined to let that

develop out of the discussion rather than come from
you, Mr. Secretary.

MR. BELL: That would come out in I and II of
the discussions on the problem and the War Savings

program.

H.M.JR: I have been so overworked - I mean here -

that I haven't had time to think of this meeting, and I

have not had the advantage of the other meetings which
have gone before that Bell has. You have had a number

of meetings, and I think the simolest thing is that I
am there and I will say, "Mr. Bell has devoted a great
deal of time to this, so I am going to ask him to conduct
the meeting."

MR. BELL: All right.
MR. WHITE: I think that would be a good idea,

although I don't think I would preface with anything
except to thank them for coming and say that Mr. Bell
is going to conduct the meeting, without any reasons.

H.M.JR: I am warning Bell now, if I feel that the
thing is going against us, so to speak, I am going to

horn in as anybody else would from the outside. I mean,

that is one advantage of not sitting in the chair.

MR. WHITE: Except that I think you can rely on a
good many of your staff to take care of that so that

before the evening will be out I don't think there is
any defense that will be left unrepresented. You can
relax and take it easy and just listen.
H.M.JR: That would be marvelous.

MR. BELL: I think we have to rely on everybody in
this room to sort of stimulate the discussion.

46

-6H.M.JR: I was thinking about this last night,

and I think there is great advantage not to have me

in the chair; it isn't a meeting in which I, Henry
Morgenthau, Jr., am trying to put over something; it
is the Treasury. I have thought about this thing, and
I think that some of the people there will take it in

good grace and feel much happier about it if I am not -

I mean, it is not me, personally, as a person trying to
shove something over. This is the Treasury as a group

which wants to present the problem as they see it. I

have gone to other meetings, and there is always one
individual who wants to dominate the thing. You have

been to a lot, too - you (Sullivan) and I went to the
meeting with Jesse Jones on the governors - well, it
had to be Jesse Jones. So I want this to be a
Treasury meeting rather than a Morgenthau meeting.

MR. BELL: All right.

H.M.JR: I thought about it quite a lot. You all
know your jobs. If you don't-MR. SULLIVAN: Don't look at me; I am just here to
applaud. (Laughter)

MR. WHITE: Well, that is your job. (Laughter)
MR. GASTON: Do you need any help, John? (Laughter)

MR. SULLIVAN: Yes, join me. (Laughter)
H.M.JR: Do you want a dress rehearsal outside of
this room besides this?
MR. BELL: No, I have had a good deal of this

picture already, and I think the boys know - if they

think they want to go over it, I will be glad to do

it. We met in my room just now on this agenda.

MR. WHITE: You might like to look at that one

chart that Roy prepared, if it is ready.

MR. BLOUGH: Shame on you, Harry. (Laughter)

I have a very lovely chart which happens at the moment

47

-7to be so complicated that I am afraid you would die

just to look at it. .

H.M.JR: Why do it twice? Why kill me twice?

(Laughter)

MR. BLOUGH: I think Harry was pulling my le
MR. SULLIVAN: If we have a good dress rehearsal,
the opening performance would be a flop.

H.M. JR: I have heard them before - these committees -

I think they know their stuff.

I would like, as long as I have these men in the

room here, for them to stay behind a minute for something
else, unless you have something. I would like Odegard,

Gaston and Sullivan to stay behind. I want to talk

about schools.

48

AGENDA

Fiscal Measures and Inflation
Control

I. The Problem
A. Income Expenditure Outlook for 1943

B. The Fiscal Picture
II. The War Savings Bond Program

III. The Burden of Present Personal Taxes

IV. Alternative Fiscal Measures

49

December 9, 1942
11:40 a.m.
INCOME TAXES

Present: Mr. Sullivan
Mr. Gaston
Mr. Odegard

H.M.JR: Let me just say this, that I feel a real

job can be done through the school teachers of America

by having them hold night classes, if you wish, on how
to make out income taxes, and so forth, and so on. I

have been holding up - many letters come across my desk

to go to governors and to school teachers. I just haven't
had a breathing spell. I have never been so far behind.
Now, I haven't the thing here. I am so far behind
that I just don't know where I am at. I spoke about it

to Mager, who is a high school teacher, and he gave me
the name of somebody. He said we could talk to him and

ask him to come down here.

What I want to do, John, is to do this thing much
more thoroughly. I want to do a real job and have
these people conduct it - I would like the adults coming
to the schools at night so that these people really can
learn about their income tax, and so forth. I know you
people over at the Bureau think it has been done, but I
don't think people know.

MR. SULLIVAN: I think we ought to let the Commissioner be in whenever - I assume you just want Peter,

Herb, and I to discuss it.

H.M.JR: I would like you to discuss it, and I
would like you to discuss it with Mager. I don't know
how this man whom you have over there on schools has

worked out.

50

-2MR. ODEGARD: Not too well, I am sorry to say.

H.M.JR: Mager is suggesting - he said, "I would
appreciate your releasing Mr. David Frank, Administrative
Assistant, Long Island City High School, for a day or
two, to come to Washington to consult with Treasury
officials
on a confidential matter. 11

May I turn this over to you?
(Memorandum from Mr. Mager to the Secretary, dated
December 7, 1942, handed to Mr. Odegard.)

Now, there is a man - I can get his name in a
minute. He is the publicity man for the school system
in the City of New York. They pay him twelve thousand
dollars a year, and my friend, Margaret Lewisohn, mentioned him to me once; then she said, "I mention him
because he is so outstanding. " I will ask Sam Lewisohn
what his name is. He is a man that might be borrowed.

She says, "In the first place he is a liberal. They

pay him twelve thousand a year - the City of New York
does. She says that he is unusual. You may know his
name when you hear it.

MR. ODEGARD: I don't think of it, no.

H.M.JR: He is publicity-MR. ODEGARD: There are many problems, you know,

involved in that sort of thing. Teachers are now

working overtime on rationing boards. You will have a

difficult job of training them.

H.M. JR: Mager says they will be glad to do it.
MR. SULLIVAN: They may be glad to do it, but the
one class of people we have the most trouble with in

filling out tax returns is doctors. The second poorest
class is school teachers.

51

-3H.M.JR: That proves my point.
MR. SULLIVAN: It proves the point, Mr. Secretary,
that we have got to start in and train a group who are
second poorest in handling their own tax returns.

H.M.JR: That is all right. I will tell you what

I would like you to do - I can't do anything more today,
and I won't be able to do anything more this week, but
I would like Odegard, who is a teacher; I would like
Gaston, who is a publicist; I would like you (Sullivan),
who are responsible for this; I would like Mager to

sit in; and I would like the Bureau, if you could call

a meeting - a couple of meetings this week, as many as
are necessary - so that by Monday when I come back refreshed
from the mountains of North Carolina you might have a
plan.

Now, the reason I am putting it - I want a fresh

look at it. Mager is very enthusiastic. I don't know
who this man is, but I think that the job is so big,
and I don't get the feeling - now, the President of the
United States has always felt that people should be
able to go to the post office, and any postmaster ought
to be able to help them out, and so forth, and so on.
I would like these people to take a brand new, fresh

look at it.

MR. SULLIVAN: Sure, I am for that.

H.M.JR: And sit down - I mean, it is much bigger,
and the reason that Henderson is falling down on his job
is because the people don't understand.

MR. SULLIVAN: That is right.

H.M.JR: We have got time - and after all, if you

are going to do this thing, if you ran the instructions
during the month of February, that would be the time.

Now, Mager - I think he is a school teacher, isn't

he - he went back and talked to the people and he evidently

52

4-

found they would be enthusiastic for this, they would

like to do it. I have not studied the subject, but I

just feel like when we got on these loans and tried to

educate the banks on how to make out these foreign

things - when we held schools for them, it went quite
well; and again going down, it is the smallest school
in the smaller community which will make or break it.
Here is the President of the United States himself in
Cabinet complaining bitterly about how he had to make

out the necessary blanks to get oil for his house at

Hyde Park. If somebody had gotten his superintendent

or somebody over there, and had a town meeting and
explained the thing to him, maybe the President would
not be bothered.

When we first did War Bonds, the President took
the trouble to see that the town of Hyde Park was

carefully covered, with the result that when the President called in the old wise men of the town, the eighty-

two, and asked them how War Bonds was going, and so forth,

and so on, he got a good report.

(The Secretary held an unrecorded telephone conversation with Mr. Sam Lewisohn.)

He passed on it, himself. I mean, he has got the
idea, and you could see he was thinking. You know him,

don't you?

MR. ODEGARD: Yes, I had dinner with him one

evening.

H.M.JR: That is that, and I would like to kick
this thing off, you see. After you have gone into it,
you may find that this is not the way to do it.
MR. SULLIVAN: I wonder if I can't get Guy so we
can get going on it right away.
H.M.JR: We are doing a speech. You had better do

it the first thing tomorrow morning.

53

-5MR. booklet.
GASTON: I will take a look at my City of
New York
H.M.JR: Sam knows the man; he has a bum memory.

Margaret is trustee of - what is the one where the

teachers go to?

MR. ODEGARD: Teachers College at Columbia.

H.M.JR: But she said this man has gotten along

with LaGuardia and everybody, and he has done a wonderful

job with the schools. He understood what I wanted.

54

December 9, 1942
3:20 p.m.
WAR BONDS

Re: North Carolina Speech

Present: Mr. Mager

Mr. Kuhn
Mr. Gaston

Mrs. Klotz

Mr. Odegard
Mr. White

H.M.JR: Will you just make a couple of changes as
I go along. (Reading)
"I am happy to be speaking tonight in the home
State and near the home district of one of America's
outstanding legislators -- my old friend and colleague,

the Chairman of the Ways and Means Committee of the House

of Representatives, the Honorable Robert M. Doughton.
No other committee in Congress carries a heavier burden

of responsibility, for this is the committee that originates all tax legislation.
I would say, "I am speaking tonight in the home

State and in the home community," that is a little
easier; instead of saying "near."

MR. GASTON: Is there anything incorrect in the

word "colleague"?

MR. MAGER: The meaning of it comes out a little
later.
H.M.JR: You can say "an associate," " that is what
Mr. Hull always speaks of.
MR. GASTON: "Co-worker or "associate."

H.M.JR: "Associate" is much better. Why not just
say, "my old friend" - "My old friend, the Chairman of

55

-2the Ways and Means Committee of the House of Represen-

tatives, the Honorable Robert M. Doughton. No other
committee in Congress carries a heavier burden of

responsibility, for this is the committee that originates

all tax legislation."
I like the way it starts.

(Reading) "Bob Doughton and I have shared many

labors together over many eventful years."

MR. GASTON: I was going to say, "these recent

eventful years." I thought you were questioning the

word "many." "

H.M.JR: "Many recent years" - "eventful" isn't

enough, I was thinking.

(Reading) "I think that we at the Treasury are
fortunate to be working in partnership --"
MR. KUHN: He used the word "partnership" in intro-

ducing you.

H.M.JR: Instead of saying, "I think, " say, "We at
the Treasury are fortunate to be working in partnership -MR. GASTON: "We at the Treasury consider ourselves

fortunate to be working in partnership --"
MR. MAGER: "Are indeed fortunate--'

H.M.JR: I don't like just "fortunate."
MR. MAGER: Say, "We at the Treasury are indeed

fortunate."

H.M.JR: "We at the Treasury are indeed fortunate
to be working in partnership -- as he himself described
it only a moment ago --"

I don't think that is necessary.

-3-

56

MR. KUHN: He was just talking about partnership.

I think it is right for you to say that.

H.M.JR: (Reading) "--with a Chairman who takes his
responsibilities with such deep seriousness in these

serious days."

I don't like "deep seriousness" - give me a better

word than "seriousness."

MR. KUHN: He has used the word "devotion" about

you, and I don't want to-MR. GASTON: "He takes his responsibility so seriously in these grave days.

H.M.JR: That is all right. "And I think the tax-

payers of the country are equally fortunate in having
tax legislation originate with a man like Bob Doughton,
who is so devoted to his country and to the welfare of

all its people.'

MR. ODEGARD: Tax legislation doesn't originate-MR. GASTON: "--originate under the leadership of a
"

man like Bob Doughton--

H.M.JR: That is right; "--originate under the leadership-- 11. He will love this - "--originate under the leader-

ship of a man like Bob Doughton" - that is just the whole
point - "so devoted to his country and to the welfare

of all its people. "

You wouldn't say, "--so devoted to his community, his

country and to the welfare of all its people"?

MR. GASTON: No, I think we had better make him a

National figure - not a local figure.

H.M.JR: "In introducing me Mr. Doughton spoke
generously of the financing burden that rests upon
me nowadays as Secretary of the Treasury. That burden

57

-4-

has been especially great in this month of December. The

Treasury is now in the midst of borrowing nine billion
dollars in a single month -- a borrowing operation unequalled in the annals of this or any other Government.
In this Victory Loan drive we are depending upon the

voluntary help of almost fifty thousand professional

salesmen drawn from the securities, banking and insurance

fields. It is their job to find the dollars that lie idle

in the hands of individual investors, corporations and the
custodians of trust funds, and to see that those dollars
go to work for their country. I am delighted to report
to the nation tonight that this morning, only the twelfth
business day of our drive, we had raised more than six

billion dollars."

MR. GASTON: I would just say, "this morning."

H.M.JR: Why "this morning"? "I am delighted to

report to the nation that the most recent figures--"
something like that.

MR. WHITE: I would say, "I want to report--

making it a paragraph.

MR. GASTON: "I am able to report to the Nation that

today, only the twelfth business day of our drive--"

H.M.JR: Fix it up.
(Continuing) "We are more than two thirds of the
way to success. This is a magnificent achievement,
another proof of what a free, enlightened and democratic
people can do when their country needs them.
MR. GASTON: "Calls on them" is better.
MR. WHITE: Would you want to say, "This is a mag-

nificent response"? They are liable to think you are
patting yourself on the back.

MR. KUHN: Call it a response, but not a response
from the people, because there are very few people in 0
have been responding.

58

-5H.M.JR: (Continuing) "In this Victory Loan drive

and in the War Savings campaign that has brought us to-

gether tonight, you in North Carolina are doing great
things. From the mountain cabins in your western

counties" - we will have Miss Elliott check that - "to

your factories near Winston-Salem and your shipyards

on the coast, this State of yours is a fine example of
the spirit that is being shown by millions upon millions
in every State at the start of our second year of war."
Why do you say, "--start of the second year of war"?
MR. KUHN: It isn't necessary.

MR. WHITE: I think I would put a period after

"State.

MR. GASTON: The only object, as I see it, is to
get in the war movement - the fact that we are at war the spirit in connection with the war effort.
MR. ODEGARD: That adds something.

H.M.JR: (Continuing) "I have come here tonight
to pay my tribute to the workers and employers of North
Carolina who have earned Minute Man flags for their part
in the War Savings campaign," - that is again the same
thing; nobody knows what a Minute Man flag is. Say,
"Treasury Minute Man flag" - it can't do any harm to say

"Treasury." (Continuing) "--but in congratulating

them I want also to congratulate the workers and employers of the United States as a whole." "

MR. WHITE: May I suggest that that "but" be capitalized,
so that in your reading, you pause?
MR. KUHN: Yes, start the sentence with "But."
H.M.JR: Why not say, "But in congratulating them
I am also congratulating the 'workers and employers--'

-6-

59

MR. KUHN: Yes, start the sentence with "But."
I

H.M.JR: Why not say, "But in congratulating them,
also am congratulating the workers and employers--"?

MR. KUHN: "I also congratulate-'
H.M.JR: "In congratulating them, I also am congratulating-- "
MR. GASTON: May I suggest that you practice a

little on that word "congratulate."
H.M.JR: What is the matter?

MR. GASTON: You have a tendency to slur it a little.
H.M.JR: "In this community and in every community

the first year of war has brought miracles in some field

of patriotic effort. And not the least of these is the
War Bond campaign." "

Is "miracle" too strong?

MR. GASTON: I think it is a little strong.
MR. KUHN: We will fix it.
H.M.JR: "Take, for example, the payroll savings

program in which you in North Carolina have made such an

enviable record. You will not find it in the headlines,
you do not get medals for your part in it, you get nothing but a little blue and white flag as a symbol of
achievement. Yet in North Carolina every big company

now has a payroll savings plan, and 99 percent of all
the workers in those companies are investing in War
Bonds week in and week out."

I don't like "--every big company" - "every large

company," would be better.

MR. GASTON: Or -every big factory"--

60

-7.
MR. WHITE: May I suggest, since you say you do

not give medals, (reading) -you do not get medals for

your part in it, you get nothing but a little blue and
white flag as a symbol of achievement" that maybe you
don't need that up earlier, who have earned Minute

Man flags for their part in the War Savings campaign."
It sounds as though they were getting a medal, up there.
MR. KUHN: Simply that the ceremony is a Minute

Man ceremony.

MR. ODEGARD: I do not like the use of diminutives -

"--you get nothing but a little blue and white flag--'
it is deprecating. I would rather say nothing about it
at all than to say it is nothing at all. Why award
something - why go all the way to North Carolina to
award a flag that doesn't mean anything?

MR. KUHN: The only argument is that the pay roll
savings thing has been consistently ignored in the press;
people are not aware of it.

H.M.JR: Can I do this - I am so pressed for time let me see if this is acceptable, and then argue about
words afterwards, if you don't mind. I have never been
so short of time and so tired. I would like you people
to go over it, and yet I am desperate. I want suggestions, but if they can be made in Mr. Gaston's room,
it would help me.

(Reading) "We can better appreciate the truly
magnificent achievement of this democratic, voluntary

program by examining what has been accomplished during

the past year.' I would say, maybe, "twelve months ago."
(Continuing) "Just a year ago there were only 700,000

workers in the entire country on the pay roll savings
plan, and these workers were investing only 4 percent of
their pay in bonds. Today, 24 million workers are setting
aside an average of eight and one-half percent of their
pay every pay day. And soon, we have reason to believe,

30 million workers will be investing at least ten percent of their pay in War Bonds. This is indeed a tribute to
the patriotism and intelligence of the American people.

61

-8-

Would you want to say, "And soon, if this steady
growth continues, we have reason to believe--" instead
of, "And soon, we have reason to believe- "? I am

just throwing it out. I want to get the feeling.

MR. MAGER: Don't you think it is more or less
obvious that if the growth continues, then there will

be thirty million?

H.M.JR: I am throwing it at you. If I want something definite, I am going to say so. I am going to

throw things at you.

MR. MAGER: That would be my objection.

H.M.JR: All right, if you don't like it, throw it

in the fire.

(Continuing) "We could never have achieved this

success without the untiring effort of thousands of

volunteer workers who have been the unsung heroes in a
noble enterprise." "
thick.

I think that you are putting it on a little bit

MR. KUHN: It is easily softened.
H.M.JR: What was the word used earlier - "miracles" and now "a noble enterprise."
MR. ODEGARD: "--this enterprise"-

H.M.JR: Is this Kuhn or Mager who is getting noble
on me?

MR. MAGER: That is mine.

H.M.JR: I think it is a little bit too noble.
(Laughter)

-9-

62

MR. MAGER: The reason I put it in was because

they are, in a sense, unsung heroes, so I wanted to
play up the fact that they were doing a grand piece
of work.

H.M.JR: O.K. I am willing to say, "--who have

been unsung heroes in this grand enterprise."
MR. MAGER: That is better, too.

H.M.JR: That is what I am willing to say.
"Day in and day out our labor-management committees,

of which there are many thousands in the nation today,
have contributed immeasurably to the success of the

effort. The result is just one example of what can be

done with labor and management in harmony. I like to
feel that this new labor-management partnership sets a

pattern for the future when labor and industry will work
side by side for their own good and for their country's
good.

That is very good - that is O.K.

H.M.JR: (Continuing) "Important though the payroll
savings plan is, it represents but one phase of our War
Savings campaign. Millions of farmers, self-employed
artisans" - that is too highfaluting - "and businessmen

have put their savings at their country's disposal. All
in all 50 million Americans invested in War Bonds during

the past year. To my mind the significance of this can

hardly be overestimated. It means, as Mr. Doughton has
said, that more than 50 million Americans now have a

direct and personal stake in the finances of their
Government. It means that their savings are being protected until those savings are needed to keep the wheels
of peace-time industry turning once more. It means that
habits of thrift have taken hold of the American people,

with results that will help to win the war and to win
the peace to come.

63

- 10 -

"We on the home front have to decide whether we

shall deny ourselves all the comforts we would like to
have or deny the boys at the front -- your sons and
mine -- the tools and the weapons they need to meet
the enemy." "

Do you want to put that thought in?

MR. KUHN: It is the thought the President has
used. I think it is the best argument we have got.

H.M.JR: It is all right.
"We have to choose also whether we shall finance the

war over the rough and cruel road of inflation or by

"

sober thrift that will protect our present and our future."

MR. WHITE: "Cruel"? "Rough and unjust" or "inequitable,"
but not "cruel."
MR. ODEGARD: "Costly."

MR. GASTON: "Costly," that is good.
MR. MAGER: Yes.

H.M.JR: (Continuing) "The steep road of self-denial
will be the shortest road to victory. We have got a
lot of highways, here; we have got to do something about
these roads. Bring in a few cow paths - "From the COW

paths of Carolina"-- (Laughter)

MR. WHITE: He feels that cow paths would be more

appropriate. (Laughter)

H.M.JR: (Continuing) "I believe that the fifty

million Americans who have bought War Bonds this year

have already made up their minds to take the right road."
There is another road-- (Laughter)
MR. GASTON: There are two alternative roads. You
could choose some other figure, or not have any figure

at all.

64

- 11 H.M.JR: "I am convinced that we on the home front

'over here' will be worthy of our fighting men. On the
production lines, in mines and fields and factories,

we are giving an increasingly good account of ourselves.
We ha ve living evidence in this community and in thou-

sands of others all over the land of a nationwide willingness to work and save and sacrifice."
MR. KUHN: The next sentence is out because it is
repetitious.

H.M.JR: "I have just heard of an example of patriotic
spirit right here in North Carolina which I regard as
a challenge to the country as a whole. At the great

ordnance plant at Fore River, not far from here, the
workers are investing not ten percent but an average
of twenty-two percent of their pay in War Bonds every
pay day.

When did you get that?
MR. KUHN: We got that today.

MR. GASTON: Is there a Fore River? The Great Fore
River shipping plant is at Quincy, Massachusetts.

H.M.JR: Isn't that-MR. MAGER: We will check it.

H.M.JR: "This performance does not call for con-

gratulations; it calls for a salute. I salute the workers
of Fore River, in the hope that their example will be

followed elsewhere.

"We have hard tasks ahead of us in 1943; we shall

have our own trial of blood, sweat and tears. But I
believe that we shall meet our trials triumphantly, because I have faith in the American people. I believe
we will play our part in winning the war and in building

a world in which the American people can live in harmony,

peace and freedom."
O.K.

That is good.

65

- 12 -

MR. MAGER: That is a good way to finish.
MR. KUHN: They are doing it in Kansas City in

another one.

H.M.JR: The Kaiser plant is eighteen percent.
You wouldn't want to make it, "At the great ordnance
plant at Fore River where there are twenty thousand employees"? You can get some idea of the number. How
did you get this, call up on the phone?
MR. KUHN: I got that from Englesman, who had just

come back from there.

H.M.JR: It is a hard trial we have-MR. WHITE: Do we have to have "blood, sweat, and

tears" here, too?
H.M.JR: No.

MR. WHITE: It has crept into every speech.
MR. ODEGARD: Just stop after "We have hard tasks
ahead of us in 1943. "

H.M.JR: "But I believe that we shall meet our
trials triumphantly, because I have faith in the American people.' That is a little presumptious on my part.
MR. WHITE: I think you are right. You don't need

that clause.

H.M.JR: Give me a little something - look, boys,
look up some Revolutionary hero from North Carolina and
give me some quotation from him.

MR. WHITE: Revolutionary times is going a long
way back for North Carolina.
H.M.JR: Go back to the time - some body up in the

library can get it.

66

- 13 -

MR. WHITE: They must have some hero.

MR. MAGER: Wiley Jones is the man; look it up.
H.M.JR: Give me a good quotation, "As Wiley Jones

said, in 1775--" something like that. (Laughter)

MR. WHITE: Make it up if you can't find it; nobody
will know. (Laughter)

This is O.K. It is very good. This speech, I

think, is very good.

H.M.JR: Give me some ammonia! (Laughter)

This is all right. Could you fellows do the word-

by-word part? Who is going into the four o'clock meeting

with me?

MR. KUHN: I thought I would come in, but I don't

have to.

H.M.JR: Peter, could you go over this with him

once more?

MR. KUHN: Is the scope of it all right?

H.M.JR: I like it.
MR. WHITE: Didn't you have a sentence about bring-

ing back to the community - something that you said this
morning? It needs some kind of an end.

MR. GASTON: That little story brings it back to the

community. We need some sort of a kicker on the end.

H.M.JR: I want to find out - I want this to be
read to Miss Elliott and Mrs. Morgenthau, tonight. I
will find out. I am going upstairs.
This is good. We will do it again at nine o'clock
tomorrow morning. This is all right, gentlemen.

67

- 14 -

MR. KUHN:

Just the words, now.

MR. MAGER: And the conclusion.

H.M.JR: Look up - there must be somebody in North

Carolina. You don't want to get into the Civil War;
that gets into your sectional stuff. That is why I say
the Revolution.

MR. WHITE: You are right.
MR. MAGER:

Connor's History of North Carolina.

Magor's - Draft III

3

(my)
I am happy to be speaking tonight in the home

State and near the home district of one of America's

outstanding legislators -- my old friend and colleague,
the Chairman of the Ways and Means Committee of the House

of Representatives, the Honorable Robert M. Doughton.
No other committee in Congress carries a heavier burden

of responsibility, for this is the committee that

originates all tax legislation.
Bob Doughton and I have shared many labore together

over many eventful years. I think that we at the Treasury
are fortunate to be working in partnership -- as he
himself described it only a moment ago -- with a Chairman

who takes his responsibilities with such deep seriousness

in these serious days. And I think the taxpayers of the

country are equally fortunate in having tax legislation
D-C

69

-2originate with a man like Bob Doughton, who is so

devoted to his country and to the welfare of all its
people.

-

In introducing me Mr. Doughton spoke generously

of the financing burden that rests upon me nowadays

as Secretary of the Treasury. That burden has been
especially great in this month of December. The Treasury

is now in the midst of borrowing nine billion dollars
in a single month -- a borrowing operation unequalled

in the annals of this or any other Government. In this
Victory Loan drive we are depending upon the voluntary

help of almost fifty thousand professional salesmen

drawn from the securities, banking and insurance fields.

It is their job to find the dollars that lie idle in the
hands of individual investors, corporations and the

D-C

custodians of trust funds, and to see that those dollars

70

-3go to work for their country. I am delighted to report

to the nation tonight that this morning, only the twelfth
business day of our drive, we had raised more than six

billion dollars. We are more than two thirds of the way
to success. This is a magnificent achievement, another
proof of what a free, enlightened and democratic people
can do when their country needs them.

In this Victory Loan drive and in the War Savings
campaign that has brought us together tonight, you in
North Carolina are doing great things. From the mountain

cabins in your western counties to your factories near
Winston-Salem and your shipyards on the coast, this

State of yours is a fine example of the spirit that is
being shown by millions upon millions in every State at
"

the start of our second year of war. I have come here
D-C

-4-

71

tonight to pay my tribute to the workers and employers
of North Carolina who have earned Minute Man flags for

their part in the War Savings campaign, but in congratulating them I want also to congratulate the workers
and employers of the United States as a whole.

In this community and in every community the first

year of war has brought miracles in some field of patriotic
effort. And not the least of these is the War Bond campaign.
Take, for example, the payroll savings program in
which you in North Carolina have made such an enviable

record. You will not find it in the headlines, you do
not get medals for your part in it, you get nothing but
a little blue and white flag as a symbol of achievement.
Yet in North Carolina every big company now has a payroll

savings plan, and 99 percent of all the workers in those
D-C

-5-

72

companies are investing in War Bonds week in and week
out.

We can better appreciate the truly magnificent
achievement of this democratic, voluntary program by
examining what has been accomplished during the past

year. Just a year ago there were only 700,000 workers

in the entire country on the payroll savings plan, and
these workers were investing only 4 percent of their

pay in bonds. Today, 24 million workers are setting
aside an average of eight and one-half percent of
their pay every pay day. And soon, we have reason to

believe, 30 million workers will be investing at least
ten percent of their pay in War bonds. This is indeed

a tribute to the patriotism and intelligence of the
American people.
D-C

-6-

73

We could never have achieved this success without

the untiring effort of thousands of volunteer workers
who have been the unsung heroes in a noble enterprise.
Day in and day out our labor-management committees, of

which there are many thousands in the nation today, have

contribute immeasurably to the success of the effort.
The result is just one example of what can be done with

labor and management in harmony. I like to feel that
this new labor-management partnership sets a pattern

for the future when labor and industry will work side
by side for their own good and for their country's good.

Important though the payroll savings plan is, it
represents but one phase of our War Savings campaign.

Millions of farmers, self-employed artisans, and businessmen have put their savings at their country's disposal.
D-C

-7 -

74

All in all 50 million Americans invested in War Bonds
during the past year. To my mind the significance

of this can hardly be overestimated. It means, as
Mr. Doughton has said, that more than 50 million Americans

now have a direct and personal stake in the finances of
their Government. It means that their savings are being
protected until those savings are needed to keep the

wheels of peace-time industry turning once more. It

means that habits of thrift have taken hold of the
American people, with results that will help to win the
war and to win the peace to come.
We on the home front have to decide whether we

shall deny ourselves all the comforts we would like to
have or deny the boys at the front -- your sons and mine -the tools and the weapons they need to meet the enemy.
D-C

75

-8-

We have to choose also whether we shall finance the war

over the rough and cruel road of inflation or by sober

thrift that will protect our present and our future.
The steep road of self-denial will be the shortest

road to victory. I believe that the fifty million Americans
who have bought War Bonds this year have already made up

their minds to take the right road.
I am convinced that we on the Home front "over here"

will be worthy of our fighting men. On the production
lines, in mines and fields and factories, we are giving
an increasingly good account of ourselves. We have
living evidence in this community and in thousands of

others all over the land of a nationwide willingness to
4

work and save and sacrifice. Our 300,000 War Bond volunteess
D-C

76

-9are giving one expression of that willingness by their

untiring efforts to enlist the earnings and the savings

of the country to finance this costliest of all wars.
I have just heard of an example of patriotic

spirit right here in North Carolina which I regard as
a challenge to the country as a whole. At the great
ordnance plant at Fore River, not far from here, the
workers are investing not ten percent but an average of
twenty-two percent of their pay in War Bonds every pay
day. N This performance does not call for congratulations;

it calls for a salute. I salute the workers of Fore
River, in the hope that their example will be followed
elsewhere.

