Full text of Diaries of Henry Morgenthau, Jr. : Volume 595 : Part 2

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271

December 11, 1942
11:09 a.m.
HMJr:

Allan

Hello.

Sproul:

Good morning, Mr. Secretary.

HMJr:

How are you?

S:

Fine.

HMJr:

Good. Allan, if left to your own devices, when

would you close this Victory Fund?

S:

When would I?

HMJr:

Yeah, what - when.

S:

I would keep enjoying myself, and I've discussed it
with our sales organization here at some length and

also considered it myself. I think if we could

keep it going, that we have a considerable amount
of momentum now that was reaching - 1e reaching more
and more individuals, and that we would also have
an opportunity to get the latecomers who are waiting
to see what their year's results or their full
eleven months' results are going to be among the
corporate investors, and that its importance 18
emphasized by the fact that if we can get a considerably larger amount than we were - the minimum

we were shooting for, that we may be able to postHMJr:

S:

HMJr:
S:

pone the next big drive until after the March tax
period, which I think would be very important.
I see. Well, what date - how - how long did you

have in mind?

Well, I would run it at least through the month,
and, if possible, take in a few days - the first
week in January to catch the first of the January
reinvestment demand and to pile up the total 80
that we could run clear through March, if possible.
I see. That - that's the way you feel?
That's the way I feel, and I feel that if we could
do that it would be a tremendous help.

HMJr:

Well, aren't the salesmen getting tired?

272

-2Not our salesmen. In fact, our salesmen give
us the contrary response; they say we're now
beginning to reach the individuals; we've gotten
a lot of momentum; and we'd like to keep going
on it.

S:

S:

I see. Well, that's very interesting.
I - I really think if we could do it, it would be

HMJr:

Well, I'm going to try to make up my mind today.

S:

I see. You want to make an announcement.

HMJr:

Well, Bell and Buffington are both pressing me

S:

Well, if - if you are going to close it, I think

HMJr:

a tremendously important thing and a desirable
thing to do.

to make an announcement.

sufficient time should be given before the closing 80 as many stragglers as possible can be

rounded up
HMJr:

Yes.

before it's closed - and that - by that

S:

HMJr:
S:

HMJr:

S:

Well

I mean we should have, say, a week before before closing.

Well, if I announced, say, for tomorrow morning's
papers I was going to close it on the 19th,
that gives you a full week.

That - that would do it, but I - I think you

ought seriously to consider keeping it open now

that we're - we're going 60 well

HMJr:
S:

Yeah.

and picking up as much money in this drive
we possibly can with the hope and expectation need

as that could then not - that we'd then not

to we to the nonbank market with another such
go until April. I think that would do lively more to
keep drive your sales staff in good spirit and
(cont.)

273

-3 S:

(cont. )
HMJr:
S:

than to cut them off now and then have to come
back at them in February.

I see. Well, thank you.
While I'm talking to you, there's one other

thing - I have your nice wire this morning about
the - what the bank examiners are doing.

HMJr:

Yes, yes.

We had no question here -- certainly I did not
and I don't think anyone else did -- about that
there was any reflection upon the work of the
committee, but it was the reaction we were get-

ting from the banks. The - the traditional job
the banks in a - in a - an investigative sort of

of the bank examiner to come in and check up on
way

HMJr:
S:

Yeah.

carried over into the inquiries on this question and made them feel that their voluntary
interest which they were gladly giving was being
checked on and - officially as by investigators.

HMJr:

Oh, well, that's silly.

S:

And

HMJr:

I used them as - (Laughs) - I might have used
Alcohol Tax men, but I

S:

(Laughs)

HMJr:

I thought

S:

Well, that - that's the way they felt that

HMJr:

Well, I

9:

here these investigators were coming in to

check up on them and see what they were doing,

and that it really had a - a very adverse effect
on these people who were doing, I think, an
excellent job and were enthusiastic about their
volunteer aspect of it.

274

4-

HMJr:

Because the reports I got last week that I
sent out were very good, I - you were
supposed to have gotten copies of those.
Did you get copies?

S:

HMJr:

No.

Well, this - I did this - I had a man - oh,

whatever his name is - assistant to Lew
Douglas went out in the field for me - us ed
to be with Moody's.

S:

Woodward.

HMJr:

Woodward

S:

Yeah.

HMJr:

and he made a report, and it was on based on what I got from him, that I wanted
more information from the whole country.

S:

I see.

HMJr:

It was based on his report

S:

I see.

HMJr:

S:

HMJr:
S:

HMJr:
S:

in the Middle West. Didn't you get a copy
of that?

No, I did not.
I told them to send you one.
But I think the use of bank examiners for that
job was unfortunate, and I

Did you....
think the - the Victory Fund com.. - Fund
Committee people out in the various regions

HMJr:
S:

Yeah.

felt they were being investigated and didn't

understand it, and were.

275

-5HMJr:

You got that straightened out now, haven't you?