We have hard tasks ahead of us in 1943; we shall

have our own trial of blood, sweat and tears. But I
D-C

77

- 10 -

believe that we shall meet our trials triumphantly,
because I have faith in the American people. I believe
we will play our part in winning the war and in building
a world in which the American people can live in harmony,
peace and freedom.

D-C

78

I am happy to be speaking tonight in the home

in

community

State and near the home district of one of America's
outstanding legislators -- my old friend and colleague,
the Chairman of the Ways and Means Committee of the House

of Representatives, the Honorable Robert M. Doughton.

No other committee in Congress carries a heavier burden

of responsibility, for this is the committee that

originates all tax legislation.
Bob Doughton and I have shared many labors together

recent

over many eventful years. I think that we at the Treasury

inducl

are fortunate to be working in partnership -- as he
himself described it only a moment ago -- with a Chairman

st seriously

who takes his responsibilities, with such deep seriousness

have

in these serious days. And I think the taxpayers of the
country are equally fortunate in having tax legislation
D-C

12/9/42

79

-2-

the lendership of
originate with a man like Bob Doughton, who is 80

devoted to his country and to the welfare of all its
people.

In introducing me Mr. Doughton spoke generously
of the financing burden that rests upon me nowadays

as Secretary of the Treasury. That burden has been

especially great in this month of December. The Treasury

is now in the midst of borrowing nine billion dollars
in a single month -- a borrowing operation unequalled

in the annals of this or any other Government. In this
Victory Loan drive we are depending upon the voluntary

help of almost fifty thousand professional salesmen
drawn from the securities, banking and insurance fields.

It is their job to find the dollars that lie idle in the
hands of individual investors, corporations and the

custodians of trust funds, and to see that those dollars
D-C

80

-3go to work for their country. I am delighted to report

to the nation tonight that this morning, only the twelfth
business day of our drive, we had raised more than six

billion dollars. We are more than two thirds of the way
to success. This is a magnificent achievement, another
proof of what a free, enlightened and democratic people

calloof

can do when their country needs them.

In this Victory Loan drive and in the War Savings
campaign that has brought us together tonight, you in
North Carolina are doing great things. From the mountain

cabins in your western counties to your factories near in
Winston-Salem and your shipyards on the coast, this

State of yours is a fine example of the spirit that is

at
being shown by millions upon millions in every State, at a
the start of our second year of war. I have come here

81

-4tonight to pay my tribute to the workers and employers

Treasury
of North Carolina who have earned1 Minute Man flags for

their part in the War Savings campaign, but in congratulating them I want also to congratulate the workers
and employers of the United States as a whole.

In this community and in every community the first

year of war has brought miracles in some field of patriotic
effort. And not the least of these is the War Bond campaign.
Take, for example, the payroll savings program in
which you in North Carolina have made such an enviable

record. You will not find it in the headlines, you do
not get medals for your part in it, you get nothing but
a little blue and white flag as a symbol of achievement.

large factory

Yet in North Carolina every big company now has a payroll
1

savings plan, and 99 percent of all the workers in those

82

-5companies are investing in War Bonds week in and week
out.

We can better appreciate the truly magnificent
achievement of this democratic, voluntary program by
examining what has been accomplished during the past

year. Just a year ago there were only 700,000 workers

in the entire country on the payroll savings plan, and
these workers were investing only 4 percent of their
pay in bonds. Today, 24 million workers are setting
aside an average of eight and one-half percent of
their pay every pay day. And soon, we have reason to

believe, 30 million workers will be investing at least
ten percent of their pay in War Bonds. This is indeed

a tribute to the patriotism and intelligence of the
American people.
D-C

83

-6We could never have achieved this success without

the untiring effort of thousands of volunteer workers
who have been the unsung heroes in a noble enterprise.
Day in and day out our labor-management committees, of

which there are many thousands in the nation today, have

contributed immeasurably to the success of the effort.
The result is just one example of what can be done with

labor and management in harmony. I like to feel that
this new labor-management partnership sets a pattern

for the future when labor and industry will work side
by side for their own good and for their country's good.

Important though the payroll savings plan is, it
represents but one phase of our War Savings campaign.

Millions of farmers, self-employed artisans, and businessmen have put their savings at their country's disposal.
D-C

84

-7All in all 50 million Americans invested in War Bonds
during the past year. To my mind the significance

of this can hardly be overestimated. It means, as
Mr. Doughton has said, that more than 50 million Americans

now have a direct and personal stake in the finances of
their Government. It means that their savings are being
protected until those savings are needed to keep the

wheels of peace-time industry turning once more. It

means that habits of thrift have taken hold of the
American people, with results that will help to win the
war and to win the peace to come.
We on the home front have to decide whether we

shall deny ourselves all the comforts we would like to
have or deny the boys at the front -- your sons and mine -the tools and the weapons they need to meet the enemy.

85

-8We have to choose also whether we shall finance the war

over the rough and cruel road of inflation or by sober

thrift that will protect our present and our future.
The steep road of self-denial will be the shortest

road to victory. I believe that the fifty million Americans
who have bought War Bonds this year have already made up

their minds to take the right road.
I am convinced that we on the home front "over here"

will be worthy of our fighting men. On the production
lines, in mines and fields and factories, we are giving
an increasingly good account of ourselves. We have

living evidence in this community and in thousands of

others all over the land of a nationwide willingness to
work and save and sacrifice. Our 300,000 War Bond volunteers
D-C

86

-9are giving one expression of that willingness by their

untiring efforts to enlist the earnings and the savings

of the country to finance this costliest of all wars.
I have just heard of an example of patriotic
spirit right here in North Carolina which I regard as
a challenge to the country as a whole. At the great
ordnance plant at Fore River, not far from here, the
workers are investing not ten percent but an average of
twenty-two percent of their pay in War Bonds every pay

day. This performance does not call for congratulations;

it calls for a salute. I salute the workers of Fore
River, in the hope that their example will be followed
elsewhere.

We have hard tasks ahead of us in 1943; we shall

have our own trial of blood, sweat and tears. But I

87

- 10 -

believe that we shall meet our trials triumphantly,
because I have faith in the American people. I believe.

we will play our part in winning the war and in building
a world in which the American people can live in harmony,
peace and freedom.

D-C

TREASURY DEPARTMENT

88

INTER OFFICE COMMUNICATION
DATE December 9, 1942.
TO

Secretary Morgenthan

FROM

George

Buffington GTS.

As you know, we received the other day a statement from Mr. Garner, favor-

able to the Victory Fund Drive. If we could obtain a similar statement from
Secretary Jesse Jones, Mr. Wanders has suggested we might make a news release

on both of them, which would benefit the districts in the southwest.
Would you care to ask Mr. Jones to make such a statement in order that we
might release both of them tomorrow?

Told Buffington
"

of you'll write-a
gz 21 Wd 6 330 2961

sie letter
to Jones
signature

AND

20025

89

December 9, 1942

My dear Mr. President:

I know that you will be interested in

the marvelous cooperation which we received

from all three newspapers in Philadelphia on

December 7th.

I am sending you herewith copies of
the Philadelphia Record, Evening Bulletin

and Inquirer. You will please note that

every advertisement in all three of these

papers featured War Bonds.

As long as our sale of War Bonds con-

tinues on a voluntary basis, we will get
this kind of cooperation.
Yours sincerely,
(Signed) H. Morgenthan. Jr.

The President,
The White House.

By Memorian Budgers 4:35

Copies in Diary

90

December 9, 1942

Mr. Charles A. Tyler

President and General Manager

Philadelphia Inquirer

Philadelphia, Pennsylvania
Dear Mr. Tyler:

I was indeed gratified to see your splendid
issue of December 7th, so much so, in fact, that
I have today sent a copy to the President for his
personal attention.
I want you to know that I consider this issue

a most noteworthy contribution to the War Bond program.

It is through just such inspiring cooperation as

this that we will win through to victory in this war

and to sound economy in the peace. My sincere thanks

to all and especially to the many patriotic sponsors

who made this issue possible.
Sincerely yours,

91

December 9, 1942

Mr. J. David Stern, Publisher,
The Philadelphia Record,
Philadelphia, Pennsylvania

Dear Mr. Stern:

Supplementing my telegram of appreciation

regarding the splendid cooperation of the Philadelphia Record and the various sponsors in fur-

thering the sale of War Bonds and Stamps through
newspaper advertising, I thought you would be

interested in knowing that I have personally
called President Roosevelt's attention to your
issue of December 7th.

It is cooperation such as this which alone
can carry a program of the scope and continuing
nature of our War Bond activity to the full success
which all Americans so devoutly desire.
Sincerely yours,

92

December 9, 1942

Mr. Robert McLean, President

Philadelphia Bulletin

Philadelphia, Pennsylvania

Dear Mr. McLean:

This is to express my sincere appreciation
of the splendid contribution made to the War Bond
program by the Philadelphia Bulletin's issue of

December 7th.

I want to take this opportunity to thank you
and all those responsible for this most noteworthy

achievement, and through you, to thank as well the
many patriotically-minded sponsors who made this
issue possible.

You will be interested in knowing that I have
today sent a copy to the White House for the personal attention of President Roosevelt.
Sincerely yours,

93

December 9, 1942

Mr. L. Ellmaker
Publisher and Editor
Daily News

Philadelphia, Pennsylvania
Dear Mr. Nilmaker:

This is to tell you that the Treasury Department is deeply appreciative of the splendid contribution
to the Yar Bond program which the Philadelphia Daily
News made in the issue of December 7th. You and all
of the patrictically-inded sponsors who made this
issue possible are certainly to be commended. In any

voluntary continuing operation such as this, it is
only through the united efforts of all Americans,

working together, that a program of such magnitude

can bring us to our autual goal of victory in the war
and sound economy in the peace to follow.

I as sure you will be interested in knowing that
I have sent a copy of your December 7th issue to President Roosevelt for his personal attention.
Again, please accept my sincere thanks for this
outstanding contribution to the Var Bond program.
Sincerely yours,

RSK/mo

94
WAR DEPARTMENT

THE CHIEF OF STAFF
WASHINGTON

December 9, 1942.

The Honorable,

The Secretary of the Treasury.
Dear Mr. Secretary:

Thank you for the record. I had it
played, and "Everybody Every Payday" should be

as inspirational as "Any Bonds Today," which as

I recall reached the peak of popularity several

months ago. It is of interest to note the in-

fluence that what are apparently small matters
can have on the accomplishment of a major project.
We all wish you every success in your
present drive.

Faithfully yours,

95
THE WHITE HOUSE
WASHINGTON

December 9, 1942

Dear Mr. Secretary:

Just a little note to thank
you again for your kindness in sending me

the record of the song written by the two
Army boys.

You will not have to give me

a Victrola after all -- I just remembered
that my niece has onel

Again, many thanks for your
thought of me.

Always sincerely,

Grace

The Honorable,

The Secretary of the Treasury,

Washington, D. C.

96

TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION

DATE December 9,
1942
TO

Secretary Morgenthau

FROM

Mr. Hand

Subject: Analysis of Commercial Bank Subscriptions to
the 1-3/4 Percent Bonds

In accordance with your instructions, preparations
scriptions to the 1-3/4 percent bonds.
On Monday, Mr. Bell sent a telegram to the President

have been made for an analysis of commercial bank sub-

of each of the Federal Reserve Banks asking that he send

air mail special delivery, so that it would reach the

Treasury not later than Monday, December 14. a list showing for each member bank in his District (1) the amount

of subscriptions to the 1-3/4 percent bonds, (2) excess
reserves at the most recent reporting date, and (3) total
assets as of June 30. The data on excess reserves and
total assets were requested for banks not subscribing to
the 1-3/4 percent bonds as well as for those subscribing.
On Tuesday, Chairman Ecoles telephoned Mr. Bell and

said that the Presidents of a number of the Federal Reserve
Banks had told him that they hesitated to release data on
the excess reserves of particular banks as they considered
such data confidential. In accordance with Chairman Ecoles'

request, Mr. Bell agreed that the identification of individ-

ual banks could be stripped from the lists submitted to the
Treasury.

The preparation and submission of the lists requested

will have a two-fold purpose - (1) it will permit the

preparation of a report to you showing which classes of
banks are falling down in their subscriptions to Government
securities, and which are doing their full share, and (2)
it will make readily available in the Federal Reserve Banks
the detailed information necessary to determine which partioular banks are entering inadequate subscriptions.
All of the Federal Reserve Banks may not be able to
meet the Monday deadline and the data (involving three

97

Secretary Morgenthau - 2

items of information for each of about 6,500 banks) will
require considerable processing after it reaches the

Treasury. It will probably be impossible, therefore, to
obtain a formal report before the certificate offering

next week. It ought to be possible, however, to determine
the broad outlines of the problem by then, and the detailed
lists will be available in the Federal Reserve Banks to
implement any policy decided upon.

98
THIRTY THREE LIBERTY STREET
NEW YORK

lease

December 9, 1942

Dear Mr. Secretary:

I have begun today to take up matters

concerning the Bank for International Settlements
with some of the banks here and want to lose no
time in seeking an appointment to pay my respects

to you. My plan is to go to Washington on Sunday
next, December 13, and I should be very grateful
if you could receive me on Monday or Tuesday.

Perhaps you would be kind enough to let your secretary send me word at the Federal Reserve Bank of
New York.

Respectfully yours,

I. stimmitting
Thomas H. McKittrick

The Honorable Henry Morgenthau, Jr.,

Secretary of the Treasury,

Washington, D. C.

hm paw
the . pey 4 per on . owsell 12/16 present

House
CABLE ADDRESS NEW YORK

99

Hotel St.Regis.
Fifth Abenue and Fifty-fifth Street

New Dork December 9, 1942
Mr. Henry Morgenthau
2434 Belmont Road, N.W.,
Washington, D. C.
DearMr. Morfenthan,

May I be permitted to tell you and Mrs. Morgenthau how
greatly I enjoyed the evening spent at your hospitable home
last week.

I feel also that the discussion was fruitful, and may
bring about some practical results. I was particularly
pleased with the news which you gave me privately before I
left your home.

You will be interested to know, I am sure, that I had
what I regard as a satisfactory conversation with Mr. Welles
last Friday. Among other things, I took up with him two major issues: first, that no commitments of any kind should be
made to the Arabs at this time, which would in any way conflict with our interests in Palestine; second, the appoint-

ment of a representative of the State Department under Mr.
Welles' guidance, who would discuss with us now in a prac-

tical way, all the questions concerning the future of Palestine. Mr. Welles agreed to appoint such a person under his
guidance, and I venture to hope that the person appointed
will be sympathetic to, and understanding of, our interests.
I hope that I shall have an opportunity of seeing you
soon again.

I am

With warmest regards to Mrs. Morgenthau and yourself,

Very sincerely yours,
Chaim Weizmann

Thermany

100

TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION

DATE Dec.9,1942

Secretary Morgenthau

TO

Mr. Hoflich

FROM

Subject:

Shipment of Planes and Tanks to the U. S. S. R.

1. During the month of November, 223 planes
(145 fighters, 78 bombers) were sent to the Soviet
Union from the United States. These shipments
exceeded substantially those in September and
October. (See Table B attached)
During the same period, 347 tanks (20
light, 327 medium) were shipped to the Russians.
2.

This sets an all-time high for medium tanks.

-2-

Table A

101

Shipment of Planes and Tanks from the
United States to the U.S.S.R. #

Shipments

during

November, 1942

Cumulative Total
January 1, 1942

to November 30,1942

Planes

Fighters
Bombers

1,191

145

914

78

Total

2,105

223

Tanks

Light
Medium

Total

20

1,571

327

1,764
347

Based on export declarations received.

3,335

-3-

102

Table B

Shipments of Planes and Tanks
to the U.S.S.R.by Months
*

Total

Fighters
January, 1942

Bombers

Planes

Light
Tanks

Medium
Tanks

Total
Tanks

56

4

60

20

22

42

123

115

238

172

38

210

March

68

170

238

159

258

417

April

120

54

174

287

216

503

52

42

94

94

45

139

June

127

104

231

143

206

349

July

123

134

257

151

157

308

August

202

126

328

299

261

560

62

50

112

155

162

317

October

113

37

150

71

72

143

November

145

78

223

20

327

347

1,191

914

2,105

1,571

1,764

3,335

February

May

September

Total 1942 to
November 30

Based on export declarations received.

103
INCOMING CABLEGRAM

Dated December 9. 1942
Rec'd December 9. 1942
From Chungking

Federal Reserve Bank of New York
New York

No. 30

As instructed by the Stabilization Board of China
we have opened a special account on our books in the name of

"Federal Reserve Bank of New York as fiscal agent of the United
States Account No. 2" for yuan 200,000,000 against which please

request Secretary of the Treasury of the United States in
purchasing this amount of yuan at the Board's rate under

Article 3(a) of the Sino-American Stabilization Agreement of
April 1, 1941, and credit an equivalent amount of $10,000,000 into
an account to be opened by you with the Board in the name of

"United States dollar-Chinese yuan Stabilization Fund of China
Special Account". Please confirm and notify the Board accordingly.
(Signed) The Central Bank of China

(Received by telephone from the Federal Reserve Bank of New York,
N. Y., December 10, 1942.)

104

NOT TO BE R&-TRANSMITTED
COPY NO.

13

BRITISH MOST SECRET
U.S. SECRET

OPTEL No. 427

Information received up to 7 A.M., 9th December, 1942.
1. NAVAL

GIBRALTAR. 8th. An Italian Midget U-boat was sighted
by an army sentry and sunk.
2. MILITARY

FRENCH NORTH AFRICA. 7th. Our forces reoccupied high

ground round SL GUESSA. On 8th patrols made contact with enemy at
BIR MEH&RGA (20 miles southwest of TUNIS). No enemy movement seen on

roads running south and southeast from MATEUR and DJED&IDA. Further

reinforcements from ALGERIA are moving up towards the front.
3. AIR OPERATIONS

WESTERN FRONT. 8th. 6 Mosquitos bombed goods trains
and other targets in northwest GERMANY and a factory near HAARLEM,

one missing. 8th/9th. 133 bombers (one missing) attacked TURIN.
Preliminary reports state weather good and attack very successful.
80 bombers (5 missing) sea mining northwest GERMANY and BALTIC.
FRENCH NORTH AFRICA. During nights 5th/6th and 6th/7th

Beaufighters destroyed 11 enemy aircraft attacking BONE. 7th. Fighters
destroyed 5 enemy transport aircraft in area SFAX-GABES. 7th/8th.
10 Wellingtons attacked BIZERTA; 4 Wellingtons hit a destroyer in
SIDI ABDULLA dockyard (40 miles northeast of SFAX). 8th. 3 Beau-

fighters destroyed 4 of 58 enemy transport aircraft 40 miles south
of LAMPEDUSA.

105

December 10, 1942
9:05 a.m.
WAR BONDS

Re: North Carolina Speech
Present: Mr. Kuhn
Mr. Mager

Mrs. Klotz

MR. KUHN: I have two speeches here; one will be
about ten minutes long when we get the ending on it.
That is the one we worked on yesterday. The second
has the same beginning about Doughton and the Victory

Loan, but it is the one that I talked about with Mrs.
Morgenthau and Miss Elliott, and it is twelve minutes,
or a little less. Which do you want?
H.M.JR: I will do the twelve minute one first.
Are they exactly the same up to a certain point?

MR. KUHN: Yes, sir, they are, and I would like you
to read the beginning, because the first three pages

are the same.

H.M.JR: (Reading draft prepared by Mr. Kuhn.)
"I am happy to be speaking tonight in the home State and
in the home community of one of America's outstanding

legislators - my old friend, the Chairman of the Ways

and Means Committee of the House of Representatives,
the Honorable Robert M. Doughton. No other committee

in Congress carries a heavier burden of responsibility,

for this is the committee that originates all tax

legislation.

"Bob Doughton and I have shared many labors together

over these recent eventful years. We at the Treasury
are indeed fortunate to be working in partnership - as

106

-2he himself described it only a moment ago - with a
Chairman
who days.
takes his If responsibilities so seriously
in these grave
Has he seen his speech?

MR. KUHN: Yes, I gathered it was all right or I

would have heard about it.

H.M.JR: "And I think the taxpayers of the country
are equally fortunate in having tax legislation originate
under the leadership of a man like Bob Doughton, who is
so devoted to his country and to the welfare of all its

people. It is his wish, and mine, that tax legislation
shall always be the product of a meeting of minds, and
that it shall always be sound and just and fair to all
the taxpayers." If

MR. KUHN: That is Miss Elliott's suggestion. I
think it is good, and I think it will help with Doughton.
H.M.JR: It is good.
MRS. KLOTZ: That is not true.

MR. KUHN: You mean, "all the taxpayers" is not true?
MRS. KLOTZ: Yes.

MR. KUHN: Well, isn't it his wish? It is not what
he produces.

H.M.JR: I think that is all right; it gives his

wish. It is like everything else; we plant the seed
and it is a good gesture.

MR. KUHN: It is literally true. I think the old

man and you would start from the same premise, but you

won't produce the same kind of tax bill.

H.M.JR: What were you objecting to?

MRS. KLOTZ: Up to this point it is all right. I
get the feeling of laying it on thick. "It is his

wish, and mine--'

107

-3H.M.JR: That is all right. He would admit that.
You can wish for a fair and just world but may not
get it.
MR. KUHN: That is right.
H.M.JR: "In introducing me, Mr. Doughton spoke
generously of the burden that rests upon me nowadays
as Secretary of the Treasury. That burden has been
especially great in this month of December. The

Treasury is now in the midst of borrowing nine billion
dollars in a single month -- a borrowing operation
unequalled in the annals of this or any other Government. In this Victory Loan drive we are depending
upon the voluntary help of almost fifty thousand
professional salesmen drawn from the securities,
banking and insurance fields. "

Why do you use the word "professional" here?
MR. KUHN: Only that that characterizes them.

That is their business. It is not the same as the

War Bond worker, who is an amateur in his field.

H.MR. "It is their job to find the dollars

that lie idle in the hands of individual investors,
corporations and custodians of trust funds; it is
their job to see that those dollars go to work for
their country.' "

(Mr. Mager entered the conference.)

H.M.JR: I like all of this. I haven't a
suggestion.

"I am able to report"-- you wouldn't say, "I can

report"?

MR. KUHN: If I were saying it, I would simply
say, "I am glad to report to the Nation. You remember,
yesterday we tried various things, such as, "I am
delighted to report."

108

-4H.M.JR: We have used the words, "I am glad"
before, haven't we?

MR. KUHN: No, I don't think so.
H.M.JR: Why not say, "I am delighted"?
MR. MAGER: That is what we had originally.

H.M.JR: I would put it back. "I am delighted" I want to put a little pep in it.
"I am delighted to report to the nation that by
today, only the twelfth business day of our drive,
we have raised more than six billion dollars."
You are going to have the exact figure, aren't
you?

MR. KUHN: Sure.

"We are more than two thirds of the
way to success." There is something missing.
H.M.JR:

MR. KUHN: How about, "We have come more than
two-thirds"?

H.M.JR: "We are on our way"-MR. MAGER: Would you like the contrast between

the fact that we have gone over two-thirds of the

way in less than half of the time - the juxtaposition
of the two? That is, it is only the twelfth day, and
fifteen days would represent the halfway mark.
H.M.JR It would be twenty-one days.
MR. KUHN: "We have already come more than two-

thirds of the way."
H.M.JR: We are only going to go twenty-one days.

I am going to stop at the 19th, which is three weeks.

109

-5MRS. KLOTZ: Then you have gone more than half.
MR. MAGER: Why don't you say, "We are more than

two-thirds of the way towards our goal"?

H.M.JR: I will be talking at the end of the

second week. There are going to be three weeks.

I don't want to say "of the way to success"
because it is a success.
MR. KUHN: "Toward our goal" would be more

accurate.

H.M.JR: That is all right. I don't think we

can say the other thing, Mager, because it is a little

complicated. It really gets down to - well, it is
two-thirds of the money.
How is it now?
MR. KUHN: "We have come more than two-thirds

of the way towards our goal.'

H.M.JR: I have been trying to think of something

a little bit different, that we have two-thirds of

the money - two-thirds of the money that we need is
already in the Treasury.
MR. KUHN: It wouldn't be, anyway.

H.M.JR: All right. "This is a magnificent

response, another proof of what a free, enlightened
and democratic people can do when their country cal ls

upon them."

MR. KUHN: That is the only thing that is the

same. That passage is. the same, and from here on

we have an alternative suggestion to the draft that
Mager and I finished last night.
H.M.JR: Kuhn went upstairs and saw the ladies,
and they liked what he had done originally; and now

110

-6-

he has taken a crack at this. I will read from this
now.

"I have wanted to come to an American community

like this ever since I came home a few weeks ago from

a visit to wartime England. I have wanted to share

with my fellow-citizens the mental and moral 'lift'
which that brief but inspiring visit gave me. My

time 'over there' was short, but I saw enough of the

toughness and keenness of our troops, of the grim

efficiency of the Allied forces, of the wonders of
British production and of the vitality and strength

of the British people themselves, to convince me that
our enemies can no longer win this war."
MRS. KLOTZ: You knew that before you went

over. Perhaps you feel now it will be a shorter time,

but you knew that we would win.

H.M.JR: "Whatever trials lie ahead of us in
1943 -- and they are going to be severe -- the Nazis
and the Japanese have failed in their conspiracy
against mankind. We are not only not losing this war,
but I think we can say with confidence that we and

our Allies are at last on the road, the long and
dangerous road, that leads to victory.

"That is the impression that I have brought back

with me from 'over there.' It is reinforced by all
that I can see 'over here. It is not so much the

result of our production figures, great and impressive

as they are, or of the quality of the troops I have

seen in training. The overwhelming fact for our
enemies to remember is the spirit of our people. That

spirit is reflected right here in this room, where all
the leaders of the community have come together with

just one purpose -- to help win the war.
"Great as our war effort has been in 1942, we
are just beginning to fight. We are just beginning
to show what this country of 130 million people can
do when it puts all its heart and mind and muscle

111
7

into a single job. Yet even this beginning of ours

in 1942 has produced outstanding examples of individual

service in many fields of patriotic effort, in this

community and every community.

"Take, for example, the Payroll Savings program in

which you in North Carolina have made such an enviable

record. You will not find it in the headlines, yet in
North Carolina every large factory now has a Payroll

Savings plan. In those factories 99 percent of all the

workers are investing in War Bonds, week in and week

out, by setting aside a part of their regular pay."

I want to stop a minute. What did Englesman say
about his trip down there?
MR. KUHN: The record of North Carolina isn't
good enough to brag about, because of colored labor.

Their State-wide pay roll participation is eighty-seven
percent, which is below average, that is irrespective
of the amount they put aside.

H.M.JR: How can I say ninety-nine?

MR. KUHN: These are in the large factories, the
factories that have five hundred or more employees,
who have ninety percent or more on pay-roll savings,

and their record is very, very good. If you take the

smaller factories, it brings down the average, and there
are no particular war industries in North Carolina.
H.M.JR: Are they going to do anything this week
to bring the thing up?
MR. KUHN: They are having a drive all over the
place. They have no war industries. That place
told you about, the twenty-two percent, was a Marine
Corps air station with two thousand civilian employees,
but the twenty-two percent was just one department
of the station, so that was no good.
I

H.M.JR: "In the nation as a whole there were only
700,000 workers on the Payroll Savings plan a year ago,

112

-8and they were investing only four percent of their pay.
Today more than 24 million workers are setting aside an

average of eight and a half percent of their earnings
every pay day, so that our soldiers and sailors and

airmen can have the weapons they need. That is an
achievement 'over here' that will give encouragement

to our Allies and to our fighting men at battle stations
all over the world.
"Such a record is not-achieved by accident. It

is, as you War Bond workers know, the product of untiring

hard work by more than 300,000 volunteers in thousands

of communities. The oor-management relationship which
makes the Payroll Savings record possible is also not

just an accident. It is the product of intelligent

planning and public spirit on the part of all concerned.

If we had gone to the employers alone or to the workers
alone, we would not now have anything like our present

results, nor could we feel confident of getting thirty
million workers to invest at least ten percent in the

near future. The job has been done by a genuine partnership of labor and management, working together through

thousands of joint committees in almost every section

of the country. It is my firm belief that the good-

will created by the Payroll Savings plan has been felt

all along the production line, and will be felt for

years to come.

"We all want to build a saner _" this isn't at all
the same.

MR. KUHN: Parts of it are the same.

H.M.JR: "We all want to build a saner, sounder,
and better world when this war is over, but we cannot
build such a world by mere aspirations. We can only

build it by deeds. I like to feel that the new relationship between labor and management, which has been shown

so magnificently in this War Savings campaign, is help-

ing to build the post-war world right here and now. I

like to feel that it is setting the pattern for the post-

war years - a pattern of labor and management working

113

-9side by side for their own good and their country's

good.

"For that matter, I think it is not immodest to

claim that the whole War Savings program is, in fact,
one of the foundations upon which we are building the

world of the future. I have always believed, with
Mr. Doughton, in the value of having millions of

Americans become stockholders in their Government
through the ownership of Government securities."

Isn't this in the other?

MR. KUHN: No, this stuff was not.

H.M.JR: "I believe, as he does, that it promotes

a more intelligent interest in the problems of Government
if the people can have this direct and personal stake
in the public management of their affairs. More than
50 million men and women now own a share in America.

More than 50 million Americans now know that they will
get back from their bonds at least as much as they

put in; they know that if they hold the bonds until

maturity they will get $4 back for every $3 they have

lent to their country.

"To my mind, this is a fact of tremendous significance for the troubled years that will follow our victory.
More than that, it will be of vital importance in getting
the wheels of industry to turn once more after we have

made the great change-over from war production to peace

production again. If there are businessmen listening
to me tonight - and I know that many of them are in
this hall - I would remind them that the holders of
War Bonds are their future market. They are the people
who will be buying the products of American industry ten

years from now, when the bonds mature. The bonds that
are bought today represent new homes, new comforts, new

horizons for the common man. They will help to fulfill

the promise of this People's War and the People's Peace

that we are determined to win. They will help to trans-

late 'Freedom From Want' into actuality in thousands of
American connumities and in millions of American homes.

114

- 10 "In the meantime there is much that we on the home

front must do. As I have said, our time of trial is
just beginning. We shall have to meet it with thrift

and self-denial. We shall have to choose between denying ourselves the comforts we want, or denying the boys

at the front - your sons and mine - the tools and the

weapons they need. We shall have to choose also whether

to finance the war by the cruel and costly method of

inflation or by sober saving that will protect our

present and our future. I believe that the fifty million

men and women who have bought War Bonds this year have

already made up their minds to take the right course."
Fifty million Frenchmen can't be wrong. (Laughter)
MR. KUHN: Some of this is in the draft of what we

did yesterday. Also, if we can find that about the

North Carolina hero, we can tack that on the end.
H.M.JR: They are the same down to where?
MR. KUHN: Down to the bottom of page three.

Here is the alternative one.

H.M.JR: "I wanted to come to an American community"?

MR. KUHN: That is right; that begins the alternative

stuff.

H.M.JR: Let me just say the parts that I like as
I go along. Then I will go back and say what parts I
like in Kuhn's speech, and then maybe you can have

another crack at it, you see what I mean?

(Reading draft prepared by Mr. Mager.) "In this

Victory Loan drive and in the War Savings campaign that
has brought us together tonight, you in North Carolina
are doing great things. From the mountain homes in
your western counties to your factories in Winston-Salem

and your shipyards on the coast, this State of yours is
giving a fine example of the spirit that is being shown
by millions upon millions in every State at the start

115

- 11 of our second year of war. I have come here tonight
to pay my tribute of appreciation to the workers and
employers of North Carolina for their part in the War
Savings campaign. But in paying my tribute to them I
want
to pay
to the workers and employers of the
Unitedalso
States
as aitwhole.'

I like that so far.
"In this community and in every community the
first year of war has produced outstanding examples of

individual service-in some field of patriotic effort.
And not the least of these is the War Bond campaign.

"Take, for example, the payroll savings program in
which you in North Carolina have made such an enviable

record. You will not find it in the headlines, yet
in North Carolina every large factory now has a payroll
savings plan. In those factories 99 percent of all
the workers are investing in War Bonds week in and week

out.

"We can better appreciate the truly magnificent
achievement of this democratic, voluntary program by

examining what has been accomplished during the past
year. Just twelve months ago there were only 700,000

workers in the entire country on the payroll savings
plan, and these workers were investing only four percent
of their pay in bonds. Today, 24 million workers are
setting aside an average of eight and one-half percent
of their pay every pay day. And if this steady growth
continues, 30 million workers will soon be investing
at least ten percent of their pay to help win the war.

This is indeed a tribute to the patriotism and intelli-

gence of the American people.

I like that.
MR. KUHN: That is in the other one.
H.M.JR:

"We could never have achieved this success

without the untiring effort of our 300,000 workers

116

- 12 who have been the unsung heroes in this grand enterprise.
Day in and day out our labor-management committees, of
which there are many thousands in the nation today,
have also contributed immeasurably to the success of

the effort.

You don't want to say that they are not only contributing to the War Bond program, but also to production?
MR. KUHN: You mean that the effects of this are
felt?
H.M.JR: No, because many of these labor men are
organized by WPB.

MR. KUHN: Some of them--

H.M.JR: Do you mind making a note to simply say,

"Day in and day out labor-management committees are

not only contributing to the success of this effort,
but also contributing daily to the production in the
factories"? What I am saying is true, you see. In

other words, these labor-management committees are not

organized just to help War Bonds; the primary thing is
to do production.

MR. KUHN: As I understand it, about two thousand
of them are Nelson's committees, using them for our
purposes also, but there are also thousands which have
been formed for the War Bond drive alone.

H.M.JR: But isn't it true that every one of
Nelson's committees are helping us?

MR. KUHN: Yes, it is worth putting in there.
H.M.JR: The way I would feel if I were Nelson
and had done a good job is that I would be sore if we

talked about Iabor-management committees as though the

only thing they were doing was selling war bonds. It

is a little thing, but I think it is an important thing.

117

- 13 -

MR. KUHN: I think that is right.
H.M.JR: "The result is just one example of what
can be done when labor and management work together
in harmony."

Couldn't we leave out "in harmony," and just say,
"work together"? What do you think, Mager?
MR. MAGER: I don't know; I like "harmony."

H.M.JR: All right, so do I. (Laughter)
"I like to feel that this new labor-management
partnership sets a pattern for the post-war years - a
pattern of labor and industry working side by side for
their own good and for their country's good.

"Important though the payroll savings plan is, it

represents only one phase of our War Savings campaign.
Millions of farmers, self-employed, and businessmen have

put their savings at their country's disposal.

"All in all 50 million men and women invested in
War Bonds during the past year.

"To my mind the significance of this can hardly be
overestimated. It means, as Mr. Doughton has said,
that more than 50 million Americans now have a direct
and personal stake in the finances of their Government.
It means that their savings are being protected until
such time as they are needed to keep the wheels of peacetime industry turning once more."

I don't like that; I don't like the way it is put.
"It means that habits of thrift are taking hold of
the American people, with results that will help to win
the war and the peace to come."

There is something in Kuhn's on that which I like
better. Do you mind just questioning that part here,
this paragraph?

118

- 14 "We on the home front have to make this decision:
shall we deny ourselves the comforts we would like to

have, or shall we deny the boys at the front - your

sons and mine - the tools and the weapons they need?
We have to choose also whether we shall finance the

war by the cruel and costly method of inflation or by

sober thrift that will protect our present and our
future. The steep road of self-denial will be the

shortest road to victory. I believe that the fifty

million Americans who have bought War Bonds this year

have already made up their minds to take the right
course.

"I am convinced that we on the home front bver

here' will prove worthy of our fighting men. On the
production lines, in mines and fields and factories, we

are giving an increasingly good account of ourselves. We
have living evidence in this community and in thousands

of others all over the land of a willingness to work, and
save, and sacrifice." If

I am not so sure of this last part, pages seven
and eight. Let me just get back to Kuhn a minute.
Down to there I like it.
Ferdie, I know it is going to break your heart

in a minor way--

MR. KUHN: No, I know what you are going to say.

H.M.JR: But I just don't think I am going to do
the British thing.
MR. KUHN: We can bring in some of the other stuff

and leave the British thing out. I just think it points
it up.

M.JR: I have marked the part I like in Kuhn's.
I am on page five. What I like is, "Great as our war
effort has been in 1942, we are just beginning to fight.

We are just beginning to show what this country of 130
million people can do when it puts all its heart and mind

119

- 15 and muscle into a single job. Yet even this beginning
of ours in 1942 has produced outstanding examples of

individual service in many fields of patriotic effort,
in this community and every community."
-

You have said that "individual" thing there, haven't
you, Mager? It is in your draft without that introduction.

Anyway, what you have done about the English thing -

everything you are saying is pointing up to this.
Now, what I am saying is, I would like to leave
out England - I mean, you lead up - "That spirit is
reflected right here in this room." " Then you say, "Great
as our war effort has been in 1942 _" I would like to
say it without having the introduction-MR. KUHN: It can be done.

H.M.JR: I would like to hear what Mager thinks

about that.

MR. MAGER: That sounds all right to me.

H.M.JR: What Kuhn has said in his beginning -

he has taken all this to lead up to this. Isn't this

the point you are trying to drive home? Am I right or

wrong?

MR. KUHN: That is right; that is the purpose.

H.M.JR: All right, I would like to say the point

without giving the - "Take, for example, the Payroll

Savings program in which you in North Carolina have
made such an enviable record."
MR. KUHN: Payroll Savings is the same up to page
seven on both drafts.

H.M.JR: I like what he said. Then I come here,
at the bottom of page seven of Kuhn's, "The job has been
done by a genuine partnership of labor and management,
working together through thousands of joint committees

120

- 16 -

in almost every section of the country. It is my firm

belief that the good-will created by the Payroll Savings
plan has been felt all along the production line, and
will be felt for years to come.
Now, that thing could be combined with the other
sentence. I have marked it here in red.
MR. KUHN: Bring in the Nelson idea?

H.M.JR: Yes, Nelson, and then this - maybe it is
saying too much, to say that the payroll thing is

helping the production.

MR. KUHN: I think that is true. William Green
told that to Houghteling the other day.

H.M.JR: If we can get away with it, O.K. I think
we can; I think it is the thing that labor is proudest
of.

MR. KUHN: Green told Houghteling that he gets
a report every week of examples of production that were
made possible by good relations established by the War
Bond people.

H.M. JR: Isn't this in the other draft here, "I

like to feel that the new relationship between labor

and management, which has been shown so magnificently

in this War Savings campaign, is helping to build the
post-war world right here and now"?
MR. KUHN: One sentence of it was in.

H.M.JR: I am marking this.
MR. KUHN: You mean that is O.K.?

H.M.JR: I would like the two of you to get together.
I don't think you talked about the post-war in your -

what we are doing now.

MR. KUHN: There is one sentence saying, "I like
to feel that this new labor-management partnership sets

121

- 17 -

a pattern for the post-war years - a pattern of labor
and industry working side by side for their own good
and for their country's good.'
"

You don't say the post-war is something you can
build by wishing, it is something you have to show by

action, by deeds. I think that points it up.
to

H.M.JR: Anyway, I am marking it here. Then I go

the bottom of page nine. "To my mind, this is a fact

of tremendous significance for the troubled years

that will follow our victory. More than that, it will

be of vital importance in getting the wheels of industry

to turn once more after we have made the great change-over

from war production to peace production again." I have

marked that.

MR. KUHN: How about the "businessmen"?

H.M.JR: I am not 'sure of it, but I have marked it.
MR. KUHN: That means that you like it; and if we
can work it in, we should?

H.M.JR: Yes, this part I like, but I am not sure

of it. I would like to put it this way. I like Mager's

pretty much the way it is down to the last two pages.

I want to hang on to this. Then, there are certain

things in here which I don't know whether you can weave

into it or not, but I thought you might have another try
at it this morning. I would like some quotation, if there
is something we could use to close with--

MR. KUHN: In North Carolina - there will be.

H.M.JR: If possible.
MR. MAGER: We can get in touch with Connor, who

is the archivist over here, and he knows more about
North Carolina history than any man. He has written
about it extensively.
H.M.JR: Who is Connor?

122

- 18 MR. MAGER: The Federal Archivist.

H.M.JR: I like it pretty much the way it is

down to the last two pages. What I am suggesting is
that the two of you work together this morning and see
what you can do on another draft. We have gone into
some of the things, which are marked in red here. Then

right after lunch I will get together with you again.

That gives you all morning. Do you mind having another
try?

MR. MAGER: Oh, no.

H.M. JR: But the English thing, I am afraid of it.
MR. KUHN: It is not essential.
MR. MAGER: I want to raise a question about "If
there are businessmen listening to me tonight - and I

know that many of them are in this hall _" isn't it
possible to read in that, perhaps, an implication if

you have that kind of mind, that the businessmen have

to be singled out to understand the potentialities for

good in the War Savings program as compared with others.

H.M.JR: That is a good point.
MR. KUHN: Could you have dealt with labor in one

passage? Say, "The effects of this are not only good
for labor, but they are good for businessmen. The

businessmen are the ones who neglect War Savings more

than any other group. They brush it off, and they talk

about compulsory savings.

H.M.JR: I had a different reaction. I don't know

if anybody - "If there are any businessmen listening' let me put it once more so you fellows don't go out of
here feeling - I feel that up to the last two pages what
Mager has done - unless I have said, to introduce some-

thing, it is all right. I would like you to have another

try, checking those things that I marked in red. Then,
after lunch we will start again. Harold Thomas can wait.

123

- 19 -

I have an appointment at three o'clock. I figure that

if we start right after lunch we will stick with it
until it is finished. On the other hand, Ferdie, I

want you to feel free to say, "Mr. Morgenthau, I would

like to point out something in the first six pages
that I think can be improved."

MR. KUHN: This is a joint product.
MR. MAGER: It is indistinguishable; you can't

distinguish mine from Kuhn's.

H.M.JR: If either of you feels that the first six
pages - that there is something that should be improved,
please do it.
All I am saying is, have one more try, and please

don't take anything that I have said today as final.
Please use your own initiative, both of you. How is

that, is that fair?

MR. KUHN: Yes.

12/10/+2
9050124
I am happy to be speaking tonight in the home
State and in the home community of one of America's

outstanding legislators -- my old friend, the Chairfian
of the Ways and Means Committee of the House of

Representatives, the Honorable Robert M. Doughton.

No other committee in Congress carries a heavier burden

of responsibility, for this is the committee that

originates all tax legislation.
Bob Doughton and I have shared many labors together

over these recent eventful years. We at the Treasury

are indeed fortunate to be working in partnership -as he himself described it only a moment ago -- with
a Chairman who takes his responsibilities so seriously

in these grave days. And I think the taxpayers of the

country are equally fortunate in having tax legislation
D-D1

-2-

125

originate under the leadership of a man like Bob Doughton,

who is so devoted to his country and to the welfare of

all its people. It is his wish, and mine, that tax
legislation shall always be the product of a meeting
of minds, and that it shall always be sound and just

and fair to all the taxpayers.
In introducing me, Mr. Doughton spoke generously
of the burden that rests upon me nowadays as Secretary

of the Treasury. That burden has been especially great
in this month of December. The Treasury is now in the

midst of borrowing nine billion dollars in a single
month -- a borrowing operation unequalled in the annals

of this or any other Government. In this Victory Loan
drive we are depending upon the voluntary help of almost
fifty thousand professional salesmen drawn from the
1

-3-

126

securities, banking and insurance fields. It is their
job to find the dollars that lie idle in the hands of
individual investors, corporations and custodians of

trust funds; it is their job to see that those dollars
go to work for their country.
I am able to report to the nation that by today,
only the twelfth business day of our drive, we have

raised more than six billion dollars. We are more than

two thirds of the way to success. This is a magnificent
response, another proof of what a free, enlightened and
democratic people can do when their country calls upon them.
I have wanted to come to an American community like

this ever since I came home a few weeks ago from a visit

to wartime England. I have wanted to share with my fellow-

citizens the mental and moral "lift" which that brief but
D-D1

-4-

127

inspiring visit gave me. My time "over there" was short,
but I saw enough of the toughness and keenness of our

troops, of the grim efficiency of the Allied forces, of
the wonders of British production and of the vitality
and strength of the British people themselves, to convince
me that our enemies can no longer win this war.

Whatever trials lie ahead of us in 1943 -- and they
are going to be severe -- the Nazis and the Japanese have

failed in their conspiracy against mankind. We are not

only not losing this war, but I think we can say with
confidence that we and our Allies are at last on the road,
the long and dangerous road, that leads to victory.
That is the impression that I have brought back with

me from "over there." It is reinforced by all that I can
see "over here.' It is not so much the result of our

128

-5-

production figures, great and impressive as they are,

or of the quality of the troops I have seen in training.
The overwhelming fact for our enemies to remember is

the spirit of our people. That spirit is reflected
right here in this room, where all the leaders of the
community have come together with just one purpose --

to help win the war.

this year
however,
Great as our war effort has been in 1942, we are
A

just beginning to fight. We are just beginning to show
what this country of 130 million people can do when it
puts all its heart and mind and muscle into a single job.
in 1942
Yet even this beginning of ours 1942 has produced

patriotic

outstanding examples of individual service in many fields,

of patriotic effort, in this community and every community.
Take, for example, the Payroll Savings program in
D-I D1

-6-

129

which you in North Carolina have made such an enviable

record. You will not find it in the headlines, yet
in North Carolina every large factory now has a Payroll

Savings plan. In those factories 99 percent of all the
workers are investing in War Bonds, week in and week

out, by setting aside a part of their regular pay.
In the nation as a whole there were only 700,000
workers on the Payroll Savings plan a year ago, and they

were investing only four percent of their pay. Today
more than 24 million workers are setting aside an

average of eight and a half percent of their earnings
every pay day, , so that our soldiers and sailors and airmen
can have the weapons they need. That is an achievement

"over here" that will give encouragement to our Allies

and to our fighting men at battle stations all over the
world.

130

-7Such a record is not achieved by accident. It
is, as you War Bond workers know, the product of untiring
hard work by more that 300,000 volunteers in thousands
of communities. The labor-management relationship

which makes the Payroll Savings record possible is

also not just an accident. It is the product of
intelligent planning and public spirit on the part of
all concerned. If we had gone to the employers alone
or to the workers alone, we would not now have anything

like our present results, nor could we feel confident

of getting thirty million workers to invest at least
ten percent in the near future. The job has been done
by a genuine partnership of labor and management, working

together through thousands of joint committees in almost

every section of the country. It is my firm belief that
D-D
1

Insurec

-8-

131

the good-will created by the Payroll Savings plan has

been felt all along the production line, and will be
felt for years to come.
We all want to build a saner, sounder and better

world when this war is over but we cannot build such
a world by more aspirations. We can only build it by

deeds. I like to feel that the new relationship between
labor and management, which has been shown so magnificently

in this War Savings campaign, is helping to build the

post-war world right here and now. I like to feel that
it is setting the pattern for the post-war years -- a
pattern of labor and management working side by side

for their own good and their country's good.

For that matter, I think it is not immodest to
claim that the whole War Savings program is, in fact,
1

-9- -

132

one of the foundations upon which we are building the
18

world of the future. I have always believed, with
Mr. Doughton, in the value of having millions of Americans
become stockholders in their Government through the

ownership of Government securities. I believe, as he

does, that it promotes a more intelligent interest in
the problems of Government if the people can have this
direct and personal stake in the public management of

their country
their affairs More than 50 million mon and women non
of

own a share in America. More than 50 million Americans

now know that they will get back from their bonds at

least as much as they put in; they know that if they

hold the bonds until maturity they will get $4 back for
every $3 they have-lent to their country
To my mind, this is a fact of tremendous significance

for the troubled years that will follow our victory. More

133

- 10 -

than that will be of vital importance in getting
the wheels of industry to turn once more after we have
made the great change-over from war production to

peace production again. If there are businessmen

listening to me tonight -- and I know that many of them

are in this hall -- I would romind them that the holders
9 The ho eders of was Brade

of War Bonde are their future market. hey are
the people
^
who will be buying the products of American industry ten
years from now, when the bonds mature. The bonds that
are bought today represent new homes, new comforts, new

horizons for the common man. They will help to fulfill
the promise of this People's War and the People's Peace

give body and to the ideal of
that we are determined to win. They will help to Franclate
"Freedom From Want" into equality in thousands of
American communities and in millions of American homes.

D-D1

- 11 -

134

In the meantime there is much that we on the home

front must do. As I have said, our time of trial is
just beginning. We shall have to meet it with thrift
and self-denial. We shall have to choose between denying
ourselves the comforts we want, or denying the boys at

the front -- your sons and mine -- the tools and the weapons
they need. We shall have to choose also whether to

finance the war by the cruel and costly method of inflation
or by sober saving that will protect our present and our

future. I believe that the fifty million men and women
who have bought War Bonds this year have already made

up their minds to take the right course.

1

(Mager)

Draft
I am happy to be speaking tonight in the home

135

State and in the home community of one of America's

outstanding legislators -- my old friend, the Chairman
of the Ways and Means Committee of the House of

Representatives, the Honorable Robert M. Doughton.

No other committee in Congress carries a heavier burden

of responsibility, for this is the committee that

originates all tax legislation.
Bob Doughton and I have shared many labors together

over these recent eventful years. We at the Treasury

are indeed fortunate to be working in partnership -as he himself described it only a moment ago -- with
a Chairman who takes his responsibilities so seriously

in these grave days. And I think the taxpayers of the

country are equally fortunate in having tax legislation

-2-

136

originate under the leadership of a man like Bob Doughton,

who is so devoted to his country and to the welfare of

all its people. It is his wish, and mine, that tax
legislation shall always be the product of a meeting
of minds, and that it shall always be sound and just

and fair to all the taxpayers.
In introducing me, Mr. Doughton spoke generously
of the burden that rests upon me nowadays as Secretary

of the Treasury. That burden has been especially great
in this month of December. The Treasury is now in the

midst of borrowing nine billion dollars in a single
month -- a borrowing operation unequalled in the annals

of this or any other Government. In this Victory Loan
drive we are depending upon the voluntary help of almost
fifty thousand professional salesmen drawn from the

137

-3 securities, banking and insurance fields. It is their
job to find the dollars that lie idle in the hands of
individual investors, corporations and custodians of

trust funds; it is their job to see that those dollars
go to work for their country.

I am able to report to the nation that by today,
only the twelfth business day of our drive, we have
raised more than six billion dollars. We are more than

two thirds of the way to success. This is a magnificent
response, another proof of what a free, enlightened and
democratic people can do when their country calls upon them.

In this Victory Loan drive and in the War Savings
campaign that has brought us together tonight, you in
North Carolina are doing great things. From the mountain
home s in your western counties to your factories in
D-D

138

-4Winston-Salem and your shipyards on the coast, this State

of yours is giving a fine example of the spirit that is
being shown by millions upon millions in every State.at
the start of our second year of war. I have come here
tonight to pay my tribute of appreciation to the workers
and employers of North Carolina for their part in the
War Savings campaign. But in paying my tribute to them

I want also to pay it to the workers and employers of
the United States as a whole.

In this community and in every community the first
year of war has produced outstanding examples of individual

service in some field of patriotic effort. And not the
least of these is the War Bond campaign.

Take, for example, the payroll savings program in
which you in North Carolina have made such an enviable
D*D

a5-

139

record. You will not find it in the headlines, yet
in North Carolina every large factory now has a payroll

savings plan. In those factories 99 percent of all the
workers are investing in War Bends week in and week out.

We can better appreciate the truly magnificent
achievement of this democratic, voluntary program by
examining what has been accomplished during the past

year. Just twelve months ago there were only 700,000

workers in the entire country on the payroll savings
plan, and these workers were investing only four percent

of their pay in bonds. Today, 24 million workers are
setting aside an average of eight and one-half percent

of their pay every pay day. And if this steady growth
continues, 30 million workers will soon be investing

at least ten percent of their pay to help win the war.
This is indeed a tribute to the patriotism and intelligence
-D

of the American people. .

140

-6-

We could never have achieved this success without

the untiring effort of our 300,000 volunteer workers
who have been the unsung heroes in this grand enterprise.
Day in and day out our labor-management committees, of

which there are many thousands in the nation today, have

also contributed immeasurably to the success of the effort.
The result is just one example of what can be done when
labor and management work together in harmony. I like

to feel that this new labor-management partnership sets

a pattern for the post-war years -- a pattern of labor
and industry working side by side for their own good

and for their country's good.

Important though the payroll savings plan is, it
represents only one phase of our War Savings campaign.

Millions of farmers, self-employed, and businessmen have

put their savings at their country's disposal.
68

-7-

141

All in all 50 million men and women invested in War
Bonds during the past year.

To my mind the significance of this can hardly be
overestimated. It means, as Mr. Doughton has said,
that more than 50 million Americans now have a direct

and personal stake in the finances of their Government.

It means that their savings are being protected until
such time as they are needed to keep the wheels of
peace-time industry turning once more. V It means that

habits of thrift are taking hold of the American people,
with results that will help to win the war and the peace
to come.

We on the home front have to make this decision:

shall we deny ourselves the comforts we would like to

have, or shall we deny the boys at the front -- your
D-D

-8-

142

sons and mine -- the tools and the weapons they need?

We have to choose also whether we shall finance the war

by the cruel and costly method of inflation or by sober

thrift that will protect our present and our future. The
steep road of self-denial will be the shortest road to

victory. I believe that the fifty million Americans who
have bought War Bonds this year have already made up

their minds to take the right course.
I am convinced that we on the home front "over here"

will prove worthy of our fighting men. On the production

lines, in mines and fields and factories, we are giving
an increasingly good account of ourselves. We have

living evidence in this community and in thousands of

others all over the land of a willingness to work, and
save, and sacrifice.

SUGGESTED DRAFT OF MR. DOUGHTON'S
INTRODUCTION AT WINSTON-SALEM.

heapt 1

approx

12/10/42

Tonight the people of North Carolina are honored

to be speaking to the whole country on this nationwide
radio program. We are only one State out of many, but

we are doing our full share in the battle on the home
front "over here". We in North Carolina have known from

the very beginning what this war is all about. I remember
A statement that Secretary Morgenthau made many months

ago "War is never cheap, but it's a million times cheaper

to win than to lose". That is the way we in North Carolina
feel about the cost of fighting and winning this war.
I feel especially pleased and honored tonight to have
Secretary Morgenthau here with us in North Carolina. The
partners
Secretary and I are old friends and colleagues in a common
cause. Year after year we have worked together on tax

legislation and on other aspects of our government financing.

144

-2There is no more devoted public servant and no better
friend of all the American people than Secretary Morgenthau,

who is now shouldering the greatest financing burden in
history.

The voluntary War Savings program that brings us

together tonight has one aspect above all others which

appeals to me. War Savings calls for thrift, and thrift
calls for economy in our everyday lives. As you know,
I have advocated economy in government year in and year out

since I first came to Congress 34 years ago. When millions
of people own government bonds -- I believe the number is
now more than 50 million -- those people are bound to take

a more alert interest in economy in government in the years
to come.

145

-3The Secretary has recently come back from a visit to

England. He has not yet spoken publicly of the things

he saw "over there", and I hope that in his talk tonight
he will share with us some of the impressions he has
brought back from the front line of f reedom. And now

it is my great pleasure to introduce the Secretary of
the Treasury, Henry Morgenthau, Jr.

D-A

Delivered before Committee
on Thursday, Dec.10, 1942.

146

not Relanced Press

to

STATEMENT
OF

SECRETARY MORGENTHAU

Before the House Committee on Appropriations

Mr. Chairman, I appreciate the privilege of appearing
before your Committee today for the purpose of discussing
the Treasury Department's appropriation estimates for the
fiscal year 1944.

As in previous years, it has been the Treasury's

objective, in preparing its estimates, to reduce our
requirements to the minimum amounts regarded as necessary

for the efficient performance of the essential work of the
Department.

The War has greatly increased the responsibilities
of the Treasury, requiring the expansion of many of its
regular functions as well as the assumption of new tasks.

147

-2Because of these additional burdens, we have been compelled

to request increases for certain activities, including
5,530,000
particularly the Bureau of Internal Revenue, the Bureau of
1,724,000

1,400,000

the Public Debt, the Office of the Treasurer of the United
319,000

States, and the Division of Disbursement.

The functions of the Treasury include the rendering

of service to practically the entire Federal establishment
in such operations as accounting, procurement, disbursing,

and the clearance of checks. It is inevitable, therefore,
that the War-time expansion of Governmental activities should

be reflected in the volume of these services which the Treasury
is being called upon to perform, necessitating the appropriation

of additional funds for the bureaus responsible for the
work.

148

-3The Treasury's 1944 estimates of annual appropriations
aggregate about $187,328,000, of which $156,213,000

represents the Department's operating expenses, and the
balance of $31,115,000 represents its non-operating expenses.
The 1944 requirements for operating expenses, compared with

similar appropriations available this year and aggregating
$148,853,000, show a net increase of about $7,360,000.

With respect to certain units of the Department,
including some of our larger bureaus, the 1944 estimates
either show a reduction or reflect no increase as compared

with the current year's appropriation.

149

-4The estimates which reflect a net decrease as compared with

the 1943 appropriations include those submitted for the
Foreign-Owned Property Control, the Office of the Comptroller

of the Currency, the Bureau of Narcotics, the Bureau of
Engraving and Printing, and the Secret Service. The estimates
which reflect no change as compared with the current year's

appropriation, with allowance for non-recurring items,
include those submitted by the Secretary's Office, the
Division of Personnel, the Bureau of Customs, the Procurement

Division, and the White House Police.
For the past seven fiscal years funds have been made

available to the Bureau of Internal Revenue to provide
salaries and expenses for refunding processing and related
taxes.

150

-5No estimate is being submitted under this heading for 1944,
for the reason that the Bureau of Internal Revenue expects

to complete all administrative work in connection with
these refunds by the close of the current fiscal year.
PROCESSING TAX BOARD OF REVIEW

Since July 1, 1939, an appropriation has been made

available each year for the salaries and expenses of the
United States Processing Tax Board of Review. Under the
provisions of the Revenue Act of 1942, the Processing Tax
Board was abolished, effective December 31, 1942, and its

functions transferred to The Tax Court of the United States.
Accordingly, no funds for the Board have been included in
the Treasury's 1944 budget.

151

-6BUREAU OF INTERNAL REVENUE

The estimates now before your Committee include

$95,094,000 for "Collecting the Internal Revenue". This

figure, it should be explained, does not represent the full
amount to be required by the Bureau of Internal Revenue

during the fiscal year 1944. The Revenue Act of 1942,
approved October 21, 1942, will, as you know, substantially
increase the work of the Bureau. With the exception of

providing for the processing of 81 million additional
income tax returns, due to lowered exemption features of
the new legislation, the estimate now before your Committee
makes no provision for any of the new or unusual features
contained in the 1942 Revenue Act.

152

-7The extent to which the Bureau's operations will be increased
under the Act cannot be determined with any degree of accuracy

until all the details of procedure have been worked out.
This procedure is now being developed, however, and it is

expected that within the next two months the Bureau will
have assembled sufficient information from which to prepare

a supplemental appropriation estimate reflecting those
additional requirements for 1944 which have not been included
in the estimate now before your Committee.
In the Second Supplemental National Defense Appropriation

Act for the fiscal year 1943, Congress appropriated $8,000,000
to enable the Bureau of Internal Revenue to handle during the

current year the increased volume of income tax returns to be
filed under the lowered exemptions contained in the 1942 Revenue
Act.

153

-8This supplemental appropriation was sufficient to meet these

specific additional requirements for the remainder of this
year. For 1944, however, it has been necessary to request

$4,830,000 additional, in order to project the cost on a
full-year basis. The remainder of the increase now being
requested for the Bureau of Internal Revenue, or approximately

$700,000, is made up principally of funds required for within- grade salary adjustments as provided by the Ramspeck-Mead

Act, and to meet increased rental costs due to the vacating
of space in certain Federal buildings to meet the requirements
of the Army and Navy.

154

-9BUREAU OF THE PUBLIC DEBT

The estimated requirements of the Bureau of the Public

Debt for 1944, exclusive of the indefinite appropriation
"Expenses of Loans", are about $1,400,000 in excess of its

1943 annual appropriation. This increase is necessary in
order to provide additional personnel required to handle the
increased proportion of bond work chargeable to the Bureau's

annual appropriation. Since the indefinite appropriation,
"Expenses of Loans", is restricted to the handling of bond

transactions up to the close of the fiscal year following
the year in which the bonds were issued, it follows naturally
that from year to year the funds required under the annual

definite appropriation will increase.

155

- 10 EXPENSES OF LOANS

For the current fiscal year, under existing legislative
authority, expenditures from the indefinite appropriation
"Expenses of Loans" are limited to $45,000,000. For the
fiscal year 1944, the Bureau of the Budget has approved a

limitation in the amount of $58,600,000. This increase
includes additional allotments to the Bureau of the Public
Debt and the Office of the Treasurer of the United States,
and will also provide for increased reimbursements to Federal
Reserve Banks and the Post Office Department. These increases,

which total $16,300,000, are partially offset by a reduction
of $2,700,000 in the 1944 allotment to the War Savings Staff

as compared with the Staff's allotment for the current year,
of which $119,000 represents non-recurring expenditures for
equipment.

156

- 11 The additional requirements of the Bureau of the Public Debt

and the Office of the Treasurer of the United States, and
the provision for increased reimbursement of Federal Reserve
Banks and the Post Office Department, are due to the greatly
increased volume of work anticipated in connection with the
issue and redemption of War Savings Bonds and other securities,
Funds requested to reimburse Federal Reserve Banks

include $1,134,000 for the Victory Fund Committees. Only a
short time has elapsed since these Committees were established,

and the current Victory Loan drive is the first intensive

activity of these groups. It is not possible, therefore, to
estimate at this time the full amount to be required in 1944
for their operations.