S:

Well, we're trying to straighten it out, and I

HMJr:

Okay. Anything else?

think we're getting them back on the track.

No, but I put in a plug again - I hope you can
that your information will lead you to decide to
keep this thing going 80 that we can put you
over to April if we possibly can.
-

S:

HMJr:

Okay.

S:

All right.

HMJr:

Thank you.

276
December 11, 1942
11:20 a.m.

HMJr:

Hello.

C. S.
Young:

Hello, Mr. Secretary. This is Young speaking in

HMJr:

Mr. Young, can you hear me?

Y:

Yes, I can hear you.

HMJr:

Y:

Chicago.

What I wanted to ask you, how did you feel about
when we should close this Victory Fund drive?

Well, I - I hope that we could - if we could
close it, say, Friday at midnight before Christmas.
It would be lots better 1f we could do that. I
think that it would be the - there'd be a psychological favorable reaction on the part of the public,
and, in any event, close it before the end of the
year.

HMJr:

Well, do you think the 19th is too early?

Y:

No, I don't. If we could do that, I think it

would - it would be a kind of a shot in the arm
for the boys.

HMJr:

A shot - you mean it would speed 'em up?

Y:

Yes, that's right, and - and I talked to our

Victory Fund Committee this morning, and we're we had a session for an hour

HMJr:
Y:

Yes.

and most of them thought maybe that - to hold

it on a little - a little while longer, but I

really believe that the - if we could close it
the 19th it would be lots better.

HMJr:

You do?

Y:

And then they're - they'11 speed up the drive, if
they knew that it was going to close, why, I
think we'll get more subscriptions too.

-2-

HMJr:

277

Hello?

Y:

Hello.

HMJr:

Hello.

Y:

Yes, I - I'm pretty sure if you close it before Christmas, it would have a - a good
effect.

HMJr:

Well, do you think any people are holding back
because they think they' re going to have
another drive in February?

Y:

Oh, I don't think so.

HMJr:

You don't.

Y:

I don't think so. There'11 be a few, but I I don't think so.

HMJr:

I see.

Y:

And the - and the banks will come through on

the 16th on the seven-eighths, I think, in

great shape. And when you open that, I don't

HMJr:

think that - that will go over big. And if you
close it early, why, I think you'd tell the
whole world the thing is moving fast to get
nine billion dollars in that short time.
Yes. Well, I - I'm inclined to do it. I'm
going to try to make up my mind today, and if

I do we'd have an announcement out for tomorrow
morning's papers.

Y:

Well, if you do that, then we'll make these

teams - we've got a lot of teams working today
and they could step on the gas, you know.

HMJr:
Y:

I see.

And - and there's another encouraging thing,
had a committee of - of manufacturers yesterI

day, and they said that they - that they ve
probably done all they possibly could but if
I would call them at the end of drive and eay,
"Now we'd like to have you do a little more,"
they could find a million here and a million
there, 80 I'm going to do that.

278

-3HMJr:

Yeah. Because I

Y:

That's very encouraging.

HMJr:

I think - Sproul in New York wants to continue
it on for a week in January.

HMJr:

Oh, I think that would be a mistake.
I do too.

Y:

And - because the - the public's working now,

Y:

and I think that it'11 - it'11 be better for your
February drive to close it early.

HMJr:

Yes, yes.

Y:

And I'm pretty sure it would have a very - very
good effect.

HMJr:

Well, that's why - I wanted to get your opinion.

Y:

And we had a session on that this morning.

HMJr:

Yes.

Y:

HMJr:
Y:

And the - I think it would be - if you announced
it early 80 that they could - in the next week
they could really - really step up the drive.

All right. Well, thank you.
All right.

HMJr:

Thank you.

Y:

Goodbye.

279
December 11, 1942
11:32 a.m.

HMJr:

Marriner

Marriner?

Eccles:

Yes, Henry.

HMJr:

I hope you don't mind my calling you out.

E:

That's all right.

HMJr:

But I was afraid I couldn't get you any other

time. I'll be very brief. What are your inclinations as to when we should close this Victory

Fund drive?
E:

I'd close it next week.

HMJr:

Next week.

E:

Yeah.

HMJr:
E:

Well, that's the way I feel.
I think it would be a mistake to run into the
Christmas week, and I think everybody's getting by that time will have been pretty well tired
and fed up, and I don't think you d get enough
to make it worthwhile, and that

HMJr:

Well, I'd like to do - close it on the 19th,
that's Saturday.

E:

I would certainly close it Saturday and maybe
even Friday.

HMJr:

Well

E:

The

we said

HMJr:

the - you see, the - the offering of the two

E:

billion
HMJr:
E:

Yeah.

....

to the banks, 16th, 17th, and 18th - that
would close as of the night of the 18th

280

-2-

HMJr:

Yeah.

and I'm just wondering - Saturday's a halfday - the - the - there won't be enough outeide
of the banks to amount to anything at all, and
on - it just occurred to me that if you closed
the whole drive at the time you close the drive

E:

for the two billion, I think that's worth
thinking about.