157

- 12 The work of these Committees is of tremendous importance in

our bond-sales campaign, and while additional funds will
probably be required, we would prefer to wait until we are
able more definitely to determine our needs.

With respect to the net reduction of $2,581,000 in the

allotment to the War Savings Staff, this will result in
corresponding curtailment of the Treasury's program for
promoting the sale of War Savings Bonds. It is hoped, however,

that this curtailment can be accomplished without seriously
affecting the Government's War Savings program, but if our

experience during the early months of the coming fiscal year
should indicate the necessity for accelerating the War Savings
canpaign, the Department will at that time submit the facts

to the Bureau of the Budget for its consideration.

158

- 13 OFFICE OF THE TREASURER OF THE UNITED STATES

The annual appropriation for the Office of the Treasurer
of the United States is estimated for 1944 in the amount of
$3,424,000, representing an increase of more than $1,640,000

over the amount available for 1943. This substantial increase

is due primarily to the vast expansion in the work of the
Accounting Division of the Treasurer's Office, which handles
the clearance of all checks drawn on the Treasurer. The
number of such checks paid during the fiscal year 1942 was

approximately 79 million, as compared with 46 million paid
during the preceding year. Check clearances during the

current year will exceed 138 million, and for the fiscal
year 1944 it is estimated that not less than 155 million
checks will be paid.

159

- 14 To cope with this great increase in check payments, together

with the additional work to be performed in connection with
the handling of an increased volume of securities and the
maintenance of the necessary accounts, the Treasurer of the

United States will require, under his regular appropriation,
the services of nearly one thousand additional employees over
the force provided for 1943.
DIVISION OF DISBURSEMENT

The Division of Disbursement is requesting an increase
of about $320,000 as compared with its current year's

appropriation. This expansion is due principally to
additional work incident to the sale of War Savings Bonds
and to increased Social Security payments and disbursements
for the War Establishments.

160

- 15 SALARY ADJUSTMENTS

Within-grade salary advancements under the Ramspeck-

Mead Act of August 1, 1941, together with legislative changes

in the salary rates of certain grades in the custodial service,
have made it necessary to request additional funds for some
bureaus. Such requests have been made only in those cases

where it was felt that the bureaus would be unable to absorb
the additional cost within the amounts currently appropriated.

In all other cases the bureaus are being required to effect
the salary adjustments from savings.

161

- 16 REFUNDS OF INTERNAL REVENUE AND CUSTOMS COLLECTIONS

In connection with the 1944 estimates for "Refunding
Internal Revenue Collections" and "Refunds and Draw-backs,
Customs", the Bureau of the Budget has approved the Treasury's
recommendation that these two funds be changed from annual

definite to annual indefinite appropriations.
Officials of the Bureau of Internal Revenue and the
Bureau of Customs will later appear before your Committee

to explain in detail the necessity for the change.

162

- 17 In the case of Customs refunds, the proposed change will not
only enable the Cus toms Service to serve more conveniently

and more promptly the demands of the public, but it will
have the further advantage of eliminating the existing
necessity for obtaining deficiency appropriations each year,

due to the inability of Customs officials to estimate months
in advance the amounts which they will ultimately be called
upon to refund.

In the case of Internal Revenue refunds of taxes, the
proposed change is absolutely essential to the successful
management of the withholding provisions of the Victory Tax.
Prompt refunds must be made to taxpayers in the low income
groups where the amounts collected through withholding are
in excess of the amounts owed.

163

- 18 The total amount required cannot be estimated in advance, and

if the refunds are required to be made from a definite
appropriation, as at present, many thousands of taxpayers
in the low-income groups would have to wait too long. These

people are often in dire need of even small amounts. I urge
strongly, therefore, the approval by your Committee of the
Department's proposal to change these two funds from an

annual definite to an annual indefinite basis.
INTEREST ON THE PUBLIC DEBT

With respect to interest on the public debt, the
requirements for 1944, on the basis of the information now

available, will be not less than 3 billion dollars. A more
definite estimate will be contained in the 1944 budget when
formally submitted.

164

- 19 This concludes my general statement, Mr. Chairman.

I have given you the outstanding items contained in
the Treasury's 1944 estimates. The heads of the several
bureaus and divisions of the Department will appear before

your Committee to present the detailed justification of

their estimates. If you should desire any additional
information, I shall be pleased to see that it is promptly
furnished.

165

December 10, 1942

Luncheon in Secretary Morgenthau's Office
December 10, 1942
1:00 P.M.

Present: Secretary Morgenthau
Minister of Iran, Mohammed Schayesteh

Minister of Finance for Iran, Allah Yar Saled
Mr. Murray, Near East Division of State Dept.
Mr. D. W. Bell
Mr. White

During the luncheon the Minister of Finance explained to the

Secretary the difficult situation which existed in Iran. The
presence of foreign troops -- Russian, British and American -

and many refugees had greatly aggravated the food problem, partly
because of the greater consumption of food by foreign troops,
partly because of the decrease in agricultural production due to
uncertainty and fear, and partly because of increased hoarding

due to fear of famine and rising prices. He stated that the

situation in Iran was desperate and they had to have some wheat
and he was hoping the United States Government would make it possible for them to import some wheat.
The Economic Mission, under the leadership of Dr. Millspaugh,

was soon to leave for Iran but the Minister of Finance felt it

would be very difficult for Millspaugh to accomplish much there
unless he was able to demonstrate he could also get wheat from
the United States.

The Minister (Mohammed Scheyesteh) explained to the

Secretary that their arrangement with Great Britain was quite
unsatisfactory and complained of Britain's attitude toward Iran,
He stated the monetary arrangements which Britain had "forced"
on them were greatly to Iran's disadvantage, both as to the rate
of exchange required and as to other terms.

Mr. Murray described the situation in Iran from the point

of view of maintaining order among the various tribes who had
now come into possession of arms. He said it was very important
that they not be stirred up because if they were, all of our
troops in Iran would have to spend their time keeping the transportation route free of enemy attacks.

166

-2-

Division of Monetary
Research

The Iranian Minister likewise emphasized the need for

speedy action in alleviating the serious food situation in
Iran. He said the longer the postponement, the more difficult
it would be to keep the situation in hand.
The Secretary commented that the difficulty was that of
shipping and they fully appreciated it was a question of using
the ships where it would be most helpful for the war effort.
So far as helping them in their monetary problems, the Secretary
thought we should be able to do that without any difficulty.
H. D. White

From
Mr. murray as Sta 16
(

Mr. Saleh is a young
han representing the flower

american education in

Persia.
reter - when was Mr. he was murray offer inter. duty
in
Persia
was Under Secretary 8
mance before coming here
-

ver a year
ago our an
conomic
mission

-He - now goes back to
ccept
the powerful
position and as
finance
minister,

uch will aid thesoon
america

finance mission new going.

ut under the Chamman up of Dr. millspaugh

Also murray sayo there are

something reports from Persia

Hod riots and near famine

we to lack of wheat supply

168
December 10, 1942
3:03 p.m.
HMJr:

Harold.

Harold
Graves:

Yes, sir.

HMJr:

I got another complaint from the Army about
not getting their War Bonds, and that they're
blaming the Treasury.

G:

Yes.

HMJr:

Now I'd like somehow or other to get it over

through this magazine, The Stars and Stripes,

or something
G:

Yes.

HMJr:

....I'd like to write a letter to The Stars and

Stripes and say I have this complaint and I
want to make it plain that it's not the Treasury
that it's the War Department - let's see if they 11
run it.

G:

Yes.
All right, sir. I'll see if we can't do
that.

HMJr:

I'11 tell you what you do.

G:

Yes.

HMJr:

Just 80 that you have a test, let somebody go
to the Stage Door Canteen tonight or go to -

down to the railroad station and talk to ten
soldiers

G:

Yes.

HMJr:

....23 they come in.

G:

Yes.

HMJr:

There's a rest room down there where they sit

down there. I believe
G:

Yes.

-2- HMJr:

G:

HMJr:

G:

HMJr:
G:

169

there' 8 a room where they sit down at
the Pennsylvania Station
Yes,

and talk to ten soldiers and find out.
Get
the facts, get their names, and then we'll
use that.
of
course, we know pretty well what the facts
are about these

I know, but I'm getting blamed for it.
Yeah, I was wondering whether we'd gain anything

from interviewing these soldiers that we don't

already know.
HMJr:

Well

G:

We know, for instance

HMJr:

Well, Harold - Harold

G:

Yes, sir.

HMJr:

Use the old bean

G:

Yeah.

to try to get it over to the Army that it's

HMJr:

not the Treasury
G:

Yes.

that it's the Army

HMJr:
G:

HMJr:

Yes.

and think about it and give me a suggestion

how to do it.
G:

All right, sir, I'11 be glad to.

HMJr:

Do that.

G:

How did it go this morning before the Committee
on Appropriations?

170

-3HMJr:

It went all right. They didn't ask me many

questions on War Bonds. They said they were
going to ask them later on.

G:

HMJr:

Yes.

So they asked - there were very few questions.

G:

Yes.

HMJr:

Just the same old bore.

G:

(Laughs)
on
this.

Yeah. All right, sir, I'11 get right

HMJr:

Thank you.

G:

You're welcome.

171

December 10, 1942
3:20 p.m.
WAR BONDS SPEECH

Present: Mr. Kuhn
Mr. Mager

Mrs. Klotz

MR. KUHN: We have tried all the libraries and we

can't get a quotation from a military character for that

last wind-up. We can get a quotation from somebody else.
H.M.JR: Have you got any other quotations?

MR. KUHN: I have only got one that I am awfully
keen on, that you used in a written message to the ABA
once - that Woodrow Wilson one about "America is noth-

ing if it is each of us; America is everything only if

it is all of us working together." It is one Mrs.

Morgenthau used and you used it in a written speech,
and it was a peach of a quotation. Maybe you don't
want to use it again.

H.M.JR: I don't like to.
MR. KUHN: I can get it for you quick enough.

This came out just right in length.
H.M.JR: How many words?

MR. KUHN: It is just a little over ten minutes

without the ending.

H.M.JR: Will you take this draft, follow it, and
let me know where it differs (referring to draft four) this is the Kuhn-Mager one. (Draft handed to Mrs. Klotz
by the Secretary.)

172

-2(Reading) "I am happy to be speaking tonight in

the home State and in the home community of one of

America's outstanding legislators -- my old friend,

the Chairman of the Ways and Means Committee of the
House of Representatives, the Honorable Robert M.
Doughton. If

You wouldn't say, "-- my old friend, Robert M.
Doughton, the Chairman of the Ways and Means Committee"?

MR. KUHN: The name of it is the climax of your

sentence; it is easier to speak it this way.

H.M.JR: (Continuing) "No other committee in
Congress carries a heavier burden of responsibility,

for this is the committee that originatesall tax
legislation.

"Bob Doughton and I have shared many labors together

over these recent eventful years."
MRS. KLOTZ: "Many labors"?

H.M.JR: "Many labors" is all right.
Say "during" these recent eventful years.
(Continuing) "We at the Treasury are indeed fortunate to be working in partnership -- as he himself
described it only a moment ago -- with a Chairman who

takes his responsibilities so seriously in these grave
days. I think the taxpayers of the country are equally
fortunate in having tax legislation originate under the
leadership of a man like Bob Doughton, who is devoted

to his country and to the welfare of all its people.
" "--all its people" or "all of its people"?
MR. MAGER: It is a needless preposition.

H.M.JR: (Continuing) "It is his wish, and mine,
that tax legislation shall always be the product of a
meeting of minds, and that it shall always be sound and
just and fair to all the taxpayers.

173

-3-

"In introducing me, Mr. Doughton spoke generously
of the burden that rests upon me nowadays as Secretary
of the Treasury."
"

"--generously of the burden" - I don't like it "spoke of me generously" - how can you "speak generously
of the burden"?

MR. KUHN: It means that he understands your troubles.

H.M.JR: I don't like that way.
MR. MAGER: "--spoke with sympathy" or "with understanding.

H.M.JR: "--with understanding." "

"That burden has been especially great in this

month of December." "

" "--great" or "heavy"?

MR. MAGER: It can be either.

H.M.JR: The way I feel right now it has been heavy.

(Laughter)

MR. KUHN: You will on Saturday, then, at the end

of the week.

H.M.JR: I guess "great" is a safer word.
(Continuing) "The Treasury is now in the midst

of borrowing nine billion dollars in a single month -a borrowing operation unequalled in the annals of this
or other Government. In this Victory Loan drive we
are
the voluntary help
any depending upon of almost the securities, fifty
thousand professional salesmen drawn from find
banking and insurance fields. It is their job to
the dollars that lie idle in the hands of individual
investors, corporations and custodians of trust work funds;

it is their job to see that those dollars go to

for their country.

174

-4-

"I am delighted to report to the nation that by
today, only the twelfth business day of our drive, we
have raised more than six billion dollars. We have
come more than two thirds of the way toward our goal.
This is a magnificent response, another proof of what a
free, enlightened and democratic people can do when their
country calls upon them.

"In this Victory Loan drive and in the War Savings
campaign that has brought us together tonight, you in
North Carolina are doing great things. From the mountain
homes in your western counties to your factories in
Winston-Salem and your shipyards on the coast, this State

of yours is giving a fine example of the spirit that is
being shown in every State at the start of our second

year of war."

MRS. KLOTZ: That has been changed.

MR. KUHN: It made the sentence too crowded and
long.

H.M.JR: This sounds smooth. That sentence is

good. It will make this an example to the others.
(Continuing) "I have come here tonight to pay my
tribute of appreciation to the workers and employers of
North Carolina for their part in the War Savings campaign.

But in paying my tribute to them I want also to pay it to

the workers and employers of the United States as a whole.
MRS. KLOTZ: That hasn't been changed.

H.M.JR: I like it; it is all right.
"Great as our war effort this year has been, however,

we are just beginning to fight."
MRS. KLOTZ: That has been changed.

H.M.JR: That is good; that is all right; that

brings in your idea.

175

-5-

(Continuing) "We are just beginning to show what
this country of 130 million people can do when it puts
all its heart and mind and muscle into a single job.
Yet even this beginning of ours in 1942 has produced

outstanding patriotic service in many fields, in this
community and every community." "

MRS. KLOTZ: "Yet even this beginning of ours in
1942 has produced outstanding--' that is an awkward
sentence.

H.M.JR: You can leave off "Yet even" and just
say, "This beginning of ours--"
MR. MAGER: Say, "--has already produced--" "

MR. KUHN: The idea is that already, even though

we are just at the start, we can look around this

country and see in every community some grand job.

H.M.JR: I want to put that in, but supposing you
leave out "Yet even" and start, "This beginning of ours

in 1942--"

=

MRS. KLOTZ: "This beginning of ours in 1942--"

that is terrible.

MR. KUHN: The preceding passage was "--we are just
beginning--'

MRS. KLOTZ: "--of ours" seem superfluous. It just

sounds funny to me.

H.M.JR: "This beginning in 1942 has already produced outstanding patriotic service--" you see, it goes
back to "beginning to fight." How would this be: "This
beginning of ours to fight in 1942 has already produced "?
MR. MAGER: No, I think we might have to change the

sentence and not start with "This beginning of ours--"

Start, "But even in 1942 - outstanding patriotic service-so and so.

176

-6H.M.JR: "--has already produced "
"This beginning of ours" doesn't strike me badly.

MRS. KLOTZ: I don't feel very strongly about it.
MR. KUHN: That is the way I would say it. We talk

about what we have done, and so on, and then say, "But

this beginning of ours--" It is the normal way of saying it.
H.M.JR: It doesn't bother me. Does it bother you?
MR. MAGER: No.

H.M.JR: (Reading) "This beginning of ours in

1942 has already produced outstanding patriotic service
in many fields, in this community and every community.

MR. MAGER: It just needed the "already" in there.

H.M.JR: (Continuing) "Take, for example, the payroll savings program in which you in North Carolina

have made such an enviable record."

Is "enviable" too strong?
MR. KUHN: I don't think so.
H.M.JR: I was going to substitute the word"good."
MR. MAGER: I think this is much better.

H.M. JR: All right. "You will not find it in the
think it belittles the thing.

headlines, " - that bothers me right straight along; I

MR. KUHN: I am bothered by the fact that the press

ignores this pay roll savings thing, and has from the
start.

177

-7-

H.M. JR: Is this going to make them better about it?
Have they ignored it in the press?

MR. KUHN: Not in advertising, but as a piece of
news, the fact that twenty-four million workers are
putting aside their pay-H.M.JR: Is there a newspaperman that - does that
bother either of you?
MR. MAGER: Suppose you said, "You don't often

find it in the headlines"?

MR, KUHN: If it bothers you, I would cut it. If
it has a sense of belittling, then it is the opposite
of what I tried to do.
H.M.JR: It bothers me in the sense - it belittles
them.

MR. KUHN: Let's cut it.
H.M.JR: I mean, there is something the matter with

the thing.

MRS. KLOTZ: From what you are reading now you are

just beginning to tie in; what you have read up to now

isn't here at all.
then?

H.M.JR: Would you leave out that sentence, entirely,
MR. KUHN: No, I would have a different sentence.

I would start in by saying, "Every large factory in the
State now has a pay roll savings plan. In those factories
99 percent of all the workers are investing in War Bonds
week in and week out, by setting aside a part of their
regular pay."

H.M.JR: I like it much better. "In those factories

99 percent of all the workers are investing in War Bonds
week in and week out, by setting aside a part of their
regular pay."

178

-8MRS. KLOTZ: All this percentage business is new.
MR. KUHN: Wasn't it in here?

MRS. KLOTZ: Yes, part of it was.
MR. KUHN: Two sentences end with "pay." "In the
nation as a whole there were only 700,000 workers on the
Payroll Savings plan a year ago, and they were investing

only four percent of their pay. Today more than 24
million workers are setting aside an average of eight and
a half percent of their earnings every pay day, so our
soldiers and sailors and airmen can have the weapons

they need.' They were investing only four percent of
their earnings and then the next time you refer to it
they are investing eight and a half percent of their

earnings.

H.M.JR: All right. "This (that) is an achievement

'over here' that will give encouragement to our Allies
and to our fighting men at battle stations all over the

world."

MR. MAGER: Shouldn't it be "this"?
MR. KUHN: It is a matter of speaking.

H.M.JR: Without seeing it, I said "this" - let's

make it "this."

Was that in before?
MRS. KLOTZ: No.

H.M.JR: '--that will" or "that should give encouragement"?

MR. KUHN: Either one.
MR. MAGER:

"Will" is stronger.

H.M.JR: That is all right.

179

-9-

(Continuing) "We could never have achieved this

success without the untiring effort of our 300,000

volunteer workers who have been the unsung heroes in

this grand enterprise. Day in and day out our labor-

management committees, of which there are many thousands

in the nation today, have also contributed, not only to
the speeding of production but to the success of the
War Savings effort as well."

"--speeding up of production" isn't it?
MR. KUHN: That is easier.
MRS. KLOTZ: "--but to the success of the War

Savings effort as well" - that is changed.

H.M.JR: "It is my firm belief that the good-will

created by the Payroll Savings plan has been felt all
along the production line, and will be felt for years
to come."

This is good in here, I think, because this is
another excuse for Payroll Savings. I think this is
good.

(Continuing) "I like to feel that the new relationship between labor and management, which has been shown

so magnificently in this War Savings campaign, is help-

ing to build the post-war world right here and now."
MRS. KLOTZ: That is better than what it was before the labor-management partnership - this is "relationship."

H.M.JR: "I like to feel that it is setting the

pattern for the post-war years -- a pattern of labor and

management working side by side for their own good and

their country's good." " How about "their country's good" first?

MR. KUHN: I would put the most important one last
as you speak it.

H.M.JR: It doesn't sound right to me.

180

- 10 -

MR. KUHN: The other way around makes it sound
selfish.

H.M.JR: No, I disagree with you.
MR. MAGER: I wouldn't put it on the ground of

selfishness, I would put it on the ground of rhetoric.
I think, from the point of view of rhetoric, "country"
should come at the climax of the sentence - the last

word.

H.M.JR: Do you two writers feel that way?
MR. KUHN: That is my feeling.
MR. MAGER: That is mine.

H.M.JR: I would say, " -- working side by side for
their country's good and their own. If Are you both in

agreement on that?

MR. KUHN: Yes.

MR. MAGER: Yes. I don't put it on that ground.
H.M.JR: I don't agree with you.
MRS. KLOTZ: You think first of the country and

then your own.

H.M.JR: We will see if anybody else notices it.
"Important though the Payroll Savings plan is, it

represents only one phase of our War Savings campaign.

Millions of farmers, the self-employed, and businessmen

have put their savings at their country's disposal.

All in all 50 million men and women invested in War
Bonds during the past year.

"To my mind this is a fact of real significance

for the post-war years. It means, as Mr. Doughton has
said, that more than 50 million Americans now have a

direct and personal stake in the finances of their

181

- 11 -

Government. It means that their savings not only bear

fruit now, in helping to win the war, but will also

help to keep peace-time industry active and strong
in the post-war years.
"

MR. KUHN: It is another fact of significance for

the post-war years. You have told about labor-management relations; now you are talking about the people
who own these bonds and savings.

H.M.JR: The only question - they questioned me so
closely this morning - they thought that as soon as
the war was over they thought everybody was going to

cash their stuff in.

MR. KUHN: You don't really gain that way; you have
got to keep them from cashing them in.

H.M.JR: I said that whoever was then the Secretary

of the Treasury would have to say to the fifty million
bondholders, Who are you hurting, your hired man or
yourself?" You can use that some day in a speech.

(Continuing) "It means that habits of thrift are

taking hold of the American people, with results that
will help to win this People's War and the People's
Peace to come." "

MRS. KLOTZ: This sentence you are reading now is

in but the other wasn't.

H.M.JR: (Repeating) "It means that habits of thrift

are taking hold of the American people, with results that
will help to win this People's War and the People's
Peace to come."

That is good; that is entirely new.
MR. KUHN: That was in what I read this morning.
MRS. KLOTZ: They put in the word "People's."

182

- 12 -

H.M.JR: Instead of saying, "taking hold" as
though it was something new, I would like to get it
"growing" or "steadily expanding habits of thrift.
MR. MAGER: "Taking hold increasingly" - will
that do the trick?
MR. KUHN: "It means that habits of thrift are grow-

ing stronger among the American people."

H.M.JR: "It means that the habits are growing

steadily stronger among the American people."

MR. KUHN: Yes, "among" - that is right.

H.M.JR: "--with the result" - now, the habits of

thrift help to win the People's war?

MR. KUHN: Sure, because if you are thrifty, you
can finance the war, and avoid inflation, and build up
our savings.

MR. MAGER: We say, "their savings" why can't we

say "thrift"? I mean, it is so close.
H.M.JR: All right.

"Will help to win" - is isn't going to win.
MR. KUHN: You never ought to pretend it will win

the war to buy a bond.

H.M.JR: Was that in there before?

MRS. KLOTZ: (Reading) "It means that habits of
thrift are taking hold of the American people, with
results that will help to win the war and the peace to

come."

H.M.JR: I don't think it is true. Do you think so?
MR. KUHN: I don't think so.

183

- 13 -

H.M.JR: That is what bothers me.
MRS. KLOTZ: I don't think that even buying Savings

Bonds will win the war, and "help" is lost in that
sentence.

MR. KUHN: Y.u can change it to, "--help to finance

this People's War and win the People's Peace to come. "
H.M.JR: O.K.

MR. KUHN: "It means that habits of thrift are growing steadily stronger among the American people with

results that will help to finance this People's War

and win the People's Peace to come." "

H.M.JR: That is all right. Do you like that "People's

War and People's Peace"?

MR. MAGER: I wouldn't put "win" in there. What is
wrong with saying - listen, if your objection to using

"win' in front of "People's War" is that, after all, buy-

ing bonds will not help us win, then the same thing .

applies to the peace.

MR. KUHN: No, because the peace rests on economic
foundations.

MR. MAGER: So does the war, in a sense. Why

can't we say, --will help to finance this People's

War and the People's Peace to come;" financing is
imperative then, too.

H.M.JR: "--will help to finance this People's
War and the People's Peace to come. I think that is
better. Say it once more.
MR. KUHN: "It means that habits of thrift are growing steadily stronger among the American people with

results that will help to finance this People's War

and win the People's Peace to come."

184

- 14 -

H.M.JR:

"--to help to finance the People's War

and finance the People's Peace to come."

MR. MAGER: That is the implication.

H.M.JR: Well, that is correct. Yes, that is all

right. -and it will help to finance" - they will

have this money - it isn't necessary to repeat "and

finance the People's Peace." I think that is all right.

Now I like it.

"The holders of War Bonds are the people who will
be buying the products of American industry ten years
from now, when the bonds mature. The bonds that are
bought today represent new homes, new comforts, new

horizons for the common man. They will help to give
body and substance to the ideal of 'Freedom From Want'
in thousands of American communities and in millions
of American homes." "

MRS. KLOTZ: There is a lot of change in there.
MR. KUHN: That is partly brought in from the thing
that you marked this morning, and the last sentence of
it was changed - "body and substance to the ideal of
'Freedom From Want.'"

H.M.JR: I have got an idea. "The holders of War

Bonds are' the people who will be buying, ten years
from now, the products of American industry. The bonds
that are bought today represent new homes, new comforts,
new horizons for the common man. They will help to give
body and substance to the ideal of 'Freedom From Want'
in thousands of American communities and in millions of
American homes.

"In the meantime there is much that we on the home

front must do. As I have said, our time of trial is
just beginning. We shall have to meet it with thrift

and self-denial. We shall have to choose between denying ourselves the comforts we want, or denying the boys

at the front -- your sons and mine -- the tools and the
weapons they need."

185

- 15 -

I don't like the word "tools."
MR. KUHN: "--the weapons."

H.M.JR: Do you like the word "tools"? What is

the matter with "the weapons"?

MR. KUHN: Leave it "the weapons" or you can
specify the guns and planes and tanks they need.

H.M.JR: No, just "the weapons."
(Continuing) "We shall have to choose also whether

to finance the war by the cruel and costly method of

inflation or by sober saving that will protect our present
and our future. I believe that the fifty million men and
women who have bought War Bonds this year have already

made up their minds to take the right course."

MR. KUHN: Then I want to get a quotation if I can.

H.M.JR: I don't like to raise this question - "We

shall have to choose--" Do you want to say that?
MR. KUHN: This is Herbert Gaston's stuff.

H.M.JR: "We shall have to choose-- " Let me see -

let me just try it this way; I have got an idea here.
"Important though the Payroll Savings plan is, it

represents only one phase of our War Savings campaign.

Millions of farmers, the self-employed, and businessmen

have put their savings at their country's disposal.

All in all 50 million men and women invested in War
Bonds during the past year.
"The holders of War Bonds are the people who will
be buying the products of American industry ten years
from now, when the bonds mature. The bonds that are
bought today represent new homes, new comforts, new

horizons for the common man. They will help to give

body and substance to the ideal of 'Freedom From Want'
in thousands of American communities and in millions

of American homes.

186

- 16 -

"To my mind this is a fact of real significance

for the post-war years. It means, as Mr. Doughton has
said, that more than 50 million Americans now have a
direct and personal stake in the finances of their
Government. It-means that their savings not only bear

fruit now, in helping to win the war, but will also

help to keep peace-time industry active and strong in

future years. It means that habits of thrift are taking

hold of the American people, with results that will

help to win this People's War and the People's Peace to
come."

MR. MAGER: That sounds all right.
MR. KUHN: You twisted it around.

H.M.JR: I left out a whole page.
MR. MAGER: Which page?

H.M.JR: Beginning "In the meantime" - beginning

at the bottom of Page 8, I left out the whole business.
MR. KUHN: Good. (Laughter)

H.M.JR: Look what I did. I took the paragraph on

page 7, ending, "All in all 50 million men and women
invested in War Bonds during the past your,' and then
I skipped to the middle of page 8, "The holders of War
Bonds are the people--' and then I went back and read
that paragraph on page 7 beginning, "To my mind this is

a fact of real significance for the post-war years."
MR. MAGER: That is where the conclusion really

belongs.

H.M. JR: The reason I like it is this: In the first
place it ties up Mr. Doughton at the end once more, and

--with results that will help to win this People's

War and the People's Peace to come" is a good conclusion.
That way, now, to me, you don't need any quotation, and

I think this last page is repetitious.

187

- 17 -

MR. KUHN: The only thing is, the last page prevents

it from sounding smug and complacent. Somewhere there

should be a thought that we have a terrific job to do

in the year ahead.

H.M.JR: If you don't mind, that is where I don't
vibrate with you. I mean, this stuff of always saying -

now, you see - may I make a little speech?
MR. KUHN: Go ahead.

H.M.JR: You wanted me to say I cameback from

England - at least this is what I told people I have

talked to privately - I came back from England, and from
what I saw and what I learned, I am convinced that this
thing - we can get it over within a couple of years - and

I believe in it. It doesn't mean that we don't have to

work very hard, and so forth and so on. I am not afraid
of this thing being complacent, and this thing, "In the

meantime, we at home-- has been said so often that
people - "This is a cruel war and you have to save" and

all the rest of that. I have said it; all of the War

Bond people have said it. My own feeling is I think we
can leave it out.
MR. KUHN: I think you are right; I was only trying

to explain why I put it in.

H.M.JR: I know why you put it in. To me, I think

we are just going out of that phase. I may be wrong.
MR. MAGER: You know where we could cover that

thought? We could cover that thought on page four, at
the bottom, "Great as our war effort this year has been,

however, we are just beginning to fight. We are just

beginning to show what this country of 130 million people
can do when it puts all its heart and mind and muscle

into a single job.' We could have the thought in here one sentence - indicating what we must still GO.

188

- 18 -

MR. KUHN: I think you are right in calling attention to that, because in that passage you take care of
the point I was worried about. You don't say any more
than that this is the beginning; therefore you are all
clear - your record is O.K. I am with you on taking
out the last part.
H.M.JR: "This beginning in 1942--"

MR. KUHN: "Great as our effort has been, it is

only a beginning."

H.M.JR: Do you want to put that in?
MR. MAGER: No, no, what I am saying is that if
you really wanted to save the last page of the draft,
we could put one sentence in here that would increase
the tone, and that would make it very plain that we are
not smug and complacent. On page four, at the bottom
say that we realize this is only a beginning and that

there is a whole lot still to be done. That can be em-

phasized a little more than it has been emphasized in

here.

MR. KUHN: My feeling is that it is all right as

it stands.

H.M.JR: I would leave page nine off, then.
MR. KUHN: I forgot about that paragraph.

H.M.JR: Did you get the way I did that thing?
MR. MAGER: Yes.

H.M.JR: You know what I left out?
MR. MAGER: Yes.

I went from the middle of page seven to the
middle of page eight, took in that paragraph, and then
went back to the last paragraph on page seven.
H.M.JR:

189

- 19 -

MR. MAGER: Yes, and dropped out the last page.

H.M.JR: Yes, now what I would like to do is this;

I would like to do two things. I would like to have this
thing rewritten once more and then - because I have

promised myself to go home tonight - I would like - if
you will make a note, please - I would like these people
who are available, if they are available, Bell and
Gaston - only if they are available - and white and Odegard
and Gamble and Buffington - get them together and read it
to them.

MR. KUHN: O.K.

H.MJR: Now, then, I think somebody should go up and

read it to Mr. Doughton. Would this take more than an

hour to type?

MR. KUHN: No.

H.M.JR: Gamble can find out how late he is going

to

be there. It should be read to him, but I would like

a copy to come to my house tonight.

MR. KUHN: Do you want the reading copy?

H.M.JR: No, not yet. But I would like you to get

as many of those people as are available together, read
it to them once more, and then send it up to me. You
had better address it to Mrs. Morgenthau.
MRS. KLOTZ: You want Doughton to read this?

H.M.JR: Yes. There might be some little thing--

Draft 4 190
(mager Kahu)

I am happy to be speaking tonight in the home

State and in the home community of one of America's

outstanding legislators -- my old friend, the Chairman
of the Ways and Means Committee of the House of
Representatives, the Honorable Robert M. Doughton.

No other committee in Congress carries a heavier burden

of responsibility, for this is the committee that

originates all tax legislation.
Bob Doughton and I have shared many labors together

over these recent eventful years. We at the Treasury

are indeed fortunate to be working in partnership -as he himself described it only a moment ago -- with
a Chairman who takes his responsibilities so seriously

in these grave days. And I think the taxpayers of the
country are equally fortunate in having tax legislation

-2-

191

originate under the leadership of a man like Bob Doughton,

who is 80 devoted to his country and to the welfare of

all its people. It is his wish, and mine, that tax
legislation shall always be the product of a meeting
of minds, and that it shall always be sound and just

and fair to all the taxpayers.
In introducing me, Mr. Doughton spoke generously
of the burden that rests upon me nowadays as Secretary

of the Treasury. That burden has been especially great
in this month of December. The Treasury is now in the

midst of borrowing nine billion dollars in a single
month -- a borrowing operation unequalled in the annals

of this or any other Government. In this Victory Loan
drive we are depending upon the voluntary help of almost
fifty thousand professional salesmen drawn from the
D-D

-3-

192

securities, banking and insurance fields. It is their

job to find the dollars that lie idle in the hands of
individual investors, corporations and custodians of

trust funds; it is their job to see that those dollars
go to work for their country.

I am able to report to the nation that by today,
only the twelfth business day of our drive, we have

raised more than six billion dollars. We are more than
two thirds of the way to success. This is a magnificent
response, another proof of what a free, enlightened and
democratic people can do when their country calls upon them.

In this Victory Loan drive and in the War Savings
campaign that has brought us together tonight, you in

North Carolina are doing great things. From the mountain
homes in your western counties to your factories in
D-D

193

-4Winston-Salem and your shipyards on the coast, this State

of yours is giving a fine example of the spirit that is
being shown by millions upon millions in every State.at
the start of our second year of war. I have come here

tonight to pay my tribute of appreciation to the workers
and employers of North Carolina for their part in the
War Savings campaign. But in paying my tribute to them

I want also to pay it to the workers and employers of
the United States as a whole.

In this community and in every community the first
year of war has produced outstanding examples of individual

service in some field of patriotic effort. And not the
least of these is the War Bond campaign.

Take, for example, the payroll savings program in
which you in North Carolina have made such an enviable

-5-

194

record. You will not find it in the headlines, yet
in North Carolina every large factory now has a payroll

savings plan. In those factories 99 percent of all the
workers are investing in War Bonds week in and week out.

We can better appreciate the truly magnificent
achievement of this democratic, voluntary program by
examining what has been accomplished during the past

year. Just twelve months ago there were only 700,000

workers in the entire country on the payroll savings
plan, and these workers were investing only four percent

of their pay in bonds. Today, 24 million workers are
setting aside an average of eight and one-half percent

of their pay every pay day. And if this steady growth
continues, 30 million workers will soon be investing

at least ten percent of their pay to help win the war.
This is indeed a tribute to the patriotism and intelligence
of the American people.

-6-

195

We could never have achieved this success without

the untiring effort of our 300,000 volunteer workers
who have been the unsung heroes in this grend enterprise.
Day in and day out our labor-management committees, of

which there are many thousands in the nation today, have

also contributed immeasurably to the success of the effort.
The result is just one example of what can be done when
labor and management work together in harmony. I like
to feel that this new labor-management partnership sets

a pattern for the post-war years -- a pattern of labor
and industry working side by side for their own good

and for their country's good.
Important though the payroll savings plan is, it
represents only one phase of our War Savings campaign.

Millions of farmers, self-employed, and businessmen have

put their savings at their country's disposal.

196

-7All in all 50 million men and women invested in War
Bonds during the past year.

To my mind the significance of this can hardly be
overestimated. It means, as Mr. Doughton has said,
that more than 50 million Americans now have a direct
and personal stake in the finances of their Government.

It means that their savings are being protected until
such time as they are needed to keep the wheels of

peace-time industry turning once more. It means that

habits of thrift are taking hold of the American people,
with results that will help to win the war and the peace
to come.

We on the home front have to make this decision:

shall we deny ourselves the comforts we would like to

have, or shall we deny the boys at the front -- your

-8-

197

sons and mine -- the tools and the weapons they need?
We have to choose also whether we shall finance the war

by the cruel and costly method of inflation or by sober

thrift that will protect our present and our future. The
steep road of self-denial will be the shortest road to

victory. I believe that the fifty million Americans who
have bought War Bonds this year have already made up

their minds to take the right course.
I am convinced that we on the home front "over here"

will prove worthy of our fighting men. On the production
lines, in mines and fields and factories, we are giving
an increasingly good account of ourselves. We have

living evidence in this community and in thousands of

others all over the land of a willingness to work, and
save, and sacrifice.

Draft 198

dreft
(mager

I am happy to be speaking tonight in the home
State and in the home community of one of America's

outstanding legislators -- my old friend, the Chairman
of the Ways and Means Committee of the House of
Representatives, the Honorable Robert M. Doughton.

No other committee in Congress carries a heavier burden

of responsibility, for this is the committee that

originates all tax legislation.
Bob Doughton and I have shared many labors together

during

over these recent eventful years. We at the Treasury

are indeed fortunate to be working in partnership -as he himself described it only a moment ago -- with
a Chairman who takes his responsibilities 80 seriously

in these grave days. And I think the taxpayers of the
country are equally fortunate in having tax legislation

199

-2originate under the leadership of a man like Bob Doughton,

who is so devoted to his country and to the welfare of

all its people. . . It is his wish, and mine, that tax
legislation shall always be the product of a meeting
of minds, and that it shall always be sound and just

and fair to all the taxpayers.

with understanding
In introducing me, Mr. Doughton spoke generously
of the burden that rests upon me nowadays as Secretary

of the Treasury. That burden has been especially great
in this month of December. The Treasury is now in the

midst of borrowing nine billion dollars in a single
month -- a borrowing operation unequalled in the annals

of this or any other Government. In this Victory Loan
drive we are depending upon the voluntary help of almost
fifty thousand professional salesmen drawn from the

200

-3-

securities, banking and insurance fields. It is their

job to find the dollars that lie idle in the hands of
individual investors, corporations and custodians of

trust funds; it is their job to see that those dollars
go to work for their country.
delighted
I am able to report to the nation that by today,
only the twelfth business day of our drive, we have
have come

raised more than six billion dollars. We are more than
A

toward our gone.
two thirds of the way to success. This is a magnificent
response, another proof of what a free, enlightened and
democratic people can do when their country calls upon them.

In this Victory Loan drive and in the War Savings
campaign that has brought us together tonight, you in
North Carolina are doing great things. From the mountain

homes in your western counties to your factories in

201

-4Winston-Salem and your shipyards on the coast, this State

of yours is giving a fine example of the spirit that is
being shown in every State at the start of our second
"

year of war. I have come here tonight to pay my tribute
of appreciation to the workers and employers of North

Carolina for their part in the War Savings campaign.

But in paying my tribute to them I want also to pay
it to the workers and employers of the United States
as a whole.

Great as our war effort this year has been, however,

we are just beginning to fight. We are just beginning
to show what this country of 130 million people can do

when it puts all its heart and mind and muscle into a

single job. Yet even this beginning of ours in 1942

already

has
produced outstanding patriotic service in many
1

202

-5fields, in this community and every community.

Take, for example, the payroll savings program in
which you in North Carolina have made such an enviable

record. 12 You will not find it in the headlines, yet
in North Carolina every large factory now has a payroll

savings plan. In those factories 99 percent of all the
workers are investing in War Bonds week in and week out,

by setting aside a part of their regular pay.
In the nation as a whole there were only 700,000
workers on the Payroll Savings plan a year ago, and they

were investing only four percent of their pay. Today
more than 24 million workers are setting aside an

average of eight and a half percent of their earnings
every pay day, so our soldiers and sailors and airmen
can have the weapons they need. That is an achievement
D-E

-6-

203

"over here" that will give encouragement to our Allies

and to our fighting men at battle stations all over

the world. This is indeed a tribute to the patriotism
and intelligence of the American people.
We could never have achieved this success without

the untiring effort of our 300,000 volunteer workers
who have been the unsung heroes in this grand enterprise.
Day in and day out our labor-management committees, of

which there are many thousands in the nation today, have
wh

also contributed, not only to the speeding of production
but to the success of the War Savings effort as well.

It is my firm belief that the good-will created by
the Payroll Savings plan has been felt all along the

production line, and will be felt for years to come.
I like to feel that the new relationship between labor
and management, which has been shown so magnificently
D-E

-7-

204

in this War Savings campaign, is helping to build the

post-war world right here and now. () I like to feel that

it is setting the pattern for the post-war years -a pattern of labor and management working side by side

for their own good and their country's good.

Important though the Payroll Savings plan is, it
represents only one phase of our War Savings campaign.

Millions of farmers, the self-employed, and businessmen

have put their savings at their country's disposal.
All in all 50 million men and women invested in War
Bonds during the past year.

3 To my mind this is a fact of real significance
for the post-war years. It means, as Mr. Doughton has
said, that more than 50 million Americans now have a

direct and personal stake in the finances of their
Government. It means that theirsavings not only bear

-8-

205

fruit now, in helping to win the war, but will also
help to keep peace-time industry active and strong

future

in the post war years. It means that habits of thrift
are taking hold of the American people, with results

that will help to win this People's War and the People's
Peace to come.

N

The holders of War Bonds are the people who will

be buying the products of American industry ten years
from now, when the bonds mature. The bonds that are
bought today represent new homes, new comforts, new

horizons for the common man. They will help to give
body and substance to the ideal of "Freedom From Want"

in thousands of American communities and in millions
of American homes.

In the meantime there is much that we on the home

-9-

206

front must do. As I have said, our time of trial is
just beginning. We shall have to meet it with thrift
and self-denial. We shall have to choose between denying
ourselves the comforts we want, or denying the boys at

the front -- your sons and mine -- the tools and the
weapons they need. We shall have to choose also whether

to finance the war by the cruel and costly method of

inflation or by sober saving that will protect our

present and our future. I believe that the fifty million
men and women who have bought War Bonds this year have

already made up their minds to take the right course.

CONFIDENTIAL

207

UNITED STATES SAVINGS BONDS - SERIES F AND G COMBINED

Comparison of December sales to date with sales during the
same number of business days in November and October, 1942

(At issue price in thousands of dollars)

December

November

:
:

:

sales

October

:

daily

Cumulative sales by business days

:

:
:
:

Date

December

December as

:percent of November

December 1942
$

197

329

527

2,688
13,947
12,303

3,214
17,161
29,464

17,522
2,872
9,576

46,986
49,858
59,434

1
2

3
4
5

7
8
9

Office of the Secretary of the Treasury,
Division of Research and Statistics.

$

303

1,115
7,846
14,720
31,425

-

197

-

$

$ 2,218
20,322
24,325

34,030
43,940

31,922
46,695

49,326

55,998

65.0%

47.3
41.0
116.6
93.8
138.1

113.5
120.5

December 10, 1942.

Source: All figures are deposits with the Treasurer of the United States on account
of proceeds of sales of United States savings bonds. These figures have been
adjusted on the basis of wire reports and therefore will not agree with the
Treasurer's accounts.

Note: Figures have been rounded to nearest thousand and will not necessarily add
to totals.

CONFIDENTIAL

208
Sales of United States savings bonds, Series E
December 1 through 9, 1942

Compared with sales quota for same period

(At issue price in millions of dollars)
Actual sales

:
:

December

1
2
3
4

December 1

to date

Quota,
December 1

to date

Sales to date
as percent
of quota

$ 4.1

$ 4.1

$ 5.5

4.5

8.6

10.0

18.6
58.3
75.0

11.0
23.1
35.2
57.1

78.2
80.5
165.6
131.3

95.3
110.2
133.2
158.5
181.5
194.2

127.4
121.0

39.7

16.6

5

7
8
9

Daily

:

Date

46.4
11.9
17.9

121.4
133.3
151.2

10
11

12

14
15
16

17
18
19

24

26

472.7

22
23

28
29

30
31

Office of the Secretary of the Treasury,
Division of Research and Statistics.

113.5

233.6
248.8
272.9
300.4
326.3
340.8
385.5
402.3
428.2
457.9

21

74.5%

518.4
551.3
585.3
650.0

December 10, 1942.

Source: Actual sales figures are deposits with the Treasurer of the
United States on account of proceeds of sales of United
States savings bonds. Figures have been rounded and will
not necessarily add to totals.

209

TREASURY DEPARTMENT
WASHINGTON

December 10, 1942.
MEMORANDUM ON MEETING OF THE JOINT
COMMITTEE ON REDUCTION OF NON-DEFENSE EXPENDITURES

A meeting was called at 11:00 A. M., Thursday, December 10,
in the Senate Finance Committee Room in the Senate Office Building.
There were present:
Senators:
Byrd
Nye

Congressman Cannon

Bureau of the Budget:
Mr. Lawton

Senator Byrd arrived at 11:15 at which time the meeting got under way.
The Committee reporter made a stenographic transcript of the meeting.
Senator Byrd opened the meeting and said the Committee would

hear testimony of members of the staff of the Bureau of the Budget
concerning the Farm Security Administration and the National Youth
Administration.

Farm Security Administration:
Messrs. Scott, Patterson and Broadbent were present to

furnish information concerning the Farm Security Administration. In
reply to questions from Senator Nye they furnished information showing
the funds available for the fiscal years 1942 and 1943.
Senator Byrd asked what effect the recent executive order
transferring the Farm Security Administration to the Food Adminis-

tration would have upon the activities of the agency. Mr. Scott

said that no substantial changes in operation were contemplated;
that he thought the organization would operate much as it has up
to date, and that more emphasis would be given to increasing
production by the lower income group of farmers,

There was a general discussion concerning the status of
loans made by the Farm Security Administration, repayments, etc.
and the members of the Budget Bureau staff did not have the situation detailed

information desired by the Committee. As a result of this

the Chairman asked that the Committee be furnished comprehensive

information concerning such loans.
BUY

The Committee also asked for information concerning the

liquidation of the old resettlement projects which are now being

210

-2liquidated by the Farm Security Administration. A great deal of
detailed data concerning this situation was requested.
National Youth Administration:

Messrs. Mitchell, Garber and another person from the staff
of the Bureau of the Budget furnished information concerning the
appropriations made in 1942 and 1943 for the National Youth Adminis-

tration. Total appropriations for 1942 were about $155,000,000, of
which $63,000,000 were allocated to the defense training program.
Total appropriations for 1943 were about $61,000,000, of which
$53,000,000 were allocated to defense training.
The members of the Budget Bureau staff furnished certain
limited information concerning the number of persons being trained
in defense activities. On November 25, 1942 there were 53,600
persons in training, of which 28,300 were boys and 25,200 were
girls.
Senator Byrd asked whether the Budget Bureau had given

any consideration to putting all training programs under the Office
of Education. Mr. Mitchell replied that some study had been given
to the matter but nothing definitely had been done.
Senator Byrd furnished R list of questions concerning the
National Youth Administration and the Farm Security Administration
and asked the Budget Bureau to submit data in reply thereto.
Congressman Cannon left the meeting at 12:15 and Senator

Nye left at 12:35. The meeting adjourned at 12:45.

The meeting was not productive from the standpoint of the
information submitted unless the data called for by the Chairman in
the questionnaires is of some consequence,

Wrt

21

Treasury Department

Office of the Under Secretary

To:

From:

Date: n.v.

Mrs. Klats
For the Scripfile

DUB

DEPARTMENT OF THE NAVY
OFFICE OF THE SECRETARY
WASHINGTON

DEC 10 1942

Dear Henry:

In view of your letter of December 7, 1942, I
have issued instructions that orders to Lieutenant

Frank A. Southard, Jr. I-:(s), U.S.M.R., detailing

him to the Treasury be cancelled and that he be directed to resume his duties with Naval Intelligence.
It always 'ives me pleasure to help you in any

way that I can. Please do not hesitate to call on
me if I can be of any help to you in the future.
Sincerely yours,

Honorable Henry Morgenthau, Jr.,

Secretary of the Treasury,
Washington, D.C.

Famestear

213

December 10. 1942.

Dear Miss Nevdomers

Thank you very such for your letter of
November 27, with the list of Vassar graduates
and the detailed information about the different
girls. This seems to be a wonderful list, and

I an studying is very carefully. I feel sare

that 18 will be most helpful is connection with

what I had in mind.

with thanks again and certified regards,
Sincerely,
(Signed) H. Morgenthau, Jr.

Miss Nabel Novemen,
Chairman, Department of Economics,
Vassar College,
Poughlesspele, New York.

File sent to Thompson to
SEF/dbs

speak to HMJr.

CC in Diary.

VASSAR COLLEGE
POUCHKEEPSH YORK

November 27, 1942

Secretary Henry Morgenthau, Jr.

Treasury Department
Washington, D.C.

Dear Mr. Morgenthau:

In reply to your telephoned inquiry concerning Vassar graduates
who might be qualified for work in the Treasury, I am submitting the
following list. I do not know that any of these is seeking another
position, but some might be interested. I am sending addresses as
far as I have them so that they can be reached directly. I may be able

to add to the list later, but I trust that some of these may be avail-

able and fit your needs. If you want more information concerning any
of them, or the address given proves to be out-of-date, we shall be glad
to supply what information we have. All have had most of work in f1nance as undergraduates.

Graduates that I rank 88 exceptionally able are:
Margaret L. Harrison graduated in 1933. She had an excellent record
with us, and received a fellowship to continue her studies at the London School of Economics. I think she has done some graduate work at
Radcliffe also. She worked for some years as research associate with
Scudder, Stevens and Clark in Boston, and I understend that she is now

working for the WPB. I have a very high opinion of her abilities.

Personally she is most attractive. Her present address 18: 1703 New
York Avenue, Washington, D.C.

Helen Fitch graduated from Vassar in 1934. She was a brilliant student
and has had a brilliant record since. She has completed the work for
a Ph.D. at Radcliffe except for the thesis. She obtained an AAUW fellow-

ship to do this last year and then gave it up for 8 position with the
OPA in Washington. I think she is still there but I have not been able

to obtain her Washington address. She is on leave from Smith College
where she has been an instructor in economics. She has specialized in
economic history and statistics rather than finance, but she has a good

foundation in finance also. Personally, she is attractive, but perhaps
a little high strung and temperamental. I have A high opinion of her
ability and have considered trying to bring her to Vassar to teach if
the right opening should develop.

Vivian Cadman (Mrs. Joseph Cedman) graduated from Vassar in 1938. She

18 one of the top half-dozen students that I have taught in twenty-five

at years at Vassar. She has prectically completed the work for her Ph.D.

Columbia, specializing in public finance. She had fellowship from

secretary Morgenthau

2.

Vassar and Columbia. When at Vassar she was one of our young radicals,

and I think she still has redical leaninge, although I am under the
impression that she has changed her point of view materially. Her
radicalism never interfered with her powers of reasoning, but it may

bar her from a government position. I think she 18 working 8.8 research
assistant for Congressman Marcantonio and can be reached in his care.
Barbara Cole graduated in 1939, and has since practically completed the
work for a Ph.D. in economics at Radcliffe. She specialized in statistics and finance as an undergraduate here, and has continued in that
field. She is exceptionally brilliant, and at the same time dependablean unusual combination. I believe that she would adapt herself very
quickly to the requirements of any position for which she 18 fitted.
She is the daughter of Arthur Cole of the Harverd Department of Economics,
She has worked as research assistant at Harvard. Her present address
18 102 Fresh Pond Parkway, Cambridge, Massachusetts.

Jeanne Matscheck graduated from Vassar in 1940. She obtained one of
the government internships connected with American University after
graduation and has worked in different government offices. She 18 one

of the best of our graduates, with a clear. logical mind, mature Judgment and poise. Personally she is most attractive. She 18 the daughter
of Walter Matscheck of the Railroad Retirement Board. She had some
graduate work at American University. She specialized in finance as an
undergraduate, but has not been working in that field since. Her address
is 3020 Tilden Street, N.W., Washington.

Louette Per-Lee (Mrs. Charles Per-Leegraduated from Vasser in 1940. She
worked more than a year as research assistant to Dr. Beckhart in the
Chase National Bank. She had a brilliant record with us, and I know
that Dr. Beckhert found her a most exceptional assistant. She took some
graduate courses et Columbia while working at the bank. Her training

has been primarily in finance and statistics. She is now married and
has a young baby, but she lives in Weshington it might be possible for
her to take a position there. Her address can probably be found in
the Washington telephone book.

Mary Fitt graduated in 1941, and received a fellowship to continue her
studies at Columbia University the following year. She has received
her A.M. degree since. She has specialized in international trade, but
has had work in money and banking, in public finance, and in statistics.
She is now working for the Irving Trust Co. in New York. We have a

very high opinion of her ability, and I understand that her record at
Columbia was outstanding. Personally she is cooperative and should
work well with others. I have no reservations concerning her. Her

address 1s Apt. 30, 562 West 113th Street, New York City.

Eleanor Stoddard, Vassar 1942, is A very brilliant and energetic student. In her undergreduate career she was able to combine "A" work She

in her major field with dramatics and other student activities. be
18 most likable and always gets on well with others. She would her.
unusually competent in any position for which her training fits now

Her home address is 253 Woodland Road, Medison, N.J., but she is
working with the OPA in Washington.

Secretary Morgenthau

3.

Graduates who are well above average but not in the first rank
are:

,

Ann Baumann greduated from Vassar in 1935. She was a very good student,

specializing in finance and statistics. I do not think that she has
tant, and is now with the OPA--or was the last time I heard. I under-

done graduate work but she has worked for the FDIC, as research assisstand that she rates very high with the people who have employed her.
do not know her 8.8 well as some of the others, but from what I do
know, I can recommend her without reservation. The last address that
I have for her is 1701 20th Street, N.W., Washington, D.C.
I

Narnie Puryear Borchardt (lrs. Kurt Borchardt) greduated in 1936.
She was one of our best students and received a fellowship to study
economics at Chicago University the following year. I think she
married before she completed her work for the master's degree. The
last I heard from her she was with the Railroad Retirement Board in
Washington. She worked as my assistant the summer following her
graduation and I found her very capable. Personally she 18 most
attractive. Her present address in 1385 Nicholson Street, N.W
Washington.

Eleanor Stockwell graduated from Vassar in 1936. She was a mathematics
major, but took almost enough economics to qualify as an economics

major. She took most of our courses in finance and did excellent
work. She has been doing research for the Board of Governors of the
Federal Reserve System since graduation, and I understand that her
work has been more than satisfactory. She is married but I believe
that she uses her maiden name for business purposes. She can be
reached in care of the Board of Governors of the Federal Reserve
System.

Mary Splawn Taylor (Mrs. Thomas Taylor) graduated in 1938. She Was

an outstanding student and an exceptionally dependable one. She is
the daughter of Walter Splawn of the Interstate Commerce Commission.
She had graduate work at American University, and for a time had a
position in the Department of Agriculture. She has specialized in.
banking, I do not think that she has worked since her marriage but

it is possible that she would consider it. Her address is Lincoln,
Virginia.

Judith Gravely DeBuys (Mrs. William DeBuys) graduated in 1939. She

She I do not

was an excellent student, doing careful and thoughtful work rather

than brilliant. she was most cooperative, and very attrac- had

tive. specialized
work. ShePersonally
has workedinasfinance.
Junior think that she has in
I do not know
whetherExaminaer
she has worked
since
she
Baltimore.
her that
marriage
or
not. Sincegraduate
she livesPersonnel
near Weshington,
it is possible

night be available. Her address in 105 Tunbridge Road, Baltimore, Md.

Patricia Shane greduated in 1939. She W&S a brilliant, but erratic serstudent. I should expect her to take a regular position more however.
iously than she sometimes took her undergraduate studies, think she

She specialized in finance as an undergraduate. I do not Codes,

has had graduate work. I think she is working for Occupational other
Interdepartmental Placement Service in Washington. I have no
address.

Secretary Morgenthau

4.

Anne Montgomery, Vassar 1941, is getting an A.M. degree this Decem-

ber at Ohio State University. I think she is specializing in government finance. That was the field of her major interest as an under-

graduate. Although not brillian, she always did better than average
work with us, and WAS thoroughly competent. She is the kind of worker
that will see a job through as a matter of course, no matter how much
time and effort is involved: and is genuinely interested in what she
is doing. Her address 1s 74 Granville hoad, Newark, Ohio.

Nanoy Hayden, Vassar 1942, W&B an able and dependable student, special-

izing in finance. She worked for me during the summer of 1941 and I
found her a very promising, research assistant. She has had no graduate

work. She is now working for the OPA. I think you would find her
excellent for any position for which her training would qualify her.

Her address is 242 Portland Street, S.E., Washington.

Alice Meriam, Vassar 1942, was a good and dependable student. Her

work was never brilliant, but always satisfactory and often of A very
high calibrer. She occasionally worked as clerical assistant for our
department, and we always found her work accurate and in every way
satisfactory. She has been trained primarily in finance, with courses
in statistics, accounting, corporations, money and banking, and public
finance. She has had no graduate work. She now has a position as
senior clerk with the War Department, Boston Ordinance District. Her
address is Baker Bridge Road, South Lincoln, liassachusetts.
Sylvia Stern, Vassar 1942, was an able and hard working student who

took several courses in finance. She is now working with the banking

department of the Prudential Insurance Company. She is competent
rather than brilliant, but well A ove the average of our students.
Her address is 450 West End Avenue, New York City.

Please do not hesitate to call on us if we can be of any further

help to you.

Sincerely yours,

malr? Newarmer
Mobel Newcomer, Chairman
Department of Economics
MNHEK

VASSAR COLLEGE
POUCHKEEPSIE NEW YORK

Department of Economics a Sociology

December 9, 1942

Secretary Henry Morgenthau, Jr.

Treasury Department
Washington, D. C.

Dear Mr. Morgenthau:

I have one more name to add to the list of

Vassar alumnae who might qualify for Treasury Jobs.
Miss Lucy Yundt who graduated in 1935 is now working as tax accountant for the Southern Bell Telephone
Company in Atlanta. She has been with this company

in various capacities since graduation. She is not
looking for another position but might consider it.
She WAS an excellent student and a very capable all
round person with lots of initiative and good common
sense. She was an economics ma jor with courses in
statistics and finance. I think she has not done
graduate work.

Sincerely yours,

mabl novemen
Mabel Newcomer, Chairman

Department of Economics
MN:EK

VASSAR COLLECE
POUCHKEEPSIE NEW YORK

Department of E.comomics C Sociology

December 9, 1942

Secretary Henry Morgenthau, Jr.

Treasury Department
Washington, D. C.

Dear Mr. Morgenthau:

I have one more name to add to the list of

Vassar alumnae who might qualify for Treasury Jobs.
Miss Lucy Yundt who graduated in 1935 is now working as tax accountant for the Southern Bell Telephone
Company in Atlanta. She has been with this company

in various capacities since graduation. She 18 not
looking for another position but might consider it.

She was en excellent student and a very capable allaround person with lots of initiative and good common
sense. She was an economics major with courses in

statistics and finance. I think she has not done
graduate work.

Sincerely yours,

mabl novemen
Mabel Newcomer, Chairman
Department of Economics
MN:EK

219

December 10, 1942

Mr . Pehle called Mrs. Klotz today to say that

the State Department recommends that the application
of J.D.C. be approved in connection with the shipment

of food to Poland, and that he will go ahead on that

basis.

219

December 10, 1942

Mr . Pehle called Mrs. Klotz today to say that
the State Department recommends that the application
of J.D.C. be approved in connection with the shipment

of food to Poland, and that he will go ahead on that
basis.

7,1220
IRVING LEHMAN
36 WEST 44TH ST.
NEW YORK

November 16, 1942

Dear Elinor,

Mr.Leavitt of the Joint Distribution

Committee came to see me on Friday to tell me of a

mix-up in connection with an application that has been
made to the State Department for permission to send a
small amount of food each month to Poland. As far as
I can make out, Dr. Wise has, as usual, been an
opportunist and has placed the State Department,
Mr. Pehle of the Treasury and a group composed both

of Jewish and Christian organizations in a very
embarrassing position. Henry has widely kept aloof
from the whole matter, and I hope that he will continue
to remain aloof. Mr. Leavitt, however, is anxious
that Henry should receive an explanation of the entire
matter so that he may understand why the Joint
Distribution Committee and the other groups cannot
cooperate with Wise's World Congress group. I told
him that I would ask you to give Henry their written
explanation if you thought it advisable. Please don't

give it to Henry if you think it would disturb him.

In this matter it is entirely clear that it is best

from every point of view that he should continue his

attitude of non-intervention. I hesitate even to ask

you to give him this statement because I know that
all these matters disturb Henry. He is doing grand work.
We are in New York for a three-week

recess, but return to Albany next Sunday, and we will
probably remain there for three weeks. Perhaps we may
have a chance to get a glimpse of you during the
Christmas recess.

Sissie joins me in loving greetings

to yourself and Henry.

Yours

Mrs. Henry Morgenthau, Jr.,

2211 Thirtieth Street, N.W.,

Washington, D.C.

Imm

TELEPHONE: LExington 2-5200

ES: -JOINTDISCO NEW YORK

THE AMERICAN JEWISH
JOINT DISTRIBUTION COMMITTEE Inc.