HMJr:
E:

HMJr:
E:

HMJr:

E:

HMJr:

Well...
That's Fri.. - that's Friday night, you see.
Friday night - we could
That's the 18th, the night of the 18th is when
you close the books for the bank subscription
of the two billion. What would come in on the
half-a-day Saturday outside of that would be
practically nothing.

Well, I could advance it - leave that other - well,
open it on the 17th and close it on the 19th.
Well, or you could leave it open the four days or
the three-and-a-half then. Why don't you do that,
leave the - leave the

Well, do you think we ought to - do you think it
makes any difference if we let the Victory Fund
go one day over?

E:

No, I don't know as it makes any particular difference only to close the two billion and leave
the other go for another half-a-day, it - you
might do this, I don't know whether the announcement is such - I've forgotten whether it was such
that - that you couldn't leave the subscription

for the certificates

HMJr:
E:

I can ask Bell.
open on 16th, 17th, 18th, and you might
announce that you - you're extending that before
you open it

-HMJr:
E:

HMJr:
E:

HMJr:

281

Yeah.

... for 16th, 17th, 18th, and 19th, and then
closing the entire

The whole business.

the whole business on the 19th, which would

make sense.

I think - you might mention it to Bell, because

he and I are going to have lunch together and

try to settle it, and that's why I was call..
took - I hope you didn't ,mind my calling you.

HMJr:

No, , no, no, they're just discussing
Would you mention it to Bell?

E:

Yeah.

E:

HMJr:

Well, thank you so much.

E:

All right, then. Goodbye.

-

282

December 11, 1942
3:00 p.m.

TAXES

Present: Mr. Bell

Mr. Gaston
Mr. White

Mr. Cairns

Mrs. Klotz

H.M.JR: I thought I would tell you people this,
in the strictest confidence. I am rather pleased with
myself, for once, with what happened at Cabinet. I
wanted Paul, particularly, to know this - nobody but
Paul and you people.

The Attorney General, every once in a while, gets
all emotional - I don't understand him anyway - and he
made a speech. He said that following out what the
President had said he wanted to bring to the President's
attention a number of incidents where there had been
cross-purposes among the Board members. For example, on

this Immigration bill which went before Doughton, he,
the Attorney General, didn't know anything about it.

He tried to find out, and he thought it originated over
at BEW, but he didn't know. He went on about how the

Naval Intelligence officers ruined the bill, and how
Green went out--

MR. GASTON: That is the other thing - the censorship thing.

H.M.JR: He was laying all this ground work, and
then he said, "Now, Mr. President, what I think we
should do," - he gets very excited - he says, "I think War
we should go back the way we did last year on the
Powers bill, where everything was cleared through me,
the Attorney General, and then from me to Jimmy Byrnes,

283

-2on the Hill. I think that is the way - with such an

unfriendly Congress - that is the way the legislation
should be handled from now on."

Well, I saw this was something from Jimmy to the
Attorney General, so I went back to my experience with
Leo Crowley, where the two of them certainly gave me
the works, and I felt that this was where we were going

to be taken into camp on the tax bill.

The President didn't say anything, and the Attorney
General went at him three times. "Now don't you want
me to do this, Mr. President? I know the committees
and know how to handle the thing, and with Jimmy Byrnes'

help--" and so forth and so on.

I thought, listen, in a minute the President is
going to say yes, and then it will be too late; so I sat

up straight and I said, "Now, Mr. President, I am sure
you don't want the Attorney General handling legislation
for the State Department and the Treasury - legislation

affecting foreign affairs and finance.

So the Attorney General said, "Of course, I wouldn't
expect to handle the tax bill" - I mean, as much as to
II

say, "Well, that is all I wanted.

He said, "Of course, I don't expect to handle the
tax bill, " and I said, "O.K." and he didn't get a peep
out of the President.
So the President said something about - the Attorney
General said, "Suppose you want something done where

there are two or three departments affected, or some-

thing like that," and the President didn't answer. But
the gist of it was - you see, Jimmy kept perfectly still.
He said, "Of course I wouldn't dream of handling

the tax bill."

MR. BELL: Too bad there was not a record!

284

-3-

H.V.JR: But just get the playMR. GASTON: I heard nearly the same speech - I
attended the Censorship Policy Board, and I heard nearly
the same speech. He cited the same instance on this

Third War Powers bill, so-called, but the joke about
that is that he did lead the thing. He was complaining

about Zacharias coming up there and gumming up the game,

but he and Fahy were running the show, and it was their

fault if they didn't get the Navy in line and get an

understanding with the Navy.

H.M.JR: That doesn't - I mean, that doesn't interest me - I mean, the point-MR. GASTON: This is just an instance where he did
the job and fell down.

H.M.JR: But the point that I got, I think this was

all cooked up between them. The President would say
yes, and the next thing we would have known, Jimmy would

have had the tax bill.

MR. GASTON: What was the mistake you made?

H.M.JR: I didn't make any mistake.
MR. GASTON: I thought you were going to tell us

how you made a mistake.

H.M.JR: No, I said that I thought for once I was

smart. I think for once I was smart. I think I just
nailed something which practically - there was the play
from Jimmy, and therefore - I dug up the letter of last
year about where all legislation should clear, you remember, only last week - did you see that letter? There
is a letter right now on our books from the Attorney
General saying all legislation should clear through him,
which I decided we would pay no attention to last year.

MR. CAIRNS: It is just as well that I didn't see it.

285

-4-

H.M.JR: In other words, these fellows are going
to keep - you have just got to keep on your toes every

minute, that is all; I just wanted to tell you - those
of you who look after the Treasury's interests across
the street - and so forth and so on. That is that.
One thing, when I get back Monday, this letter from
Cordell Hull laying down this policy as to how we should
proceed in Africa - Bell is not going to be here tomorrow but Monday morning, if you and White would get together-MR. BELL: We know pretty well what we are going to
say.

MR. WHITE: I thought so until I read the letter.
H.M.JR: Don't do any more now until Monday morning.
He (Bell) has given me his promise he is going home.

MR. WHITE: There is just the Spanish thing.
H.M.JR: No, not now. I am leaving in twenty minutes.
MR. BELL: I thought we laid that over until Monday.

H.M. JR: I just had the operator particularly tell

you this wouldn't run more than five minutes, and it has
run seven.

I am awfully glad to have seen all of you. (Laughter)

=

286

December 10, 1942.
MEMORANDUM

Secretary Morgenthau
FROM: Mr. Gaston

TO:

If you have not already been advised you may be interested in some of the suggestions as to a tax program made near

the close of last night's meeting.

Gilbert (OPA) - A total program of approximately twenty-

five billions, including about seventeen billions of forced
lending and about eight of taxes, the latter to include a pro-

gressive sales tax with exemptions, using the stamp plan as
proposed by Ben Cohen, 2-1/2 billions; additional corporation

taxes, 2 to 3 billions; additional individual income taxes, 2
to 3 billions.

Ben Cohen - Thinks there is very little prospect of enacting a spendings tax as proposed by the Treasury and proposes

instead a rough equivalent, which could be called a progressive
sales tax. Free books would be issued carrying stamps up to
some such value as $300 for each individual, which would authorize purchases to that amount. Supplementary books would be

sold for cash at progressively higher rates. This is not a new

idea but one which has been extensively discussed in the Depart-

ment and rejected as too difficult to administer and too vulnerable to evasion. Cohen thought it very doubtful that we could
get any more income taxes but might get forced lending.

Hanson - Favors a 15 billion dollar program combining
taxes and compulsory lending. He regards collection at the
source as extremely important. He would like to see the compul-

sory lending, or at least a part of it, done on an excess income
basis, that is, he would compel purchases of Government securities out of increase of individual income over prior years.

Hanson also thought the Treasury should take steps to advertise
the fact more widely that the British and Canadians pay higher

taxes than we do. He thinks this very important.

Colm - Thinks we might go for a program of 10 to 15

billions, principally compulsory lending. He does not think

we ought to aim at "closing the gap" because we don't know very

287

-2much about what the gap really is. He is also strong for
collection at the source. He also thinks improving the tax

structure so that later increases may be made more important
than additional tax revenue at present.

Harold Smith - We are up against the gun on the budget
message. If there are any suggestions to be made as to taxes
for the budget message they had better be made quickly so that
the President will have an opportunity to do some matching.
"What influence you will have depends on what you can present
in a concrete manner. He added that there was a problem as
to how rapidly we could load the tax system and called atten-

tion to the fact that there was a heavy increase in the 1942
bill. He thought, like Colm, that the vehicle was more important than rates.

Stark - He thought we ought to raise 8 to 10 billions,
including some forced lending. For the tax portion he would
(1) increase income and Victory taxes; (2) Levy additional
social security taxes.
Altmeyer thought it possible to raise additional taxes
for social security purposes but thought the case would be
weakened if the taxes were proposed as an inflationary control
measure.

Helvering thought it more practical to raise new the taxes

by increasing rates rather than attempting to revise system.

mg

288

TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION

DATE Dec. 11,
1942

Secretary Morgenthau
Mr. Odegard

FROM

Mr. Gaston, Mr. Sullivan, Commissioner Helvering, and
met in Mr. Sullivan's office on Thursday, December 10,

I

to discuss the possibility of using high school teachers
throughout the country to bring to tax payers a better
understanding of income tax procedure.

Immediately thereafter I talked with Mr. Lewisohn

who suggested the names of three people who might be of

assistance on this project. The people he suggested were

L. F. Schiebler, in charge of public relations for the

New York schools; Frederick Ernst, Associate Superintendent
of Schools for New York; and Forrest Long, professor of
secondary education at New York University. Mr. Lewisohn
said that in his judgment Professor Long would be the

most helpful. I therefore called Professor Long on the
phone and asked him if he were interested. He indicated
not only his willingness to help but his enthusiastic
interest in the plan. He will be in Washington Tuesday
morning.