221

100 EAST 42nd STREET, NEW YORK CITY
Vice-Chairmen
AERWALD Honorary Chairman

1. EDWIN GOLDWASSER Treasurer

HERBERT H. LEHMAN

ELIX M WARBURG Honorary Chairman

N ROSENBERG Henorary Chairman, Executive Committee
ND M M WARBURG Chairman

GEORGE BACKER
DAVID M. BRESSLER

WILLIAM ROSENWALD
WILLIAM J. SHRODER

ALEXANDER KAHN
HAROLD F. LINDER

JONAH B. WISE

M. C. SLOSS

H LIEBERMAN Vice-Chairman National Council

BERNHARD KAHN

Honorary Chairman

C HYMAN Executive Vice Chairman

EVELYN M. MORRISSEY. Assistant Treasurer

MRS. H.B.L GOLDSTEIN Comptroller

European Executive Council

H. BECKER Chairman National Council

ALEXANDER A. LANDESCO, Treasurer
ABNER BREGMAN Associate Treasurer

JOSEPH J. SCHWARTZ

ISIDOR COONS Director of Fund Raising

Chairman

MOSES A. LEAVITT. Secretary

November 13th, 1942.

Hon. Irving Lehman,

119 East 71st Street,
New York, N.Y.
Dear Judge Lehman:

I enclose herein copy of the
memorandum which I discussed with you this afternoon.
Sincerely yours,

M. A. Leavitt.

enc.

222
November 13, 1942

MEMORANDUM
Re:

THE EXTENSION OF RELIEF IN OCCUPIED POLAND

or the State

About five months ago, at the instance of the General Jewish Council, comprising
the American Jewish Committee, the B'nai B'rith and the Jewish Labor Committee,
representatives of the J.D.C. conferred with the delegates of these
ganizations with respect to the feasibility of approaching three Department Jewish
in the near future to urge that food and other means of relief be extended to the
Jewish population in ocoupied Poland. At this meeting the organizations a greed

in principle that it was desirable to make such inquiry of the State Department
It was proposed, however, that in order to have a united Jewish representation,
the American Jewish Congress be invited to participate in the next conference
and urged to associate itself with a common course of action.

Accordingly, the American Jewish Congress was so invited, accepted the invitation
and appeared in the persons of Dr. Stephen S. Wise and Mr. Carl Sherman. All

further discussions with respect to the entire problem of extension of relief

to the Jewish communities in Poland were attended by representatives of the
American Jewish Congress. Practically all such meetings were attended by
Dr. Maurice Perlzweig, who came as the alternate for Rabbi Stephen S. Wise,
in behalf of the American Jewish Congress.

Consideration was given to the action taken by the Allied and United Nations
and the German Government in permitting certain foodstuffs and other relief
supplies to be brought into Greece. It was hoped that the precedent set by the
belligerent governments in sending, under proper supervision, food supplies

into Greece for the benefit of the Greek population, would be utilized in

appropriate approaches to the United States Government and to the British Govern-

ment, with a view to determining the practicability of adopting similar procedures in the case of the Polish Jewish population.

At this stage it was suggested that as the problem of relief was of paramount
importance, not alone to the Jewish inhabitants of Poland, but to the Catholic
Poles, the collaboration of Christian organizations of the United States be
enlisted in studying the plan and in approaching our Government. To that end
the five organizations, namely, American Jewish Committee, B'nai B'rith, Jewish
Labor Committee, American Jewish Congress and the J.D.C. agreed that the

Secretary of the Conference, Mr. Minkoff, address communications to the Federal
Counoil of the Churches of Christ in America and the American Friends Service

Committee, inviting them to a further discussion. Informally, the representatives of these organizations were approached and they indicated their willingness Conference

to participate in these discussions. At the same time members of the serviceable

group sought such information as might be available and as might be Red

for a further study of this problem from representatives of the American Polish Cross
the International Red Cross, the Polish Embassy in the United States, the
Minister in New York and other organizations.
The r representatives of the Federal Council of Churches of Christ in America their and

the American Friends Service Committee, after submitting the matter to

-2-

223

respective boards, agreed in principle to associate themselves with the Jewish
groups in an appropriate demarche to the State Department. In conversations
with the Polish Ambassador to the United States and the Polish Minister in
New York, it developed that the collaboration of the Polish American Counoil
(representing the Polish Catholic groups in this country) might be enlisted
in this enterprise. Accordingly, on the unanimous consent of the conferees,

the Polish American Council was invited to associate itself with this project

and it delegated both a lay representative and at the same time brought about
the representation of a Polish Bishop at several of these conferences.
The Conference in the mean time had learned that the British Government had

agreed in principle to permit the purchase of foodstuffs in Portugal in an

amount of 3,000 pounds monthly for transmission to Poland. It was learned

thereafter that this permission on the part of the British authorities would
cover not only the shipment of food supplies from Portugal to the Jews in the
Polish ghettos, but also to the general Polish population in a similar amount.
Thereupon the conferees agreed to embody in the memorandum to be submitted to

the State Department a specific request that permission be granted for the
purchase in Portugal of food supplies to be sent respectively to the general
Polish population and to the Jewish population in such amounts as might be
authorized by our Government.

A Drafting Committee was appointed to prepare the memorandum setting forth
these views, consisting of Dr. Perlzweig representing the American Jewish
Congress and Mr. Minkoff representing the General Jewish Council. It was

agreed that the drafts in turn be submitted to all the members of the Confer-

ence and be duly approved by them. The Drafting Committee promptly submitted

such a draft, which was in the process of circulation to the members of the

Conference group, when the attention of the Conference was directed to a new
development in this situation; It appeared that some three weeks ago
Dr. Stephen S. Wise and Dr. Naohum Goldmann,a representatives of the World
Jewish Congress, had called on Mr. Summer Welles and were advised by
"T. Summer Welles that our Government had consented to permit the purchase

in Portugal of a limited amount of food supplies, to wit, $12,000 a month
for shipment to the Jewish population in Poland and that a similar
amount of foodstuffs would be authorized to be purchased for the Polish general
population.

At this point the World Jewish Congress representatives communicated with the

J.D.C. and asked for a meeting to discuss this matter. Such a meeting did take
place. The representatives of the World Jewish Congress stated that they had
secured a license and that they understood also that the Polish American Council
had received a license in a similar amount and they requested that the J.D.C.
associate itself with them in the financing and in the carrying through of this

project.

The J.D.C. having associated itself with the American Jewish Committee, the
American Jewish Congress, B'nai B'rith, Jewish Labor Committee, Federal Council
of Churches of Christ in America, American Friends Service Committee, the
Bishops Committee and the Polish American Council, pointed out that it must

bring this situation to the attention of these bodies and that it could not
act in good faith without their assent and that it must advise them fully.

224

-3-

This was done by Mr. Minkoff as Seoretary of the Conference Committee, who

duly sent out word to all the members of the Conference group for the information of their respective organizations.

In order that the facts of this situation might be clearly known, Mr. Minkoff,

as Secretary of the Conference group and also as representative of the General
Jewish Council, and Messrs. Hyman and Leavitt, representing the J.D.C., visited
Washington to confer with the Treasury with respect to the procedures to be
undertaken.

The facts as above set forth were communicated to Mr. John Pehle of the Foreign
Funds Control of the Treasury. Mr. Pehle advised that Mr. Nahum Goldmann
had conferred with him several days ago on the same subject matter and that
Dr. Goldmann was planning to submit an application for a license to transmit

$12,000 to Portugal for the purposes indicated. As of that time, we understood
that no application had yet been received, nor had any license been issued to
the World Jewish Congress.

Mr. Minkoff, for the General Jewish Counoil, and Messrs. Hyman and Leavitt,

for the J.D.C., pointed out that the J.D.C., as the oldest and most substantial
American ewish relief organization, with a record of twenty-eight years'
service in the disbursement of some $125,000,000 of relief throughout the
world, stood ready, without or ganizing any special campaign or any special
publicity or propaganda, to furnish the funds required monthly, to organize
the necessary procedures, and to instruct its headquarters office in Lisbon

to carry out this activity, so far as possible, in collaboration with the

representatives of the Polish Government and in collaboration with the
Polish American Counoil, which was likewise anxious to transmit funds for
food packages for the general population in Poland.
The request of the World Jewish Congress that the J.D.C. associate itself with
them in a joint venture was placed before the Executive Committee of the Joint
Distribution Committee. It was the unanimous opinion of the Executive Committee

that the J.D.C. could not associate itself with what was essentially a political
international organization and that it must limit its participation in this

matter to such contact with American agencies.

As a result of this decision, the J.D.C. submitted an application to the Treasury
requesting a license to transmit up to $12,000 to Portugal. The American
Jewish Committee, the B'nai B'rith and the Jewish Labor Committee agreed for
themselves and for the General Jewish Council to support fully the application

of the J.D.C. as the American functional operating agency to apply for the
license and carry this project through.

The Joint Distribution Committee is awaiting the decision of the Treasury Department on its application.

..c.H.

J.C. Hyman.
JCH:RM

225

now 17

car Mr Secretary,

through Jace Walfwhins help the

inclosed letter was obtained from the
general junish Cammeil which I hope

will he sufficient to in dicate that
it is the general wish of the yoush

requestions interested w releig

that the juit Distribution Committe

be recognized as the matrument through

which the
ashace relief for Plant
should
befood
handled

your
Ben V. C. Non Henry Morgenthan p.

follow

GENERAL JEWISH COUNCIL
295 MADISON AVENUE
NEW YORK
JEWISH COMMITTEE

JEWTSH

LABOR

COMMITTEE

November 17, 1942

Mr. John Pehle,
Foreign Fund Control,
U.S.Treasury Department,
Washington, D.C.
Dear Mr. Pehle,

The General Jewi sh Council, through its constituent
agencies - the American Jewish Committee, the B'nai B'rith and
the Jewi sh Labor Committee -has authorized me to communicate
to you their support of an application made by the American
Jewish Joint Distribution Committee for the issuance of a permit

to transmit $12,000. monthly to Lisbon for the purchase of food
packages to be sent to the Jewi sh population in Nazi-occupied
Poland.

These instructions were given to me as the result of

a meeting held on Friday, November 13th, 1942, and called at the
instance of the General Jewish Council. The meeting WAS attended
by representatives of the above-mentioned organizations as well
as by a representative of the American Jewi sh Congress. A re presentative of the American Jewish Joint Distribution Committee
was also present.

All the American organizations represented at the
meeting were urged to reach a unanimous decision as to which
agency should be recommended to the Government to be charged

with furnishing and transmitting the funds as well as with the
carrying out of the technical arrangements in Lisbon.
As stated above, the American Jewish Committee, the

B'na1 B'rith and the Jewish Labor Committee, respectfully submit

that the application of the American Jewish Joint Distribution
to Jews in distress, receive the most favorable consideration of

Committee as the chief American Jewish agency for overseas aid
the Treasury Department.

-2-

The representative of the American Jewish Congress

stated at the meeting that he was not in a position to make any
decision at that moment. As yet, no reply has been received from
the American Jewish Congress.

Respectfully yours,

I.M.Minkoff
Executive Secretary

Treasury Department

228

Division of Monetary Research

Date December 10 19 42

To: Secretary Morgenthau
From: Mr. White

Original of this report
appended to prepared letter
to President.

Treasury Department

228

Division of Monetary Research

Date December 10 19 42
To:

Secretary Morgenthau

From: Mr. White

Original of this report
appended to prepared letter
to President.

Treasury Department

228

Division of Monetary Research

Date December 10 19 42
To:

Secretary Morgenthau

From: Mr. White

Original of this report
appended to prepared letter
to President.

-

-

29

Treasury Department

Division of Monetary Research
Date December 10

1942

Miss Chauncey

To:

From:

Mr. White

The tables for transmittal to the
Secretary of State differ from those
being sent to the President in that
certain military figures are not broken
down.

SECRET
230

December 10, 1942

Exports to Russia, Free China and selected blocked
countries as reported to the Treasury Department
during the ten-day period ending
November 30, 1942

1. Exports to Russia
Exports to Russia as reported during the ten-day
period ending November 30. 1942 amounted to $88,415,000
making a total of $187,426,000 for the month of November.
Military equipment accounted for $55,376,000 of the total
for the period under review and included 247 tanks, 100
105-mm. self-propelled howitsers and 27 light bombers.
(See Appendix c.)

2. Exports to Free China
Exports to Free China as reported during the period
under review amounted to $296,000, of which all was
military equipment.

3. Exports to selected blocked countries
Exports to selected blooked countries are given
in Appendix A. Most important were exports to Switser-

land and Portugal, amounting to $935,000 and $204,000,
respectively.

ISF/efa
12/10/42

SECRET
231
APPENDIX A

Summary of United States Exports to Selected
Countries as Reported to the Treasury Department
from Export Declarations Received

During the Period Indicated 1
(In thousands of dollars)

10-day

10-day

Period ended
Nov.30. 1942
S.S. R.
ree China

den
Portugal

french North Africa 2

Aug. 1, 1942 to
Nov. 30. 1942

Total
Domestic Exports

July 28, 1941 to
July 31. 1942

$ 88,415

$ 45,867

$ 553,281

$ 742,941

296

2,032

9,494

97,720

770

2,858

pain

witserland

Period ended
Nov.20. 1942

Total
Domestic Exports

1

3

935

443

5,629

11,537

-

-

2,626

18,056

204

396

1,396

9,743

-

-

2,088

6,305

Treasury Department, Division of Monetary Research

December 10, 1942

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.
Includes Marocco, Algeria and Tunisia.

1/efs 12/10/42

SECRET
232

APPENDIX B

Exports
from the to
U.S.
Free China
and
U.S.S.R.
as reported
theto
Treasury
Depar
twent
July 28, 1941 - November 30, 1942 1
(Thousands of Dollars)
Exports to
Exports to
July 28, 1941 - Jan. 24, 1942

Free China

U.S.S.R.

$ 32,758

e 98,902

6,938

9,608
13,315

1942

Jan. 26 - Jan. 31

Feb. 1 - Feb. 10 2

Feb. 10 - Feb. 20
Feb. 20 - Feb. 28

4,889
4,853
2,921
2,879
8,058

26,174

855

-

ii

28,119
32,509
28,556
42,435
51,696
66,906
50,958
28,652
18,000
26,180
12,764
53,799
49,919
35,657
33,940
35,669
14,970
23,325
112,492
24,339

-

902

30,947

1-

1,885

3

Mar. 1 - Mar. 10

Mar. 10 - Mar. 20
Mar. 20 . Mar. 31

2

4,836
5,335

Apr. 1 - Apr. 10

Apr. 11 - Apr. 20
Apr. 21 - Apr. 30

2,827

May 1 - May 10 5
May 11 - May 20
May 21 - May 31
June 1 - June 10

296

1,872
2,533
3,399
2,707

June 11 - June 20
June 21 - June 30

1,664
7,900

July 1 - July 10

590

July 11 - July 20
July 21 - July 31
Aug. 1 - Aug. 10

3,066

Aug. 11 - Aug. 20
Aug. 21 - - Aug. 31 4

208
192

2,850

296

55,085
45,701
53,144
45.867
88,415

$ 109,817

$1,297,041

30

Sept.11 Sept.21 Sept. Oct. Oct. 11 1 Sept.20 Oct. Sept.10 Sept.30 10
-

233

1 - Nov. 10

Nov. Oct. 21 Oct. Oct. 20 31

Nov. 11 - Nov. 20
Nov. 21 - Nov. 30

2,032

Total

2. 1. These figures are in part taken from copies of shipping manifests.
Beginning instead with February 1, figures are given for 10-day period
3. 8-day period. of week, except where otherwise indicated.

4. 11-day period.
5. Due to changes in reporting procedure by the Department of

Commerce, this report is incomplete for the period indicated.

Treasury Department, Dividon of Monetary Research December 9,1942

ISP/efa 12/9/42

SECRET
233

APPENDIX 0

Principal Exports from U. S. to U. S. S. R.
as reported to the Treasury Department
during the ten-day period ending
November 30, 1942

Unit of

Quantity

Quantity

TOTAL EXPORTS

Value
(Thousands

of dollars)
$ 88,415

Military Equipment (855,376)
Ammunition

--

Military tanks

Medium tanks (M4A1)

19,023
17,806

No.
No.

117
130

No.
No.

100
101

No.

320

No.

39

Aircraft
Lt. bombers (2 engine A-20)

No.

27

Tank engines, parts and accessories

--

--

1,723

armament

--

--

792

arts and accessories for field
artillery

--

--

687

--

--

1,298

--

--

8,472

--

6,403

Medium tanks, n.e.s.

Field artillery

105 mm. howitsers (self-propelled)

37 inch anti-aircraft artillery guns
Infantry support weapons

6 pounder (57 mm.) anti-tank equipment guns (self-propelled)

Guns, n.e.s.

Parts and accessories for tank

All other

5,425

4,837

3,785

Non-Military Goods (833,0391

Motor trucks and auto replacement
parts and accessories

Industrial
and electrical machinery
parts
Iron and steel manufactures and
semimanufactures

--

5,425

234

Page 2

APPENDIX C (Con't)

Unit of

Quantity

Metal and manufactures, n.e.s.

Value
(Thousands

Quantity

of dollars)

--

3,298

Meat products

--

--

2,912

Dairy products

--

--

2,237

Rubber and leather manufactures

--

--

1,379

Dried egg products

Lb.

Chemicals and related products

--

--

619

All other

--

--

1,648

622,225

646

Treasury Department, Division of Monetary Research December 9. 1942
EPM/efs 12/9/42

235

DEC 11 1942

My dear Mr. Secretary:

I am enclosing report on our exports
to some selected countries for the period
ending November 30, 1942.

Sincerely yours,
(Signed) H. Morgenthau, Jr.

Secretary of the Treasury.
The Honorable,

The Secretary of State.
Enclosure

File in Diary
By Givens 4:27 12/11/42

Extra copies direct to White's
office 12/12

HDW/efs

12/9/42

HOW

FILE COPY

SECRET
236

December 10, 1942

Exports to Russia, Free China and selected blooked
countri es as reported to the Treasury Department
during the ten-day period ending
November 30, 1942

1. Exports to Russia
Exports to Russia as reported during the ten-day
making a total of $187,426,000 for the month of November.
Military equipment accounted for $55,376,000 of the total
for the period under review.
2. Exports to Free China
period ending November 30, 1942 amounted to $88,415,000

Exports to Free China as reported during the period
under review amounted to $296,000, of which all was
military equipment.

3. Exports to selected blocked countries
Exports to selected blocked countries are given in

Appendix A. Most important were exports to Switser-

land and Portugal, amounting to $935,000 and $204,000,
respectively.

ISP/efs
12/10/42

SECRET
237

APPENDIX A

Summary of United States Exports to Selected
Countries as Reported to the Treasury Department
from Export Declarations Received

During the Period Indicated 1/
(In thousands of dollars)

10-day

Period ended
Nov. 30.1942
S. S. R.
ree China

reden

rtugal

rench North Africa 2

Aug. 1, 1942 to
Nov. 30. 1942

Total
Domestic Exports

July 28, 1941 to
July 31. 1942

8 88,415

$ 45,867

$ 553,281

$ 742,941

296

2,032

9,494

97,720

1

3

770

2,858

5,629

11,537

is
itserland

10-day

Period ended
Nov. 20.1942

Total
Donestic Exports

935

443

-

-

2,626

18,056

204

396

1,396

9,743

-

-

2,088

6,305

Teasury Department, Division of Monetary Research

December 10, 1942

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.
Includes Morocco, Algeria and Tunisia.

n/efa 12/10/42

SECRET
238
APPENDIX B

Exports from the U. S. to Free China and U.S.S.R.
as reported to the Treasury Depar twent
July 28, 1941 - November 30, 1942 1
(Thousands of Dollars)
Exports to
Free China

July 28, 1941 - Jan. 24, 1942
1942

Jan. 26 - Jan. 31

s

$ 98,902

6,938

9,608
13,315
26,174
28,119
32,500
28,556

4,889
4,855

Mar. 1 - Mar. 10

2,879

Mar. 10 - Mar. 20
Mar. 20 - Mar. 31

U.S.S.R.

32,758

Feb. 1 - Feb. 10 2

Feb. 10 - Feb. 20
Feb. 20 - Feb. 28 3

Exports to

2,921

8,058
2

Apr. 1 - Apr. 10
Apr. 11 - Apr. 20
Apr. 21 - Apr. 30

4,836
5,335
2,827

May 11 - May 20
May 21 - May 31
June 1 - June 10

1,872
2,533

May 1 - May 10 5

296

3,399

June 11 - June 20
June 21 - June 30

2,707
1,664
7,900

July 1 - July 10

July 11 - July 20
July 21 - July 31
Aug. 1 - Aug. 10

66,906
50,958
28,652
18,000
26,180
12,764

590

3,066

208
192

Aug. 11 - Aug. 20
Aug. 21 - Aug. 31
Sept. 1 - Sept.10
Sept.11 - Sept.20
Sept.21 - Sept.30

2,850

35,669
14,970
23,325
112,492

855
11

902

Oct. 1 - Oct. 10

1,885

Oct. 11 - Oct. 20
Oct. 21 - Oct. 31
Nov. 1 - Nov. 10

30

233

Nov. 11 - Nov. 20
Nov. 21 - Nov. 30

2,032
296

Total

$ 109,817

$1,297,041

1. These figures are in part taken from copies of shipping manifests.
2. Beginning with February 1, figures are given for 10-day period
instead of week, except where otherwise indicated.
3. 8-day period.
4. 11-day period.
5. Due to changes in reporting procedure by the Department of
Commerce, this report is incomplete for the period indi eated.
Treasury Department, Division of Monetary Research December 9, 1942
ISP/efe 12/9/42

SECRET
239
APPENDIX 0

Principal Exports from U. S. to U. S. S. R.
as reported to the Treasury Department
during the ten-day period ending
November 30, 1942

(Thousands of Dollars)
TOTAL EXPORTS

$ 88,415

Principal Items:
Military equipment
Motor trucks and auto replacement
parts and accessories

Industrial machinery and parts
Iron and steel bars

Iron and steel billets, sheets, plates,
wire, nails, axles, etc.

Dairy products
Canned sausage and pork
Rubber and leather and manufactures

Meat products, n.e.b.

Copper, nickel, sinc, mercury and tungsten
Electrical machinery and apparatus
Aluminum and manufactures

Brass and bronse plates, sheets, wire,
pipes, tubes, etc.

Dried egg products
Chemicals and related products

Tellow and lard
Relief supplies
Non-metallis minerals
Cotton, wool and manufactures

55,376
8,472
5,176
3,124

2,301

2,237
1,583
1,379
1,529
1,319
1,227
1,005
974
619

486
448
235
202

Treasury Department, Division of Monetary Research December 9,1942
KPK/efa 12/9/42

240

Treasury Department

Division of Monetary Research

To:

Date December 10, 1942 19

Secretary Morgenthau

From: Mr. White

1. The Stabilization Board of China is
calling on the Treasury for $10 million
in accordance with the Stabilization
Agreement of April 1, 1941.

2. This is the first time that China has
called on the United States for funds

under this 1941 agreement.

241
BOARD OF GOVERNORS
OF THE

FEDERAL RESERVE SYSTEM
WASHINGTON

OFFICE OF THE CHAIRMAN

December 10, 1942.

My dear Mr. Secretary:

This is to acknowledge receipt of your letter
of December 8 enclosing a copy of the one which you received from Lt. Gen. J. L. DeWitt concerning the evacuation of persons of Japanese ancestry from the Pacific

Coast area.

I have circulated your letter and that of

General DeWitt to members of the Board who will, I am
sure, be gratified as I am by the expressions of appreciation for the part which the Federal Reserve System,
and particularly Mr. Szymczak, had in helping to carry
out the program.

Sincerely yours,

The Honorable

The Secretary of the Treasury,
Washington, D. C.

V

242

NOT TO BE RE-TRANSMITTED
COPY NO.

13

BRITISH MOST SECRET
U.S. SECRET

OPTAL No. 428

Information received up to 7 A.M., 10th December, 1942.
1. NAVAL

Photographic reconnaissance of NAPLES on 7th showed 3 battleships

of LITTORIA Class had left port.
9th. One of H.M. Destroyers was torpedoed 70 miles north of
ORAN. One of H.M. Corvettes was torpedoed and sunk by aircraft off North

African Coast. Six officers and 37 ratings picked up.
Attack on shipping. An 18,000 ton merchant ship outrard bound
independently routed, believed sunk 480 miles west-north-west of AZORES on

6th/7th. No information regarding survivors.
2. MILITARY

LIBYA and TUNISIA. Nothing reported beyond patrolling activity.
3. AIR OPERATIONS

WESTERN FRONT. 8th/9th. About 270 tons of high explosive and

incendiaries were dropped on TURIN. Further reports confirm that attack was
very successful.

9th. Industrial, railway and canal targets in FRANCE and Low
Countries were attacked by fighters and light bombers. A 5,000 ton ship was
torpedoed off South-west coast of NORWAY.

9th/10th. 245 aircraft were despatched: TURIN 226 (3 missing);
sea mining 7 (1 crashed); and pamphlets Northern France 12 (1 missing). Pre-

liminary reports indicate attack on TURIN was scattered at first owing to
weather, but later attack became more concentrated when target was lit up .
LIBYA. 7th and 8th. Fighter-bombers attacked MARBLEARCH landing
ground.

Night 7th/8th. Heavy bombers attacked TRIPOLI (L) and MISURATA.

Also airfields near HOMS (L). Enemy casualties: 8, 1, 7. Ours 2, nil, nil.

243
NOT TO BE RE-TRANSMITTED
COPY NO.

13

BRITISH MOST SECRET

U.S. secret
OPTEL No. 434

is supplementary
rosume of operational events covering
the period 3rd toFollowing
10th December,
1942.
1. NAVAL

NORTHERN WATERS. The last 3 Russian ships to be independently
routed from NOVA ZEMBLA arrived in ICELAND (c) on the 5th December. TIRPITZ is
reported to be undergoing repairs in the TRONDHEIM FJORD and & ship which may be

a repair ship has been seen in that area. NURNBERG, 6 inch cruiser, believed to
have arrived extreme northern waters from the BALTIC.
SUBMARINE WARFARE. Apart from attack on convoy in the North

Atlantic and slight increase of activity east and west of GIBRALTAR, week was
Quiet. 23 attacks by aircraft on U-boats, 5 promising, and 5 by surface craft,
promising. During the week 5th December to 11th December inclusive, 8 ships
reported torpedoed and 2 attacked by aircraft as follows: 4 British torpedoed

2

in North Atlantic, one British off West Coast of Africa, one British in Mediter-

ranean, and one British and one Dutch off the northeast coast of South America;
and one British and one French by aircraft in the Mediterranean. Belated reports
of 5 torpedoed: 2 British and one Norwegian off northeast coast of South America,
one British in North Atlantic and one Panamanian in Cape area. Of 103 ships sunk
b U-boat during month of November, including North African operations losses, 66
were in North Atlantic. November losses in tonnage reported to date 695,000 of
which 91% due to U-boats and 134,000 in connection with North African operations.
Percentage of ships sunk by U-boat in escorted convoys excluding U.K. coastal
convoys for month of November - 2 per cent.
TRADE. About 67 French merchant ships, totalling upwards of

266,000 tons in North African ports have come under Allied control. Imports in
convoy to U.K. week ending 5th - 717,537 tons, of which 308,193 of oil.
2. MILITARY

LIBYA. At the start of Rommel's latest withdrawal, it is thought
that German troops comprising remnants of 90th Light and 15th Panzer Divisions,
were holding EL AGHEILA position. Italian mobile troops were unlocated, but

thought also to be still in this position. Italian infantry of 21st Corps had

probably already been withdrawn to BUCRAT, which is the next good defensive posi-

tion and lies about 230 miles further west.

MALTA. Since the arrival and successful unloading of 2 supply
convoys, Viscount Fort has been able to make some essential small increases in

the reduced ration scale. This is only considered as a first step and it is

hoped to be able to make further increases shortly.

FRENCH NORTH AFRICA. Heavy rain restricting operations. Need for
essential maintenance and reinforcement over long line of communications still
preventing full pressure being exerted against the Axis. Shortage of M.T. has
thrown extra strain on railways causing congestion and delay. In addition,
native labour disperses immediately when bombs fall. Nevertheless, strong Allied
reinforcements building up in forward areas. Reinforcement of Axis forces continues steadily. Axis thought to be developing bridgehead approximately from a

point on coast 15 miles west of BIZERTA - JEFNA - west of TEBOURBA - MASSICAULT ZAGHOUAN with P mobile screen on south to ensure communications with TRIPOLITANIA.

Indications that French troops within bridgehead area being disarmed by Germans.
FAR EAST. BURMA. Japanese have withdrawn in AKYAB area.

Japanese patrol visited HOMALID scattered by British patrol.
RUSSIA. Russians on central sector may be prevented from offensive action on any large scale owing to deepening of winter. In DON area, however,
normally no heavy snow and when frost returns, Russians may be able to push on if
they can overcome lack of communications from which they must suffer so long as
encircled German army remains in existence.

244

3. AIR OPERATIONS
WESTERN FRONT.

Day. Philips radio factory heavily bombed from low level by R.A.F.
objective known to be well-defended by heavy and light A.A. signifying its importance to Germans. Much damage done to both plants. 13 light bombers lost. Fives

Lille
heavy
attacked
U.S. Fortresses from high altitude. Several its seen.
Both these
attacks
sameby
day.
Night. One heavy attack on MANNHEIM but result could not repeat
NOT be estimated owing to cloud. 2 good attacks on TURIN on consecutive nights,
both successful, and also heavy taking into account distance from base. Fires

large and well concentrated. Our losses about one and a third per cent of force
employed. During November more than 42 million leaflets were dropped over GERMANY

and occupied territory. Over 12 million of these were released in one night over

every important district of FRANCE to announce Allied entry into MOROCCO and ALGERIA

TUNISIA. Heavy rain and generally bad weather with its effect upon

indifferent airfields both hampered our activity in the air and our build-up of

sir strength forward. Further successes obtained against Axis transport aircraft

The enemy operating chiefly from better constructed airfields near BIZERTA and
TUNIS not repeat NOT handicapped to same extent and could maintain fairly heavy
scale of activity with fighters, dive bombers and long range bombers against our
ground
positions. But his night bombers attacking our bases have been dealt with
severely by Beaufighters.

LIBYA. Fighter bombers attacked enemy airfields. Liberators bombed

TRIPOLI by night and U.S. Liberators bombed NAPLES by day.

GIBRALTAR. Air patrols made 27 U-boat sightings and 9 attacks.
RUSSIA. Russians thought to have air superiority in STALINGRAD area
and to be making the most of it by attacking German supply system, i.e., transport
aircraft, airfields and communications. Probably about 200 German transport aircraft have been withdrawn from south Russia to Moditerranean area. This added to
losses from Russian fighters must render supply of encircled Axis troops an even
greater problem. Germans are using several old-type Heinkols and JU 86's in this
area for transport purposes.
4. EXTRACTS FROM PHOTOGRAPHIC AND INTELLIGENCE REPORTS ON RESULTS OF AIR ATTACKS
ON ENEMY TERRITORY IN EUROPE.

TURIN. November 28th/29th and 29th/30th. Considerable destruction
at Fist. Aeroengine Assembly suffered most. About 6 other factories working for Fiat
badly damaged. 3 large bombs hit Lancia works. Very heavy damage in town, especially near centre.