I have also talked with Professor Richard Ballou
of Smith College and am trying now to get in touch with

Howard Wilson of Harvard.

I will let you know what plans we have in view to

carry out your suggestion after our meeting on Tuesday
with Messrs. Gaston, Sullivan and Helvering.

289

and pm
1942 DEC 11 DM 5 5

W69WASH LONG B380 NY 11-459P

470
MORGENTHAU

APPRECIATE YOUR GENEROUS TELEGRAM OF YESTERDAY CONCERNING

I

INQUIRIES BY NATIONAL BANK EXAMINERS AMONG BANKS IN THIS
DISTRICT REGARDING THEIR PARTICIPATION IN VICTORY FUND
CAMPAIGN. OUR CONCERN AROSE NOT BECAUSE WE FELT THESE

INQUIRIES WERE A REFLECTION UPON THE WORK OF THE VICTORY
FUND COMMITTEE AS SUCH, BUT BECAUSE THEY WERE DISTURBING
TO THE BANKERS WHO ARE THE BACKBONE OF OUR ORGANIZATION IN

THE FIELD. THE VISIT OF A BANK EXAMINER TO A BANK IS
TRADITIONALLY A VISIT OF INVESTIGATION AND A VISIT OF
THIS CHARACTER DID NOT SEEM TO BE IN HARMONY WITH THE
SPLENDID VOLUNTEER JOB THE BANKERS ARE DOING IN THE VICTORY

FUND CAMPAIGN. I REALIZE, OF COURSE, THAT YOU WERE
SEEKING INFORMATION WHICH WOULD BE HELPFUL TO ALL OF US AS

IT IS THE KIND OF INFORMATION WHICH WE ARE GETTING AND PLAN
TO DIGEST AND STUDY IN PREPARATION FOR OUR NEXT BIG DRIVE
SPROUL.

290
Under Secretary

- -

Exp. Loans

C

0

P

Y

December 10, 1942

Chairman, Victory Fund Committee, Copies to
Executive Managers, Victory Fund Committee.

To - Federal Reserve Banks:

Chicago

New York, N. Y.

Pa.

COMPANY Ohio
RICHMOND Va.

TOTAL

Milenta, Ga

San Francisco, Calif.

I understand that you feel bank examiners in your
district are placing undue emphasis upon activities
of Victory Fund Committees in their conversations with

bank officials. The purpose of the questioning was to
learn the reactions of banks to the current drive and
to secure information as to what changes Treasury should

make in its approach to next drive. It is only a
continuation of the policy followed heretofore in some

of our major financing operations. This information would
be in addition to what I would expect to obtain from you
and Executive Manager. The two-day survey conpleted today

was in no way intended as a reflection upon the work of your
committee. Your fine spirit of cooperation has exceeded our
expectations.
MORGENTHAU

Initialed
DWB*GB

291
TREASURY DEPARTMENT

0: Miss Chauncry

This letter was

signed by the
Secretary + original
handed to Mr. Dooley

by me. DeoBrown
GEORGE BUFFINGTON

292

December 11, 1942.

Dear Mr. Dooley

It is a real encouragement to me to know
of the careful and valuable work of the banking
institutions of Washington, and of their many

men and women employees engaged in those fidu-

ciary tasks which increasingly concern securities
of the Government.

I am especially glad to know that nearly
$60,000,000 of direct Treasury obligations now
rest in fiduciary accounts of these banks, and
that related subscriptions to the current Victory
Loan total close to $3,000,000. These are heartening signs that we are all becoming aware of our

perils and our responsibilities in this war of
survival. Equally encouraging is the steadily

improving record of the trust department personnel

of the banks in purchasing of War Bonds and Stamps.

Ours is a continuing task, requiring even
greater sacrifices and responsibilities as the war
goes on. I know that I can count on you to intensify your efforts to help finance the winning
of the war.
Sincerely,
(Signed) H. Morgenthan, #

Copy in Diary

Mr. Aubrey O. Dooley,
Chairman, Fiduciaries Section,

District of Columbia Bankers Association,

Washington, D. C.
GB:FK:eg

File to Thompson

293

December 11, 1942

Dear Jesse:

I wonder if you would be good enough
to let us have a hundred-word statement
over your own signature in support of the
Treasury's $9,000,000,000 Victory Loan drive.

As you know, we are trying to raise
money in this drive mainly from nonbanking
sources, since that is the soundest method
of borrowing. Senator Glass and Mr. Garner
have already supplied statements for us.
I can assure you that a statement from you
would be of immense help to us, and I shall
appreciate it personally very much.
If you would send the statement to
Mr. George Wanders in my office, he will
see that good use is made of it in our campaign.
Sincerely,
(Signed) Henry

Honorable Jesse H. Jones,
Secretary of Commerce.