MILAN. Evacuation continues on large scale. Some small industrial

concerns have closed down and moved south. Firms such as Alfs Romeo and Isotta

Fraschini are diverting part of their production to less vulnerable areas. Trade
Fair advertised for April, 1943 officially postponed.
SEA-MINING. Names of 6 ships sunk and one damaged by mines between
13th November and 2nd December received from various sources. Majority in waters
between DENMARK and SWEDEN.

5. OPERATIONAL AIRCRAFT BATTLE CASUALTIES

Owing to difficulty of giving up-to-date and accurate figures for the
previous woek, especially relating to distant war theatres, this paragraph will no
longer appear weekly. Efforts will be made to give monthly figures in similar
tabulated form about halfway through the succeeding month starting mid-January.
6. HOME SECURITY

Estimated civilian casualties week onding 6 a.m.a 9th. Killed 3,

seriously wounded 7.

245
NUMBER 61

SECRET

OFFICE OF STRATEGIC SERVICES

THE WAR
THIS WEEK
December 3-10,1942

Printed for the Board of Analysts

Copy 6
No.

SECRET

DECEMBER 3-10, 1942

THE WAR THIS WEEK
The events of the week have been unspectacular in all

theaters of the war. Allied forces have been repulsed in
Tunisia, but the numbers involved were apparently very small.
The Darlan imbroglio continues to be confusing in its implications and embarrassing in its consequences. At El Agheila
the lull continues. The Russians have broadened the salient
to the north and south of Velikie Luki, and have drawn closer

the pincer arms west of Stalingrad. Finally, Allied forces
have overrun Gona and divided other elements of the Japanese beachhead remaining on the northern shore of New
Guinea, and threaten soon to push the enemy into the sea.
Axis Counterattack in Tunisia

Despite the flurry of newspaper headlines, the situation
in Tunisia has undergone no sweeping changes and the forces

involved in the current engagements remain very small.
Details of the fighting are obscure, but in general it appears
that the enemy has capitalized on his strategic position, his
air superiority, and his immediate advantages in communica-

tions to halt the advance of light Allied forces into the
Djedeida area and drive them back along the Medjerda
Valley to the hills west of Tebourba. Axis forces have
maintained considerable pressure in this whole area. On
December 7, however, Allied forces reoccupied the hills at

El Guessa, five miles southwest of Tebourba. Farther
north the Axis has retained its strong positions controlling

the road and railroad junctions at Mateur. In the center
and south, Allied units have taken Faid and Pichon, points
on the east-west roads leading toward Sfax and Sousse.

Air activity has been intense. Dive bombers from nearby
fields operated in close cooperation with ground troops in the
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successive enemy counterattacks; and enemy bombers continued their attacks on Allied ports. The Allied air offensive

Americans were unwilling to alter their scripts to suit the
Admiral's pleasure. In Morocco, former Governor General

has concentrated on enemy airdromes, and has given increas.

Noguès-now a member of Darlan's newly-created imperial

ing support to ground forces west of Tebourba.

council-unlike Giraud and the Admiral himself, has not

The size of Axis forces in Tunisia appears to be growing, as

air transports and presumably shipping continue to supply
and reinforce the original bridgehead. Total Axis combat
forces in Tunisia have been estimated at more than 30,000.
The Axis also enjoys the advantage of the major airdromes of
Bizerte and Tunis, and of smaller fields in this area, as well as

the use of bases in Sicily for bombers.
The Allies, facing severe problems of distance and communication, have to date been able to concentrate only small
armored and infantry forces in the immediate combat zone.
The battlefront is about 200 miles from Bône by rail, about
540 from Algiers, about 800 from Oran, and more than 1,300
from Casablanca. Similarly Allied air operations have been
handicapped by lack of all-weather airfields in the forward
area. However, with the improvement of Allied communications into Tunisia and the establishment of air-ferry routes
to this theater, the gradual massing of air and ground power
should be possible. It remains to be seen whether-in terms
of diversion and attrition-Germany will consider it profitable

forfeited his Vichy citizenship. According to a reliable report, Noguès has sent to Madrid and Vichy a certain Olivier
de Sardan, formerly Laval's chef de cabinet, ostensibly as
representative of the Moroccan Phosphate Bureau. Very
possibly, however, he is to maintain liaison between Noguès,
Pétain, and Pietri, French Ambassador to Spain, against the

day when the Allies might meet serious reverses in North
Africa. At the same time, numerous pro-Axis Frenchmen
are freely passing from French Morocco through the Spanish
zone on their way to metropolitan France.
Significantly enough, the recent agreement between Darlan
and Boisson, Governor General of French West Africa, opening Dakar to Allied planes and ships, has restricted the use of
West African air fields to transit purposes and has left undecided the disposition of the French warships in the area.
Moreover, a report descriptive of the situation preceding the
announcement of the current agreement, has painted a picture

of extreme confusion and not a little double-dealing.

It appears that Governor Boisson came to terms with
Darlan only after the pressure of public opinion and Allied

to enlarge and strengthen its bridgehead to match any growth
of Allied power.

successes in Morocco and Algeria had made any other course

Vichy-in-exile: Evidences of Incomplete Conversion

impracticable. At the same time, the authorities at Dakar
maintained communication with Vichy; and General Falvy,

As the Allied forces have with difficulty maintained their
ground on the Tunisian battlefront, the metamorphosed
Vichy governors of French Africa apparently continue to be
a source of some embarrassment. Although ostensibly cooperating with the United States, Darlan has withheld permission for the OWI to broadcast from North African radio

would be restricted to American troops with no British or
Fighting French permitted to enter the colony. Furthermore, Boisson has given no indications that he is purging
former collaborationists. On the contrary, the execution of
a "De Gaullist agent" on the nineteenth (the very day of the

the commander of the West African ground forces and a reputed Germanophile, proclaimed that any occupying forces

stations to the European continent-presumably because the
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accord putting Dakar under Darlan), and the imprisonment
of an army officer for distributing pro-American propaganda
on the twenty-seventh have indicated the trend of the ad-

ministration. Our informant concludes that the policy of
keeping the public in the dark has produced a "disquieting
situation," threatening the discipline of the armed forces,
which may eventually pass out of the Government's control.
In Switzerland, a refugee from the Vichy government has
reported that Pétain has been greatly pleased with Darlan's

actions. The Marshal, our informant relates, withheld
orders to Dakar to resist the Allies until he was sure that
Boisson had decided to follow the Admiral. Confirming
earlier reports, this official ascribes Pétain's remaining in
France to his desire to protect refugees from Alsace-Lorraine
and the former occupied zone.

Plain Speaking From Germany and Britain
The Nazis have been quick to sense the propaganda value

of the Darlan imbroglio. In the words of the Nationalzeitung: "Darlan's defection appears to have made either no
impression or a bad one in France
The public detects
impure motives
American cooperation with Darlan
confused and disorganized underground opposition."
In London, meanwhile, General Catroux, Fighting French

Delegate General to the Levant, has warned that military
expediency no longer justifies leaving Darlan in control-in
view of the havoc that disloyal Frenchmen could wreak on
the tenuous communication lines between Morocco and
Tunisia. Speaking in the House of Commons on December 3,

restraint, had anticipated the Foreign Secretary's declaration.

The conservative Times has pointedly advised that the
Admiral's action be viewed in the light of President Roose-

velt's explanation of the former's temporary status. Both
the Times and Telegraph emphasize, however, that Darlan,
far from accepting the President's interpretation, "is making
every effort to put himself in the strongest possible position."
According to the Fighting French, the Telegraph continues,
Darlan "may be counting on the United States to set him up
in power in France itself against the desire of the majority of
Frenchmen."

In still plainer terms the Manchester Guardian finds it

"difficult to see how this latest development
facilitates the military operations of the Allies.
This appears to be a purely personal political move and one
which may cause more mischief and more discord than any
he [Darlan] has yet made.
The probability is that
the United States will be forced by this step to restate its

position towards the Admiral." In Washington, the first
signs of such a restatement have appeared in Secretary Hull's

pledge to Fighting French representatives that the United
States will not permit Darlan to impose an unpopular regime
on the French people.

Lull at El Agheila

In Libya the anticipated lull continues, while General
Montgomery has been establishing forward bases and organiz-

ing lines of communication to give him a rate of supply
sufficient to sustain offensive operations. Contact with the

Government does not consider itself bound by the Admiral's

enemy has been established east and southeast of El Agheila,
where Rommel has prepared fixed positions, but ground action

"unilateral" assumption of authority in North Africa.

has been limited to patrolling. Axis air forces have at inter-

On the critical question of Darlan's organization of a North
African government, the British press, breaking its previous

vals bombed and strafed British positions and have carried out

Foreign Secretary Eden has flatly stated that the British

4

reconnaissance as far as Benghazi. Meanwhile Allied air5

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craft from this theater have ranged as far as Tunis, Bizerte,

has only six light cruisers ready for action. Three more light

and Naples, besides attacking Tripoli and Libyan communica-

cruisers are repairing damage and about 10 are believed to be

tions.

under construction, consisting largely of units of the lightly
armored Regolo class which carries only 5.3 inch guns. The

Enemy strength is currently estimated at about 30,000
40,000 men (10,000 of them Germans), 60 or possibly 100
tanks (50 German), 250 anti-tank guns, and more than 200
field and medium guns. With indications that the British

the cruisers are concentrated in the Naples-Sieily area.
Italy has, to date, only one seaplane tender, but she may

may shortly be ready to renew their offensive, military

shortly have a converted liner in service as a carrier. Her

observers expect that the enemy will make a strong and
determined stand in his present positions. British opera-

strength in destroyers and submarines now effective is prob-

tions may, therefore, follow the pattern of the early stages of

the battle at El Alamein. A spectacular break through is
not expected, however, for, if Rommel is forced back, he
should be able to use the favorable terrain to make a long
series of delaying stands along the narrow coastal belt.

battleship force has been divided between Naples and Taranto;

ably about 50 and 60, respectively. Although the showing
of Italian surface units has not been impressive to date,
there is no reason to believe that her fleet is not prepared to
offer a vigorous defense against any amphibious attack on
the Italian mainland.
Franco's Speech and Spanish Policy

Bombing of Naples and Units of the Fleet
The attack on Naples last Friday by 24 Liberator bombers

from distant African bases suggests what can be done if
bases are gained in nearby Tunisia. Dropping heavy bombs
from a high altitude, Army fliers claim hits on one battleship,
two or more cruisers, and two or three other vessels in the
harbor. Preliminary reconnaissance has shown a light cruiser
of the Attendolo class lying on its side, and widespread damage

to port facilities. Antiaircraft fire was heavy but inaccurate,
and, with no attempt made at interception, all planes returned
safely.

Damage inflicted on cruisers strikes at a vulnerable point

in Italy's naval armament. Since last summer she had
raised her number of effective battleships to six (prior to the

raid on Naples)-three of the 35,000 ton Littorio class, including the newly-commissioned Roma, and three old ships of

the 23,000-ton Cavour class. Italy has only three heavy
cruisers, however, one of which is damaged, and she probably

In his speech of last Wednesday Franco reasserted the
ideological identity of his regime with that of Germany and
Italy, but he carefully made no mention of participation in
the war. Although only incomplete texts of the address are
as yet available, Franco apparently tried to rally his people
by placing before them the choice of either his own fuzzy
Fascism or the "barbaric formula of bolshevism." Liberalism he discarded as the selfish, senile faith of a by-gone era

of capitalism, imperialism and mass unemployment. The
only references to possible action were that Spain would
fight if threatened by war and that Spain's hour would come
after the war was over.

In response to Hitler's birthday greeting (which consisted
of a telegram, a personal letter, and an automobile) Franco
also wished the Fuehrer continued successes in the crusade
against communism.

It is possible to interpret these statements as steps preparing Spain for further collaboration with the Axis. But
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observers question whether a Spanish Government that kept
out of war even when France fell and England stood alone

would enter the war at a moment when Allied armies

are

at the doorstep. A more likely interpretation is that Franco
wants to keep out of war at all cost, fearing mass starvation
and the possible renewal of the Civil War; that the Nazis
are waging a war of nerves and Franco feels words
inexpensive way of cooperating with his brother Fascists who,

after all, put him in power; and that the Allied landings had
so encouraged opposition elements and the anti-Falangist
trend that Franco felt obliged to reassert the political principles of his regime-of which anti-communism was always
the cornerstone.

Prior to Franco's speech Foreign Minister Jordana had
stated categorically and direct from Franco that Spain's
whole policy was directed toward remaining neutral. He
told the Portuguese Ambassador that, contrary to rumors,
Spain had not asked Germany for arms and denied that
Germany had made demands of Spain. The removal of
General Aranda from the Superior War College, and his
replacement there by General Kindelan, transferred from his

post at Barcelona-together with the report that General
Orgaz may possibly be removed from North Africa-are
changes unfavorable to us; but observers attribute them
to internal pressure against avowed monarchists, rather
than to any Spanish desire to join the Axis.
The Germans, in turn, have given no indication of intentions

to move into Spain. The Pyrenees frontier is quiet, and
occupation forces in southwestern France appear to have
been reduced as a result of German movements toward the
Riviera. Certain of the Spanish commanding generals on

the border recently told an American observer that they
expected no attack.

Simultaneously with Franco's speech the appointment of &

new Junta Politica of the Falange was announced. The five
men whom Franco personally selected seem to reflect his pre-

occupation with national unity, being representatives of the

Army, the traditionalists, the economic radicals, and the
Church, together with the founder of the Falange. Five
others were ex-officio members and the last five were selected

by Franco in agreement with the Council. At least three of
these have served with the Blue Division against Russia
and observers class several as "ardent" Falangists. The
star of Serrano Suner, however, appears to have fallen lower

than ever, with the appointment of a number of his old
enemies. In general, no very alarming shift appears to have
taken place. Two interesting notes are the youthfulness of
the group, which at a glance would seem to have an average
age under 45, and the inclusion in the Junta of the Falange of
General Asensio, ambitious Minister of the Army.
Action West of Rzhev

With the definite slowing of the Soviet offensive in the
south, interest has shifted to the central front, where the
secondary offensive begun last summer has in the past two
weeks registered substantial gains. The deep Russian salient

around Velikie Luki, while making little further progress in
a westerly direction, has broadened out toward Staraya
Russa to the north and Smolensk to the south. To the east,
German units have counterattacked in an effort to restore
the railroad between Vyazma and Rzhev, the latter nearly
surrounded by Soviet forces.

The net result of the Russians' offensive has been the
liberation of an impressive extent of territory, and the crea-

tion of a grave threat against four strong points in the
German system of winter defense-Velikie Luki, Staraya
Russa, Rzhev, and Smolensk. Military observers warn, how-

ever, that this offensive-astride the Bologoye-Velikie Luki
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railroad-is operating in the same areas in which the Soviet
armies made some of their most spectacular gains last winter.

But at that time, despite the virtual isolation of Rzhev and

Staraya Russa, both these fortresses held out until the
arrival of spring enabled the Germans to straighten their
lines once more. Only the fall of one of these strong points
will offer conclusive proof of the power of the Soviet offensive.
Stiffening Resistance West of Stalingrad

Meanwhile the Stalingrad pincers drew closer, as the
southern arm established a bridgehead on the west bank of
the Don, and the northern arm (astride the Don bend) concentrated on reducing the German defensive system east of
the river. Here the Nazis have counterattacked to protect

their positions around Stalingrad, while to the south they
have harassed the Russians by raiding supply lines across the

Kalmyk steppes. In Stalingrad itself, the Soviets have
maintained the offensive. Apparently the German position
between the Don and the Volga, while not yet hopeless, is
still deteriorating.
The third Russian offensive, against the Voronezh bridgehead, continues with unannounced results. In the Ordzhonikidze and Tuapse sectors of the Caucasus front, Soviet forces

have maintained the initiative, and Red Navy units have
participated in the repulse of a German local attack south of
Novorossiisk.

German Grain Reaches Finland

With the Finnish merchant marine feverishly engaged in

RUSSIAN CENTRAL FRONT
SEPTEMBER 5 . DECEMBER 9

importing what reports describe as "the whole amount of
wheat promised to them by the Germans before January 1",
it appears that the Finns will not starve this winter. According to an agreement signed last summer, the Reich was to

Line of September 5

Double Track

Russian Advances

Single Track

send to Finland 230,000 tons of breadgrains in the 12 months

Canals

10

so

100

Miles

Map No. 1435 December 9. 1942

Complied and Drawn in the Branch of Research and Analysis

REPRODUCED BY THE 055 REPRO

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following September 1, 1942-apparently enough (when
added to Finland's own crop of a minimum of 390,000 tons)
to suffice for the country's wartime consumption (The War

This Week, September 10-17, pp. 4-5). But the current
imports, arriving mostly from Danzig, seem to be of poor
quality Polish wheat, which the Finns are mixing in a ratio of
two to three with locally grown rye.
Finland's dependence on Germany for wheat, coal, and
other necessities remains the insurmountable difficulty facing
the increasingly vocal advocates of a separate peace with
Russia and a policy of friendship toward the United States.
Furthermore, the resignation of Fagerholm, Social Democratic Minister of Social Affairs, has evidently strengthened
the position of President Ryti and Foreign Minister Witting,

whose belief in an Axis victory appears unshaken. In a
recent speech lauding Germany as Europe's bulwark against

the Soviet, Ryti "has burned his bridges behind him and
gambled everything on German victory." At the same time,
however, his Foreign Minister has been under fire from proAmerican elements and has been asked by the Foreign Affairs

Committee of the Diet whether he was ready to terminate
hostilities with Russia. And the third member of the govern-

mental triumvirate, Tanner, is apparently beginning to
waver in his loyalty to his German allies.
Anglo-American Wheat Agreement With Iran

The Anglo-American wheat agreement concluded with
Iran on December 4 should ease a food crisis that threatened

to cause disorders and should promote the solution of the

critical political and currency problems confronting the
present Government. The agreement-which followed prog-

ress in the currency negotiations-provides that the two
Allied powers will jointly meet deficiencies in wheat and
barley that may occur up to the time of the 1943 harvest,
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provided that the Iranian Government has previously made
every effort to cope with the problem. Provision is made for
Russia to become a partner to the agreement if she so desires.

In an accompanying note Britain and the United States
have arranged to ship 25,000 tons of wheat to Iran as a
"replacement" for Russia's current purchases from Iran.
The current cereal crop-which constitutes 60-70 percent

of the Irani diet-is believed to have been about 300,000
400,000 tons below normal domestic consumption. The

mopping-up operations on this swampy battlefield is not
likely to be rapid, but the enemy's hold appears to be slowly
giving way. Our advances again were characterized by the
close cooperation of ground and air forces.
The Japanese succeeded earlier in dropping some supplies
to their troops at Buna by parachute, but on the whole little

aid appears to have gotten through. Recent attempts to
run the gauntlet against our aircraft with destroyers have met

with no discernible success. One destroyer group which

scarcity has been accentuated by the disruption of the limited
transport facilities to the cities and deficit areas of the south,
by widespread hoarding, and by the failure of the Government

apparently succeeded in getting fairly close to shore Decem-

to establish effective means of collection and control. The
British last year sent at least 80,000 tons of wheat to Iran.

second destroyer group was reported on December 9 to have

It is hoped that supervision by Sheridan, the American Food
Adviser to Iran, together with the effect of the present agreement on hoarders and speculators, will reduce to a minimum
the burden that will actually be placed on Allied shipping in
the coming months.
Japanese Reverses in the Southwest Pacific

In New Guinea, Allied forces succeeded after hard fighting

in dividing Japanese forces strung out along the narrow
Buna-Gona beachhead, and Gona itself has been wholly
occupied. The enemy is clinging tenaciously to his foothold, but his counterattacks have failed and his hasty,
last-minute efforts to combat our air supremacy SO far
have been futile.

ber 1-2 was kept moving and finally driven off when 21
enemy aircraft, providing air cover, were shot down. A
been struck and turned back by our bombers while still
400-500 miles away.

On Guadalcanal, too, the enemy's supply position is deteriorating. A Japanese effort to improve it on the night of
November 30-December 1 was broken up by a United States
naval task force, which reported the sinking of 2 large destroyers or cruisers, 4 destroyers, 2 transports, and a cargo
ship, at the cost to us of 1 cruiser sunk and other unspecified

warships damaged. Another small enemy naval force,
attacked by our aircraft December 3 while still 150 miles
northwest of Guadaleanal, lost either a destroyer or cruiser
and also failed to land supplies or reinforcements.
Tokyo Celebrates Pearl Harbor

At present the Japanese appear to hold the center of the

Tokyo has marked the first anniversary of the war with
further warnings to the Japanese that a long, grim conflict

coastal strip from Sanananda to Buna, but they are en-

lies ahead, and with more dilations on the theme of American

dangered on the west by Australians moving down the beach
from Gona; and on the east by American forces which have
driven a wedge through to the beach, isolating the eastern

war guilt, newest of these being the claim that the United
States began the shooting war by attacking a Japanese

Japanese flank at Cape Endaiadere. The progress of our

taken advantage of the occasion to boast of Japanese naval

12

submarine-at Pearl Harbor. Tokyo, however, has also
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exploits against the United States in the first year of thewar.
According to the Tokyo summary, the Japanese Navy has

sunk 5 American battleships of known type, has sunk
battleships (presumably American) of unknown type, and has

severely damaged 7 American battleships-a total of 16
battleships out of the 17 with which the United States entered

the war. In aircraft carriers the Japanese have done still
better, since they claim to have sunk the Lexington, Yorktown,
Wasp, Enterprise, Hornet, Saratoga, and 3 carriers of unknown

type, presumably American, and to have damaged heavily
4 further American carriers. In the cruiser category, however, the Japanese have surpassed themselves (as well as the

1941 listed total of 37 American cruisers): they claim to have
sunk 11 American heavy cruisers, and 21 heavy or light cruis-

ers, presumably American, and to have damaged 3 heavy
cruisers and 12 heavy or light cruisers, for a grand total of 48.

ment" and a request for material aid to the Korean Independent Army.

Arrests in Argentina

The Castillo Government, goaded by United States
memoranda on Nazi activities in Argentina, has not only
indicted 38 Axis agents but has now preferred formal charges
of complicity in espionage against several members of the
German Embassy. Since this action involves the immunities
of foreign diplomats, Argentina's Supreme Court must pass
on the case.

Hard on the heels of the espionage case has come a new
development to harass Castillo's regime: José Castells, Under-

secretary of the Interior, has announced his intention of
resigning within the next few days. In this key ministry,

The Ijongwon (the Legislative Yuan of the "Korean Provisional Government") which met in Chungking from Octo-

whose control of territorial governments, national and capital
police, posts and telegraphs, and supervision over elections
and labor relations is vital to the regime's security, Castells
has been an exceedingly influential figure. Long an admirer
of the Nazis but always a realist, he has lately hinted at the

ber 25 to November 20, has brought about at least temporary

possibility of revising his position and renewing relations

Koreans Reorganize "Provisional Government" in Chungking

unity among the Korean nationalist groups in China. The

with pro-Allied General Justo. A break now between

Ijongwon reconstituted itself to include representatives of rival

Castells and the governing clique, following so closely the

parties, although the Provisional Government party retained

resignation of Minister of War Tonazzi, may indicate a

a majority of the seats. New members of the Ijongwen

profound division within the ranks of the Castillo entourage,

included Kim Yaksan and Kim Kyusik, notable leaders of the

with one powerful group mentally prepared to scuttle

opposition party, the United Front Federation.
The State Council (Cabinet) of the Provisional Govern-

Argentina's present policy of "neutrality."

ment was reorganized with the inclusion of four new members,

to form a total of ten. Two of these members are identified
as leaders of the United Front Federation. Full reports of the
proceedings of the meeting are not yet available, but the

Ijongwon recommended a formal appeal to the United
Nations for recognition of the "Korean Provisional Govern14

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APPENDIX I

THE GOTHENBURG TRADE

imported from Sweden. Other much-needed goods which come to England from
this source are special wire and wire rods, cold-rolled strip steel, precision tools,
and spare parts for Swedish-built marine engines.
What Sweden Would Lose

Although subject to partial blockade by both Germany and the United National
Sweden is still running five ships a month from Gothenburg to neutral
under an agreement concluded in 1940 with the two belligerent groups. Pending parts

major shifts in the military situation in Scandinavia, this "Gothenburg tr
seems likely to be continued with only minor modifications since, for differing
reasons, the arrangement is satisfactory to all parties. To Sweden, the trade is
definitely benedicial; to the Allies, it offers certain real advantages; to Germany.
the political and economic costs of cutting it off (in terms of Swedish reaction)
appear to be prohibitive.
Brief History of the Trade
Since December 7, 1939, Sweden's overseas trade with the United Kingdomand
with neutrals has been regulated by the Anglo-Swedish War Trade Agreement.
Under this agreement Sweden acknowledged the Allied blockade of the Axis and
obligated itself not to re-export to Germany such contraband as Britain allowed
to pass through to Swedish ports; Sweden also agreed to restrict exports to
Germany of Swedish-produced goods to the pre-war level of 1938. With Norway's
occupation by the Nazis in April, 1940, Britain took under control all Swediah
ships destined for home ports, to prevent their falling into German hands. From
then until the opening of the "Gothenburg route," Sweden's capacity to import
goods from overseas was severely limited.
The opening of the Gothenburg route took place in March, 1941, after pro-

longed (although indirect) negotiation between Britain and Germany. Four
ships per month were allowed to put into Gothenburg from neutral ports outside
the Baltic, provided that an equal number sailed out of Gothenburg (preventing
the retention in Sweden of reserves of idle shipping exposed to Nazi seizure).
Subsequently, in the first months of 1942, accords with Great Britain and Germany
were reached to raise the number of ships to five. Sweden is now seeking to have
this number increased to six.
Imports and Exports

Imports to Sweden via the Gothenburg route have consisted largely of supplies
to sustain her civilian economy, and oil to meet the needs of her military establish-

ment. The civilian supplies-fats and vegetable oils, textile fibres, grain, and
animal feeds-have come for the most part from South America, while the United
States has provided the petroleum products.
Swedish exports overseas include pulp and paper to South America and certain

small but essential shipments of machines and machine-parts to Britain, the
United States, and South America. Swedish production of bearings is of particular
importance to Britain's war industries; on order in Sweden now are approximately

1,200 tons of finished bearings-most of them for tank and aircraft production
Even Britain's building of new factories to produce bearings has not lessened her
immediate dependence on Sweden: machines to make these bearings must be

The goods Sweden receives through the Allied blockade not merely cushion the
war's impact upon her standard of living, but, more importantly, maintain her
capacity to resist German pressure, economically and militarily. Unless for
example, Sweden can continue to obtain the petroleum products which now come
to her via the Gothenburg route, the effectiveness of her army, navy, and air
forces will be grs. very impaired. The following tables summarize the annual
requirements of those forces under peace and war conditions, and the stocks
available today.

Estimated Requirements Per Year (in metric
Peace

tons):

Navy (oil)
Air Force (gasoline)
Army (gasoline)
Total

War

45,000
20,000

425,000- 480,000

54,000

420,000- 420,000

119,

108,000-

136,000

953, 000-1,

Stocks:

77,500
26,400

Navy (oil)

Air Force (aviation gasoline)
Army (gasoline)

No information

From these figures, it can readily be seen that Sweden has on hand stocks
sufficient (under combat conditions) to last its navy only two months and its air
force only two and a half months. Since Sweden has virtually no domestic sources
of oil, it becomes obvious that, without supplies from the Allies, its armed forces
would be hard-pressed to maintain training activities and keep in operating condition. In the event of German invasion, they would be able to fight only a brief
delaying action, starkly limited by a factor beyond their control.
Although the loss of imported consumers goods through cessation of the Gothenburg trade would be less serious for Sweden, it would nevertheless produce a
definite reduction in the domestic standard of living. Sweden, if embittered by
an Anglo-American severance of this trade, might be strongly tempted to make
good the deficiency by increased imports from Germany. Naturally, Germany
would not release these additional commodities without corresponding concessions on the part of Sweden. Already, in fact, Germany appears to be pressing
Sweden to raise her exports of iron ore to some 14,000,000 tons annually and to
develop the port of Lulea to handle larger shipments. So far, Sweden has resisted
these demands; but, if freed of her obligations to the Allies, she might be persuaded
to send Germany increased tonnage in exchange for needed imports.
In addition, the severing of the Gothenburg link with the Allies, if instigated
by the Allies, would make Swedish industry in general more amenable to taking
German orders above present quotas. Exports to Germany of arsenic (important
component in poison gas), abrasives, ethylene glycol, and lead metal have hitherto

been prohibited. Denunciation of the Anglo-Swedish war-trade agreement

1 Based on a memorandum of the Research and Analysis Branch of the Office of Strategic Services
17

16

SECRET

SECRET

might lead Sweden to furnish Germany with sizeable amounts of all these
supplies. Further, if the continuation of Sweden's rearmament program, in vital

APPENDIX II

light of expected oil shortages, seemed futile, Swedish engineering and productive the

capacity might be turned over to armament manufacture for the Axis.

EIRE TODAY

What the Allies Would Lose

Three years ago, when President Eamon de Valera first declared his neutrality
stand, few Irishmen believed that he could maintain it for the duration. As time

It seems clear that the Allies would have much to lose and little to gain by
stopping the official gaps in its Swedish blockade. It is true that the monetary

has passed, however, their doubts have faded, and the most notable feature of the
last six months has been the growing belief that, so long as Hitler is preoccupied in

value of the goods the Allies have permitted Sweden to import has far outweighed

the value of those Sweden has shipped out over the Gothenburg route: in the first
half of 1942, imports were estimated at 193,000,000 kroner, and exports
only
73,000,000 kroner. But those imports were materials which the United National

eastern Europe, Eire will remain outside the war. This increasing support of de
Valera's foreign policy has been assisted by a powerful censorship which can
readily control the expression of opinion running counter to the Government's

could spare without strain (cotton, oil) or which, though "shortage goods",

wishes.

represented a negligible withdrawal from our total supplies (wool, fata and oils,
hides). On the other hand, Sweden's exports to the Allies, of metal products
and machinery components, are of considerable strategic importance to our we

Eire's censorship policy has two ends in view: first, to avoid offending any of
the belligerents; and, second, to discourage provocative political discussion at
home. As it is, the censorship has achieved its purpose in minimizing political
party fights, and to a great extent, it has also created an atmosphere of disinterest
in the war. In the early days of the conflict, a few supporters of the opposition
party, the Fine Gael, urged the Government to come out openly in favor of the
Allies, but today, the leader of the pro-Allied members of the Fine Gael, Mr.
Dillon, has been dropped from the party, and the Government's policy is not even
subjected to modest pressure. One reason for this attitude within the Fianna
Fail, the Fine Gael, and even in the small Labor Party, is the realization that
neutrality will be the most successful possible platform in the general election
expected within a few months in Eire.

effort.