Copies in Diary
By Mess. Givens
4:27
12/11/42

294

Dear Jesse:

Would you be good enough to consider the issuance, over your own signature, of a statement in
support of the Treasury's $9,000,000,000 Victory
Loan Drive. Your reputation for sound financial
judgment is so high throughout the nation, and especially in Texas, that such a statement doubtless
would be helpful.
As you know, we are trying to raise money
in this Drive mainly from nonbanking sources, since
that is the soundest method of borrowing. Senator

Glass was the first to issue a statement supporting
our program, and John N. Garner has supplied another. You would, therefore, be in choice company.
Sincerely,yours,

Honorable Jense H. Jones,
Secretary of Commerce.

GTS
GW:dwb

295

December 11, 1942

Dear Governor Green:

I am delighted to learn from your
letter of December 3rd of the fine work
being done by the State of Illinois and
its employees to push the sale of War

Bonds and Stamps.

The story you tell is most encoura ing

to all of us here at the Treasury, and I

appreciate especially your pledge of continued cooperation in the War Bond program.

Be are counting on Illinois to do
even better than its previous record in
the coming year.

Sincerely,
(Signed) H. Morgenthan, it

i on. Dwight H. Green,

Covernor of Illinois,

Springfield, Illinois.

FK/cgk

Photo file in Diary
File to Thompson

DECT

OFFICE OF THE GOVERNOR
SPRINGFIELD
DWIGHT GREEN

December 3, 1942

GOVERNOR

The Hon. Henry Morgenthau

Secretary of the Treasury

Washington, D.C.

Dear Mr. Secretary:

As honorary chairman of the Illinois War Bond
Committee I am pleased to report to you on what the state

of Illinois and its employees are doing to increase the
sale of war bonds and stamps.

The latest step, taken at my suggestion, is the
posting of war bond posters on state trucks and other
mobile equipment. More than two thousand of these vehicles
are being clacarded with three posters, one on each side

panel and one on the end gate. These will be changed

monthly. I believe Illinois is the first state to take
this step.

The drive of the State Employees War Bond

Committee, of which I am chairman, to enroll officers and
employees under the payroll savings plan has met with
notable success. Approximately ninety per cent of the
state officers and employees have enrolled and their
subscriptions averaze approximately eight per cent of
their salaries. many exceed ten per cent. Recently I
addressed is letter to all state officers and employees
urging them to secure the co-operation of members of their
families in extending the war savings plan.
State officers and employees are urged to take
part in campaigns in their home communities and are
encouraged to do everything possible to promote the sale

of war bonds and stamps.

State officers and employees also have had a
part in the success of the rubber, metal and other salvage

ampaigns in Illinois.

on. Henry Morgenthau--Dec. 3, 1942.

Assuring you that the state of Illinois and its
and employees will continue to co-operate in
> possible to further these war efforts, I am,
Respectfully your

Governor

298

December 11, 1942

Mr. C. C. Colbert
President, Nehi Corporation
Columbus, Georgia

Dear Mr. Colbert:
I have seen the War Bond posters sponsored by
your company to be displayed in 1700 cities and
towns throughout the country.
I want you to know how much I appreciate your
help and cooperation.
Sincerely yours,

(Signed) H. MORGENTHAU JR

PHOsjre

299

December " ave
Dear Mr. Barriageon

I as earry that 11 is not possible to have executed the
forms of release or license for a copyright proprietor which
you submitted to Mr. Callahan is your letter of December 2,

1942. In the above of statutory provision for such action,
18 is beyond the authority of a Federal official to execute
an indessity agreement.

However, the Secretary of the Treasury has authority to
great licenses for the use of Government property, and be has
greated a general license to radio broadcasting stations and
broadcasting companies, which I hope and believe will ensear
your purpose. A copy of that license, covering all songs new
or hereafter owned and copyrighted in the name of the Secretary
of the Treasury, is attached.

For your information, the four songs over or copyrighted
by the Secretary of the Treasury ares "Any Bonds Today" and
#I Paid my Income Tax Today", by Irving Borlin, and "Jolly
Nolly Pitcher and "Bo'sybody Dring Payday", by Richard B. Uhl

and Thomas N. Main. In addition, the Secretary holds a -

exclusive inverseable license to perform and authorize others
to perfers "Abe Lineels Bad Just One Country*, by Osear
2nd., otto Barbach, and Jerese Korn.
Sincerely,

Fordinend Kuba, Jr.,

Assistant to the Secretary.

Mr. W. Clark Barrington,

Copyright & Masic Clearance Department,

Columbia Broadcasting System, Inc.,

485 Madison New York, New York.
Attachment

JAG/bog

12-10-12

300

LICENSE

December 11, 1942

In order to promote the sale of War Savings Bonds,
every radio broadcasting station and broadcasting company is
hereby licensed to make such arrangements or adaptations of
musical compositions owned and copyrighted by Henry Morgenthau,

Jr., Secretary of the Treasury, or which may hereafter be owned

and copyrighted by him or his successor in office, as it may
desire, and to record or perform for radio broadcasting, and

to radio broadcast (including television) such recordings or
performances of said composition or adaptations or arrange-

ments thereof at any time or place it may desire.
No fees or royalties are payable to the Secretary

of the Treasury for the rights herein granted, and no other
person, company, or agency whatsoever has been authorized to

make any charge for the rights granted by this license.

This license is revocable at will.

Monthear
Secretary of the Treasury.

TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION

John A. Gilmore.

Rose Barrett. Jr.

ft

DATE 12-5-42

Attached is a letter Just received from Mr. Harrington
of the Columbia Broadcasting System. Would you be kind enough

to handle this for us?

COLUMBIA BROADCASTING SYSTEM, INC.
485 MADISON AVENUE, NEW YORK
WICKERSHAN -2000

December 2,1942

Mr. Vincent Callahan
War Savings Staff

Sixth floor-709 12thSt., N.W.
Washington, D.C.

Dear Mr. Callhan:

Mr. E.G.Opie, Chief of Transcriptions and
Recordings of the War Savings Staff here in New York City,
suggested I write directly to you concerning the license,
or permission to broadcast over our facilities certain
songs which are the property of the Treasury Department.
Among these, the only two songs of which I know so far

are "EVERYBODY-EVERY PAY DAY" and "MARCH FOR THE NEW IN-

FANTRY". I have had some preliminary correspondence with
Mr. Opie, and some telephone conversations during the
course of which I endeavored to obtain for CBS our stan-

dard types of license, and/or release -not only for these

two numbers but for any, nnd all numbers presently unknown
to me or yet to be acquired by the Treasury Department.
Even though Mr.Opie took to Washington the license forms
I sent him on September 15th,19hc, I have not AS yet recloved these licenses back, nor had any answer from your
Washington office, excepting that given me verbally today
by Mr. Opie to the effect that the licenses are there, and
that I could expect some sort of an swer any day now.

To provide for the eventuality that the licenses Mr. Opie
took to Washington have been mislaid, I am enclosing an-

other set. If you find them to be in order, may I ask
you to sign all three copies and fill in the date-spaces

and return all three to me, whereupon I shall have them
duly executed by a CBS signatory and one copy returned
to you. Should the license forms not meet with your approval, please examine the enclosed duplicate-copy re-

Lease forms which we could use for clearance purposes

failing your signing our license. of these two, only

one need be returned to us, signed and dated in ink.

[ would greatly appreciate your prompt attention to these

atters, and would like to have as well, A list of other
publications, or songs owned by the Treasury Department,

exclusive of ANY BONDS TODAY

Yours very truly,
COLUMBI A BRO ADCASTING SYSTEM. INC.
Care

nelos area

Copyright & Music. Clearance Dept.,

Clark

PROCEDURE

COLUMBIA BROADCASTING SYSTEM, Inc.
485 Madison Avenue
New York, N. Y.

Dear Sirs:

owner(s)

copyrighter(s)
author(s)

I am (We are) the creator(s) of the following composition(s):
-

EVERYBODY EVERY P.Y DAY

MARCH FOR THE NEW INFANTRY

and I (we) hereby grant to you and your owned and operated or affiliated stations the right, without payment of any fees, to publicly perform such composition(s) for profit by broadcasting in
any of its forms and regardless of place of origination or type of program, until revocation hereof
upon thirty days written notice to you and to make arrangements, adaptations and transcriptions
thereof and to broadcast the same. In consideration of your cataloging such composition(s) as
available for broadcasting, I (we) agree to hold you, your owned and operated or affiliated stations,
sponsors, agencies, your and their successors and assigns and others making use of such compo
sition(s) under this license free and harmless from any and all claims, damages, liabilities, costs and
expenses, including attorneys fees, arising out of the use of such works as herein contemplated.
Very truly yours,

(Signature)

(Signature)

Dated by signatories:

TRUST for the War Savings Staff,
Treasury Department

KNOW ALL MEN BY THESE PRESENTS, That we,

WAR SAVINGS STAFF, TREASURY DEPAR KNT, WASHINGTON, D.C.

in consideration of the agreement of Columbia Broadcasting System,

Inc. to consider the works published and/or copyrighted by us available for performance over any and all stations owned and operated by
or affiliated with it, we hereby grant to said Columbia Broadcasting
System, Inc. and to all such stations the right, without payment of

any fees, to publicly perform for profit by broadcasting in any of
its forms and regardless of place of origination or type of program,
any and all compositions published by us and/or copyrighted in our
names, whether now published and/or copyrighted or hereafter to be
published and/or copyrighted. We further grant to Columbia Broad-

casting System, Inc. and such stations the right to make any and all
arrangements, adaptations and transcriptions of such works which
Columbia Broadcasting System, Inc. in its sole discretion, shall
find necessary or desirable for broadcast use.
We agree to hold Columbia Broadcasting System, Inc.

its subsidiaries, owned and operated or affiliated stations, sponsors, clients, advertising agencies, its and their successors and
assigns and others making use of such works under this license free
and harmless from any and all claims, damages, liabilities, costs
and expenses, including attorneys' fees, arising out of the use of
such works as herein contemplated.