Of far greater significance, however, is the fact previously indicated-that
loss of Sweden's Gothenburg imports would interfere with the development of
her military strength and would impair her bargaining position vis-A-vis Germany.
This would be a diplomatic defeat for the United Nations and would probably
close off the "listening-post of North Europe," with its valuable sources of
nomie intelligence on Axis capabilities.
What Germany Would Lose

If termination of the Gothenburg trade promises such a defeat for both Sweden

and the Allies, it may fairly be asked why Germany does not unilaterally break of
the agreement and close the Skaggerak to Swedish overseas shipping. The answer
is probably twofold: Germany is already receiving voluntarily a high fractica of
Sweden's potential export capacity, as well as certain concessions on troop and
supply movements across to Norway; in cutting the Gothenburg trade on its own
initiative, Germany would almost certainly arouse Swedish hostility and end
this period of willing compliance. The possibilities open to an outraged Sweden
of reducing her present and future contributions to the Axis would be many,
ranging from delays in delivery to actual sabotage of productive facilities. Such
a policy would mean heavy sacrifices for the Swedish people; but they might well
be willing to undergo them if sufficiently angered.

Economic Price

Meanwhile, Eire has been slowly awakening to the economic costs of her
neutrality policy. National income is decreasing, while the Government fills its
budgetary deficiency by extensive borrowing. Since supplies for essential industries are no longer available, displacement of workers is likely to increase still
further. If it were not for the possibility of emigration to England, where manpower is short, Eire's unemployed would be much more numerous. The country's
dependence on imports from overseas becomes more and more painfully evident.

In peacetime, Eire obtains the bulk of her raw materials from Great Britain in
return for Irish livestock and food products. Today, tightened British export
control precludes any chance of exchanging foodstuffs for raw materials which
are urgently needed in England for the manufacture of arms. Imports of raw
materials and machinery from the United States have also been cut off since we
entered the war. As a result, Irish manufacturers have been seeking them elsewhere. Negotiations now appear to be under way for the purchase in Argentina

Equilibrium

of cotton yarns and other raw materials, which would be brought into
of

Altogether, the Gothenburg Agreement appears to present an equilibrium of
advantages and disadvantages for the parties involved that militates against NOT
major change. A margin of adjustment remains, within which the three partis
can exert pressure for concessions-the Swedes attempting to get more ships put
on the Route, the Allies trying to lower Swedish exports to Germany and limit
German transit facilities, and the Nazis arguing their right to bigger shipments
ore and a bigger volume of troop and supply movements across Sweden. But
it appears improbable that any of these claims and counter-claims will, for the
present, be pushed to the point of disrupting the Gothenburg trade itself.

Lisbon and transshipped to Eire.
Lack of gasoline and tires has ended private motoring; lack of coal and the

doubtful practicability of peat as a substitute fuel have dislocated the whole
transport system. Clothes are rationed, gas for cooking and lighting is turned
on only a few hours each day, and certain foodstuffs-tea, bacon, butter, etc.,1 Based on & memorandum of the Research and Analysis Branch of the Office of Strategic Services.
19

18

SECRET

are becoming increasingly short in supply and have been rationed for some
Bread, as the result of a good wheat harvest, is less scarce than expected, but
too,

is rationed. In general, the rationing system itself has been

planned, and an enormous black market flourishes unhampered throughout carelessly
country.

Northern Ireland

Save for the fact that service in the Armed Services and in Civil Defense
mains voluntary, Northern Ireland's war effort is similar to that of the rest of
United Kingdom. All controls-such as rationing of gasoline, food, and cloth. the
ing-apply in Northern Ireland as in Great Britain, and to all outward intenta,

Northern Ireland is fighting as much of an "all-out" war as England itself
Actually, however, this is not altogether true; large Roman Catholic and Nation
alist groups in Ulster oppose British rule, and therefore disassociate themselves
from a war they regard as "England's fight." Moreover, Irish Republican Army
(I. R. A.) men and pro-Axis subversives are working in both Eire and Ulater to
create trouble among the American and English forces in Ulster and to alienate
the Irish people from the Allied cause.
The anti-war attitude of Roman Catholic and Nationalist groups has resulted
in growing political unrest and constant outbreaks of strikes among carters,
dockers, and munition workers. However, these disturbances still do not rep-

resent a majority desire to abolish partition or to give up British rule (proBritish elements still compose more than two-thirds of the population). These
disturbances are rather a sign of general dissatisfaction with the Government's
attitude toward labor, industrial, and unemployment difficulties.
I. R. A. Activities
As for the I. R. A. and other subversive groups, their strength has been estimated at 5,000 men, but this number is probably exaggerated, and does not take
into consideration their constant flow back and forth across the Eire border, DOE
the internment of numerous I. R. A. members, both in Belfast and in Dublin
The extent to which the I. R. A. is aided and abetted by Axis agents operating
from the German Legation in Dublin is not accurately known; but the I. R A's
recent tactics are certainly reminiscent of those used by the Nazis elsewbere
British soldiers are told that the American troops, because of their higher pay, are
stealing the Britishers' girls, and are causing a rise in local prices. Fights am
promoted in pubs; and political, religious and social differences are constantly

being turned into points of friction. I. R. A. activities have not stopped at
propaganda. Throughout Ulster, constables, civilians, and soldiers have fallen
victim to I. R. A. gunmen.
The elimax of the I. R. A.'s campaign of violence came on September 2, 1942
when a manifesto was circulated in Belfast. This manifesto, besides stating the
I. R. A.'s intention to carry on continuous warfare against the British forces and
the Ulster police, also declared that it would wage this war against United States
forces so long as they insist on remaining on Irish soil. Since this outbreak,
Royal Ulster Constabulary has been rounding up several hundred suspects,
searching Catholic homes, and seeking out caches of arms hidden away in the
mountains of Northern Ireland.

20
. . GOVERNMENT PRINTING OFFICE 1948

the

Printed with the Approval of the Bureau of the Budget.

246

December 11, 1942
9:10 a.m.
WAR BONDS

Re: North Carolina Speech
Present: Mr. Kuhn
Mr. Mager

Mrs. Klotz
Mr. Bell
MR. KUHN: Did you hear about Doughton's comments?
H.M.JR: No.

MR. KUHN: Doughton said that he was very pleased.

He said, "If the Secretary can say those things with a

clear conscience, it is all right with me."
H.M.JR: Did you go up?

MR. KUHN: No, but Ted told me about it.

H.M.JR: Of course after I read that thing in
"Time," I just said, "What in the heck _" you see,

what happened up there was this: I went in there, and
there was a man outside. Doughton was fussing outside,
waiting for me, and he rushed me in the room and closed
the door. Then he went on, and I said, "Who was that
other man outside there?" He said, That was just the
man who covers 'Time' magazine on the Hill."
MR. KUHN: Oh--

H.M.JR: Now, whether he had told him I was coming,
you see, I don't know, but the man was standing there,
and then Doughton closed the door in his face and rushed
me in.

247

-2Now I want to say this: Doughton had not intended

giving out a statement. I sort of hinted about it, you
see. But, of course, the thing he put in was kind of
bad. He said that I invited myself up there for lunch,
but I couldn't change it. What I did was, I invited

him to come down here. I would hate to think that he
had that whole thing planned.

MR. KUHN: My feeling in reading it was that
Doughton had not given that stuff to "Time, but that
"Time" had taken the story which they got and did their

usual-

H.M.JR: What they had to say was that the fact
that Doughton didn't say anything unpleasant was more

significant.

MR. MAGER: I doubt if it was planned, because they
couldn't deal with Doughton the way they did and call

him "Muley," and all that stuff. He would never invite
them in again, if that were an invitation.
H.M.JR: It made it look as though he had had a
great victory over me, that I had come there to seek
the peace.

MR. KUHN: Wouldn't any scrupulous correspondent

on the Hill take this line?

H.M.JR: They would if the week before I hadn't
reached - my popularity on the Hill had reached zero.

Then they saw that I was having lunch with Doughton,

and said, "It looks as though Mor enthau isn't so un-

popular. I have to justify myself. The week before
they had said that it had reached zero. I don't know
whether I should call his attention to it or not, because
the same man that could write this other could take this
thing and just-MR. KUHN: That is true, but how about Doughton's

part in this? Doughton is going to say something, too,

about you.

H.M.JR: Has he changed it?

248

-3MR. KUHN: He has not changed that part of it.
He has only changed the part about the State of
North Carolina and the war. The part about you and
about
Bonds,
according
to Ted, he is leaving in
so thatWar
this
speech
will
conform.
H.M.JR: What did he take out about North Carolina?
MR. KUHN: The part where he said, "We have been

heart and soul behind this war." He said, "The passage
gives the impression that we, in North Carolina, are
doing more than our fighting men abroad." He said,
"They are the ones that we care about; we should not
brag about our own part in the war."

H.M.JR: I don't think he is a mean fellow.
MR. KUHN: I don't think he did that to you; I

think it was "Time" magazine.

H.M.JR: How did "Time" magazine fellow know I

was there?

I think if I said something to him - called him

up and said, "Have you read 'Time' magazine," just to
make him think I was suspicious of him - I know how
it annoys me every time there is anything in "PM."
They accuse me up there of having done it. I had better

let it go.

You know, Buffington had a long fight this week

with "Time," trying to get them to--

MR. KUHN: I know he did. I doesn't matter how
much luck you have with the individual man from "Time,"
you can never be sure what the magazine is going to say.
H.M.JR: Incidentally, I wish you would have somebody
read "Fortune," because Bob Jackson tells me that this
man who they say is building - that the man who wrote
the article is the man who is building Douglas up so
for the presidency.

249

-4MR.

MAGER: That is the fellow out west.

MR. KUHN: Newberger.

H.M.JR: No, this is a regular "Fortune" man.

He said he was analyzing why the President did so

badly in the last election. One of the things was

he called us off on Nuky Johnson and on Prendergast.
MR. KUHN: There was also a bad article by
Eliot Janeway. You remember my feeling about Eliot Janeway?

H.M.JR: That is the one.

MR. KUHN: In that article he said the election
was really a rebuke, not only to the President, but
to the same old Cabinet. Then he mentioned three
names. He said that in the Cabinet there is Frank
Knox, Henry Morgenthau, Paul McNutt, and they are

colleagues just as before. Now, McNutt isn't in the
Cabinet.

H.M.JR: I know, but he referred to these two cases.
Take a look at it - I mean, where a man is factually
wrong.

Bob Jackson tried the cases. He said that it was
one of the few cases that had stuck.
(Mrs. Klotz entered the conference.)
H.M.JR: Now, I have read this since seeing you.
(Referring to draft number six, copy attached) What
are the suggestions?

MR. KUHN: I haven't Dan's comments. I sent it to
Dan, but he had a meeting. I had Herbert, Peter, and
Harry White read it, and they felt that for the occasion
it was O.K. They did not suggest any change at all.

There were a couple of words that they weren't sure about,

250

-5"In the home community of one of America's outstanding
legislators

H.M.JR: What is the matter with that?
MR. KUHN: I don't know. Herbert thought it
sounded a little funny, but I don't know what you can
substitute.
H.M.JR: I said, "How can you say _" you can't

say the man is talking "Adjacent to his district." It

is his home community.

MR. MAGER: "In the neighborhood" would cover it.

H.M.JR: "Home community" is all right.
What else?

MR. KUHN: That is all. There was not any great
enthusiasm for it as a speech, but Harry felt particu-

larly - he said, "That fits the occasion. That is what

you are going down there to do." The others felt the
same way.

H.M.JR: I think because they are so close to it I read the thing very quietly this morning, and I think
what the people lose sight of - there are two things

there. I don't think the American public knows we have
gone from seven hundred thousand to fifty million. I
don't think they know that, and I don't think they know
that we have gotten twenty-three million factories.
That information may have been given out over and over

again, but I don't think it has been driven home. The
other thing is that which you people originally said,

that to do it in the home of Doughton was not so good what I am doing in this speech is, I am paying a great
tribute to management-labor committees, which in all
of this work that is being done in Washington is

overlooked. The papers are so full of strikes that

they don't give any credit to these labor committees
which are new, and excellent, just the way I was

251

-6thinking this morning. Show me in the newspaper any
statement about Sidney Hillman leaving Washington.
Who is the man that is taking his place? Do you know?

MR. KUHN: I don't know; tell me.
H.M.JR: He is a labor commissioner from the State

of Michigan. But, I mean, the fact that these things
work so beautifully, it is the kind of thing that you
don't get in the press. I am doing one other thing;
I am paying a real tribute to that.

And the final thing - that is, these fifty mil-

lion people are not only helping to pay for the war,
but they are helping to lay a foundation for the post-

war.

MR. KUHN: To my mind that is the most important
new idea, that nobody from the Treasury has mentioned.

H.M.JR: You have got three ideas there. The other

one is, unless "Time" magazine - they printed the most

vicious thing this week - unless they take the thing even if they do, it doesn't make any difference. I think
it is a nice gesture to the old man. Certainly the

North Carolinians will like it.

(The Secretary left the conference temporarily to
talk with Mr. John H. Folger, Representative from North
Carolina.)

H.M.JR: I just told this fellow the truth, that

I wanted to go to Bob's district, but he didn't want

me, and there the hotel wasn't good enough so we are
going to Winston-Salem.
MR. KUHN: He doesn't mind, does he?

H.M.JR: No, but what could he do for me and so
forth, and so on.

There are a couple of things I want to ask you
about once more. There wasn't anything he wanted to raise?

252

-7 MR. KUHN: One thing, Mr. Secretary. Everybody

in that room yesterday, in the little group, wanted
to leave out "as he himself described it only a moment
ago," which is toward the bottom - that parenthesis

there - just leave it out.
H.M.JR: All right.

Now, again, for Miss Chauncey, make a note that

that six-billion-dollar thing has to be blank.

MR. KUHN: On the reading copy, yes. On the
mimeographed copy we will put in parenthesis, "Exact
figure to be announced," if you issue an advance-MR. MAGER: Would that hold up the newspapers?
MR. KUHN: No.

H.M.JR: The only thing is, that Bell wants to

get out an announcement tonight. Let me talk to him

now; let me clear this right away.

MR. KUHN: If we could have that figure today, it

would be wonderful.

(The Secretary held a telephone conversation with

Mr. Bell.)

H.M.JR: I think this speech is all right. After
all, if I am going to go to a funeral, I want to make a

funereal speech. If I am going to a wedding, I want to

make a wedding speech. (Laughter.) This is something
else.

(Mr. Bell entered the conference.)
H.M. JR: This will be "We have raised more than

six and a half billion dollars.
"

We said, "this is the committee that originates all

tax legislation."

253

8-

MR. BELL: It originates other legislation, too,
important legislation.
H.M.JR: What I was trying to get over is that
it is important in the minds of people interested in

taxes, unless you could say tax - and what other
legislation?

MR. BELL: The most important legislation is

really the borrowing legislation. I said, "It

originates all legislation to raise funds with which
to finance the Government." That is true for every
dollar that is raised; it is authorized and originates
in the Ways and Means Committee.

H.M.JR: This statement - "this is the committee

that originates all tax legislation _" that means all

funds - they wouldn't know what that meant, the radio

audience.

MR. KUHN: I think the point that the Secretary
wants to get a cross is that here he is in the home
town of the man who really has to write the tax bills
and that we have worked together many years on these

tax bills, and that is the purpose of his going there.
The borrowing legislation is incidental.
MR. BELL: I was just thinking that maybe he would

think, Well, that isn't all we do, just taxes." They

have social security.

MRS. KLOTZ: He doesn't say that this is all they do.
MR. BELL: It says, "the committee originates all
tax le gislation.
MR. MAGER: The emphasis is on the tax thing.

H.M.JR: This is all right, I think, Dan. You are
correct, but this is for the radio audience.
I will say, "we have raised more than six and a

half billion dollars."

254

9-

MR. BELL: That is safe. We will know tonight
anyway.

H.M.JR: What I have got to do is to play safe.

I have asked you and Buffington to have lunch with
me in case I don't get a chance this morning.

MR. BELL: The last committee meeting of Byrnes'

lasted until quarter of two, so I may be late.

H.M.JR: You can walk out the way I did. What
time do they start?

MR. BELL: At eleven. I will only take a few

minutes.

H.M.JR: I want to take more.
MR. BELL: Unless you want to talk to New York
and Eccles and all those people--

H.M.JR: We will see, please.

(Mr. Bell left the conference.)
H.M.JR: On page three where it says, "In this
Victory Loan drive and in the Nar Savings campaign,"
you don't want to say, "In this War Bond campaign,
do you? Do you speak of it as War Savings?
MR. KUHN: War Savings campaign.

H.M.JR: All right. Is that what it is, War Savings?
MR. KUHN: Peter said there was no reference in
the speech to the thing which was going to be done at
the dinner, which was the awarding of Treasury Minute

Man Flags. I said that I thought it could be done by
the announcer in describing the occasion.
H.M.JR: Sure.

255

- 10 In the middle paragraph on page four, "Great as
our war effort this year has been, however, we are

just beginning to fight" - I read that over, and it

seemed awfully awkward to me.

MR. MAGER: I think the "however" is misplaced.
"Great as our war effort this year has been, however,

we are just beginning to fight"--

H.M.JR: There should be no comma between "been"

and "however."

MR. MAGER: There has to be a comma there.

MR. KUHN: If it is awkward, let's fix it, because

you don't want to read anything that is awkward.

MR. MAGER: You have put the "however" on the end;

it should be in the beginning.

MR. KUHN: You can do it by saying, "Yet, great

as our war effort this year has been, we are just
beginning to fight." That is a simpler way, and it
expresses the same idea.

MR. MAGER: You have to remember to stop after
"yet," though.

H.M.JR: Make a note for my reading copy, and leave

out the comma between "been" and "however."

I think this seven hundred thousand to twentyfour million is something.

MR. KUHN: Terrific. This is so nice and short

that you won't have to rush it at all. It is just

ten minutes; you can take your time reading it.
H.M.JR: Has anybody counted the words?

MR. KUHN: There are just about eleven hundred

words, which is slightly under ten minutes.

256

- 11 -

H.M.JR: I like it. Of course, you could -

no one else suggested another stinger at the end?

MR. KUHN: Herbert Gaston felt very strongly that
you still needed something to say that we have got a
tough job ahead and that if you go there and talk about
the Var Savings thing as a magnificent achievement and

you don't relate it to the size of the trials and so on,
that we have ahead, economically and otherwise, he thinks
it is false emphasis.
H.M.JR: I can't help that.
MR. KUHN: I told him we had gone over that thing.

H.M.JR: I think the air and the papers are full

of blood, sweat, and tears, as somebody said here six
weeks ago - OII or somebody told me this, MacLeish
or somebody - sending out word telling them we are going

to lose the war - then Bard went too far. They said
that the orders came out of OWI. Then they switched

and told them we were winning the war. I think - I

would just as leave - I mean, the people are working hard.

I don't think you have to tell them all the time -

as a matter of fact, I have some things in mind quite
different to try to cheer the people up, something that
I am working on.

MR. KUHN: We went over that point yesterday, and

I told Herbert, so he was agreeable.

United Salem n.c. Dec. 12 - an the Roberts.,Lu Houl

8.30 P.M.- Blue neture
257

I am happy to be speaking tonight in the home
State and in the home community of one of America's

outstanding legislators - my old friend, the Chairman
of the Ways and Means Committee of the House of
L.

Representatives, the Honorable Robert-r Doughton.
A

No other committee in Congress carries a heavier burden

of responsibility, for this is the committee that
originates all tax legislation.
Bob Doughten and I have shared many labors together

during these recent eventful years. We at the Treasury

are indeed fortunate to be working in partnership -

as himseld described 2t only a - age- with
a Chairman who takes his responsibilities so seriously

in these grave days. And I think the taxpayers of the
country are equally fortunate in having tax legislation

258

-2originate under the leadership of a man like Bob Doughton,

who is so devoted to his country and to the welfare of

its people. It is his wish, and mine, that tax
legislation shall always be the product of a meeting of
minds, and that it shall always be sound and just and

fair to all the taxpayers.

has spoken
In introducing my Mr. Doughten speine with
understanding of the burden that rests upon me nowadays

as Secretary of the Treasury. That burden has been
especially great in this month of December. The Treasury

is now in the midst of borrowing nine billion dollars in
a single month -- a borrowing operation unequalled in

the annals of this OF any other Government. In this
Victory Lo can drive we are depending upon the voluntary

help of almost fifty thousand professional salesmen drawn

-3-

259

from the securities, banking and insurance fields. It

is their job to find the dollars that lie idle in the
hands of individual investors, corporations and custodians

of trust funds; it is their job to see that those dollars
go to work for their country.
I am delighted to report to the nation that by today,
only the twelfth business day of our drive, we have

and a half

raised more than six billion dollars. We have come
way

more than two thirds of the - toward our goal. This
is a magnificent response, another proof of what a free,
enlightened and democratic people can do when their
country calls upon them.

In this Victory Loan drive and in the War Savings
campaign that has brought us together tonight, you in
North Carolina are doing great things. From the mountain

homes in your western counties to your factories in

-s- -

260

Winston-Salem and your shipyards on the coast, this State

of yours is giving a fine example of the spirit that is
being shown in every State at the start of our second
year of war. I have come here tonight to pay my tribute
of appreciation to the workers and employers of North
Carolina for their part in the War Savings campaign.

But in paying my tribute to them I want also to pay
it to the workers and employers of the United States
as a whole.

Great as our war effort this year has been, however,

we are just beginning to fight. We are just beginning
to show what this country of 180 million people can do

when it puts all its heart and mind and muscle into a
single job. This beginning of ours in 1942 has already
produced outstanding patriotic service in many fields,

261

-6at battle stations all over the world.
We could never have achieved this success without

the untiring effort of our 300,000 volunteer workers
who have been the unsung herees in this grand enterprise.
Day in and day out our labor-management committees, of

which there are many thousands in the nation today,

have also contributed, not only to the speeding up of
production but to the success of the War Savings effort
as well.

It is my firm belief that the good-will created by
the Payroll Savings plan has been felt all along the

production line, and will be felt for years to come.
I like to feel that the new relationship between labor
and management, which has been shown so magnificently

-7-

262

in this War Savings campaign, is helping to build the

post-war world right here and now. I like to feel that

it is setting the pattern for the post-war years -a pattern of labor and management working side by side

for their own good and their country's good.

Important though the Payroll Savings plan is, it
represents only one phase of our War Savings campaign.

Millions of farmers, the self-employed, and businessmen

have put their savings at their country's disposal.
All in all 50 million men and women invested in War
Bonds during the past year.
These holders of War Bonds are the people who will

be buying the products of American industry ten years
from now, when the bonds mature. The bonds that are
bought today represent new homes, new comforts, new
D-B

-8-

263

horizons for the common man. They will help to give
body and substance to the ideal of "Freedom From Want"

in thousands of American communities and in millions
of American homes.

To my mind this is R fact of real significance for
the post-war years. It means, as Mr. Doughton has said,
that more than 50 million Americans now have a direct

and personal stake in the finances of their Government.

It means that their savings not only bear fruit now, in
helping to win the war, but will also help to keep
peace-time industry active and strong in the future

years. It means that habits of thrift are growing steadily
stronger among the American people, with results that

will help to finance this People's War and the People's
Peace to come.

Ginge 12/11/42
Speech suggestions for Secretary Morgenthau

suggestions
It is a great pleasure to be in Winston-Salem.

No city in the

world can exceed this one in gracious hospitality, and it is good to
know that even a war cannot blackbut those finer sensibilities. I want
to thank you all for the kind reception you gave me, and in particular
I want to thank your chairman, Bob Hanes.

Another excellent reason for enjoyment of this occasion is the
presence here of the Honorable Robert L. Doughton. As chatsmanoof
the House Ways and Means Committee, Mr. Doughton is one of the

legislators mainly responsible for those new and heavier taxes that
have got you all worried. Officerse, the Treasury made some of
the suggestions which Mr. Doughton and his fellow legislators enacted

into law. We are both responsible, in a way, and it is nice to
have Mr. Doughton here so that a share of the blame can be placed upon
his capable shoulders.

All people have the tendency to take it out

on the tax collector, around March 15.

If you feel like hanging me

next March, remember Mr. Doughton too.

Better still, remember the ones really at the bottom of this
whole thing.

After all, it is that precious gang of cutthroats

in Berlin and Tokio who caused the legislation that makes you pass

your funds over to the Treasury so that the men on the firing line
can praise the Lord and pass the ammunition.

Let me take you one step further along that road. You all
know that I am bound to appeal to you to buy Victory bonds. I beg

of you, my friends, do your utmost. Invest until it hurts in any
of the securities offered by the Treasury in this December drive for
$9,000,000,000.

And when the hurt wears off a little, invest some

used-

265

page 2.

more.

Get all your friends and relatives to do it, and get them in

turn to spread the circle.

We are doing a great deal through the

fine-spirited Victory Fund Committees and the War Savings Staff to
place large amounts of Treasury issues and place them properly.

But

more powerful, perhaps, than any distant appeals is the personal
touch.

Nine billions, you know, is some touch.

People tell me I'm getting a bit cracked about this business of
raising money for the Treasury. They say I eat with it and sleep with
it, and my wife looks at me queerly at times, perhaps because I talk

about it in my sleep. Well, my friends, I really do think it is one
of the most important of the many Dfessary jobe, and buying of Treasury

issues is one of the most important things all of us who stay at home
have to do. Money makes the mare go. Money is the means by which
guns and planes and tanks and ships are provided for victory. Money
is indispensable to the Treasury, and we get what we can by taxation
and what we need beyond that by borrowing.

We want to do our borrowing in a sensible manner. If we
borrow too much from banks of demand deposits we may increase the

problem of keeping the general price level within reasonable bounds.
And so we want money from individuals, business firms and institutions
on a grand scale.

In particular, we want the idle money that so

many people hold.

I stress the idle money because idle money accomplishes
nothing.

It was pointed out long ago that two ooins - nice big

gold pieces if you wish - can be kept together for a thousand years
without over producing a little coin or anything whatever.

It is

money in use that gets things done. The Treasury wants to use your
money, and for every dollar that you lend your government a dollar

266
page 3.

will be repaid to you, along with interest.

If you want to make sure

that you can get hold of some of it for a personal emergency, the
Treasury will accommodate you there, too.

We have a pretty nice

selection of securities designed to meet all needs. What your

government is asking you to do is to invest in victory. That is
important.

It is important in a good many more ways than we can talk
about at this time.

You all know about the fine achievements of

war production. Rolling out to the armed forces and to our fellow
fighters of the United Nations are many thousands of planes, guns and
millions
tanks.
And ********** of tons of shipping slide down the ways
in order to supply our men in North Africa, the Solomons and the many
other places where we are active.

In a broad sense, these things run on a sort of endless money

belt.or conveyor. The dollars that supply these things are fighting

dollars, and the odd thing about it is that the dollars don't get
used up.

They travel in a oirole from the people to the Treasury

and back again to the people.

It is the duty of all of us to make

that monetary conveyor belt strong and broad and to keep it moving fast.

on it rides the service of supply.
This is what the President makn't when he said, at the start of

our nine billion dollar drive, that it is one of our jobs here at home
to provide the untold billions of dollars that are needed to help win
this war.

There are other and more direct ways in which we are making
money

the servant of victory. I am not disclosing anything new when

I remand you of the financial support we are giving members of the
United Nations.

Most of you probably heard, when our men landed in

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page 4.

North Africa, of some remarkably large results obtained by the use of
a remarkably little gold.

I said then and I repeat that I hold that

to be one of the best uses to which we ever put our gold.
I mention these things because I think you are entitled to
know that every monetary resource, like every other asset weepossess,

is being marshalled for victory.

When the full story can be told,

it will be found that money played quite a part in the defeat of the
Axis aggressors.

Not all of that part is dull and prosaic. Some

of it is dashing and remantic.
I think it was Carlyle who said that economics is a dismal

science. He might revise his opinion a little today, if he were still
alive. For it is the economy of this and other nations - our way of
life - which is at stake and for which we are fighting in this greatest
of all wars.

There is nothing dismal-about that. It is the

biggest, most sweeping and all-inclusive undertaking upon which we over
were forced to embark.

And I must remind you again and again that one of the basic

factors in all this is the investment of your funds in United States
Government securities.

This is.a privilege as well as a duty.

It is a privilege upon which rests that larger privilege of continuing
to be our American selves.

It is one of the necessary steps toward

victory.

-30-

268
December 11, 1942
11:05 a.m.
HMJr:

Donald

Hello.

Nelson:

Good morning, Mr. Secretary.

HMJr:

How are you?

N:

Fine, thank you.

HMJr:

Are you - good. Are you SQ you could talk

N:

HMJr:

N:

HMJr:
N:

a

minute or two?

Well, not very well. I can call you back.
Well, could you - could - I mean if I talked
to you - are you at a meeting or something?
Yes, but I can - you can talk to me.

It will only take me about sixty seconds.
Oh, well - oh - I thought you meant some length -

length of time, and I just didn't

HMJr:

No.

N:

That's all right. Go right ahead, sir.

HMJr:

N:

HMJr:

What I'd like to do 18 see you if - I don't know
whether you're free for Monday - a lunch, and
then I'd like to tell you what I had in mind.

All right, sir.
If you've - I'd like to find out from you if
you felt that you - first, if you had the information, and, second, if you could tell me how

many troops the Army proposes to have overseas

say, 143 and '44 - how much tonnage it will take
to maintain those troops? How many ships, you see.

N:

Yes.

HMJr:

In other words, what I'm trying to get at is

this, this whole question of what the Army says
they need.

269

-2N:

HMJr:

Yes.

Then it gets - have we got the ships and the
escort vessels to maintain those troops plus
the troops here in this country, and my

interest in it is the impact on inflation,

you see
N:

Yes, sir.
and the whole business.

HMJr:
N:

I'11 be very glad to give you that. We - we
sat down with the Chiefs of Staff last Tuesday.

HMJr:

You did.

N:

And I've gone through this pretty carefully.

HMJr:

Yes.

N:

I think the - the Chiefs of Staff have worked
that out now

HMJr:
N:

HMJr:

Yeah.

pretty well.
Because just the little that I pick up here and
there - I mean I feel that they re building an
Army way beyond anything that we could maintain
abroad.

N:

Well, I had that feeling too until we've gone

HMJr:

I see.

N:

into it

pretty thoroughly. I'll tell you the man

that can give you the whole complete information

and that's Bob Nathan, and he has the new program
now which has been cut down.
HMJr:

N:

Well, would - would you rather give it to me or

have - well

Well, either way. He'll be glad to do it either
way, sir.

270

- -3 HMJr:
N:

HMJr:

Well, do you want him there at lunch?

Well, I think it would be well if we do it.
Well - could you and he come, say, Monday?

N:

Yes, we'll be glad to do it.

HMJr:

Nelson and Bob Nathan.

N:

That's right.

HMJr:

Well, that would be wonderful.

N:

Be glad to

HMJr:

And you know what I want?

N:

I do, and we'll get it for you.

HMJr:

And - and he knows how many ships and escort
vessels

N:

HMJr:

That's right. He knows the whole picture.
That will be wonderful.

N:

Okay.

HMJr:

Thank you.

N:

Be glad to do it.