This agreement shall continue until terminated by
by registered mail.

either party giving to the other ninety (90) days' notice in writing,
this

IN WITNESS WHEREOF, we have hereunto set our hand,

day of

194

War Savings Staff, Treas. Dept.,
By

We hereby agree to consider
the compositions
of
available
as
aforesaid.
War Savinzs Staff. Treas. Dept
COLUMBIA BROADCASTING SYSTEM, INC.
By

Form 461-1-42

305

December 11, 1942
Dear Sam:

Many thanks for sending me the clippings
from the Daily Mirror.
As you know, we already have buttons to
show that a worker is buying his ten percent.

The moment we get beyond ten percent, however,

I feel that we would be making a mistake to
distribute buttons of the kind suggested in

this article. My own feeling is that there

is no special reason for issuing a badge OF
button to a man who can easily afford to put
twenty-five percent of his income into Bonds.

The man who has to scrimp and save to reach

his
ten percent is just as worthy of recognition.

Anyway, I appreciate your sending this

suggestion to me.

Sincerely,
(Signed) Henry

Mr. Sam A. Lewisohn,

61 Broadway,

New York, N. Y.

FK/cgk

File in Diary

DEC 7

306
SAM A. LEWISOHN
61 BROADWAY
NEW YORK

December 2,
1942

Dear Henry:

I do not know whether this
enclosure is not "sending coals to

Newcastle" as no doubt you have thought

of this sort of thing already. It was
called to my attention by someone whom
I regard as quite constructive. It may
be suggestive in some way. Pardon me
for intruding in the midst of the
tremendous tasks you are shouldering,
but it is tempting to see if one can
be helpful.

Mith With live best tr Elly regards

Yours,

Lain
dignified garb leaving Twin Ponds. I

P.S. We have some movies of you in

hope you will see them soon.

Daily Mirror, Nov. 19, 1942

307

WORLD BEHIND The HEADLINES
THURSDAY. NOVEMBER 19,1942

PAGE 26

Investing for Victory
A RE you salting away 10 per cent of your salary in War Bonds, neighbor If
every working American had to give an answer to that question, the various

hues of red that would creep unward from American collars would make a rainbow

look pale by comparison.

fact is most Americans

putting 10 cent

Bonds

in

figures story
22,000,000

putting
under

of

letter

Godfrey

If

But

weeks

millions

that little per

Espe

will

It

take

than

James
Cagney
Bonds
War
to

Dunne

Irene

and

keel.

keep

Not Enough

bonds

the

surplus

Enough
purchasing

effort.

However,
Treasury

THRIFT CORPS." and

body

Year's

one

like

that

always

financier
the

York

citizens
the

on

these

of

high

during
Ameri

and

that

being
$120.

of

would

$12,000,000,000 of

remaining
other

In

$60,000,000,000

manding to

raise hob in the form
spiraling prices
the war effort.

For Thrift Corps

$60.
shoes,

Can Americans

civilian

Invest
their

to

there

of

more

dur-

the

to

things

to

said,

he

people
of

the

the

world

be

he

how

victory.

sticker in

George Roboz.

By enrolling him in

Badges for Bond Buyers

35%

40%

25%

20%

15%

10%

5%

45%

50%

Visible pledges for each American's faith in victory.

30%

55% and over

.

308

TREASURY DEPARTMENT
WASHINGTON

December 11, 1942

MEMORANDUM FOR THE SECRETARY:

You might be interested in reading
the attached telegram from our Administrator
in Honolulu.

GRAVES.

OPDEFENSE

BUY
STATES

STATES
BONDS

COPY

309

Honolulu Dec 10 42

Govt Rev Graves

Asst to Secretary Treasury Washington

For your information copy of wire sent Robert W Coyne follows
Quote One million had been set as Dec seventh goal Stop
Hawaiis answer on Pearl Harbor was greatest War Bond promotion

Territory has ever seen Stop Sales of Series E alone for
four day period ending today will be five million dollars
issue value subject to increase from outlying districts Stop
Promotion conceived by our staff and executed with excellent
cooperation of Army Navy bond offices Stop Fifteen special
booths manned by soldiers and sailors swamped with customers

Monday necessitating reopening of booths Tuesday Stop Bonds

carried Pearl Harbor souvenir stamp Stop All issuing agents
report record sales continuing Stop Hawaii has exceeded
December quota of four million two hundred twenty five thousand

in first nine days of month Close quotes.
Kanne Administrator
750 am Dec 11

310

DEC 11

The Honorable,

The Secretary of War.
Dear Mr. Secretary:

I was glad to have your letter of

November 23, giving current information

about the results of the payroll allot-

ment plan for the purchase of War Bonds
in the War Department.

This report is most encouraging,

and I thank you for sending it to me.
Sincerely,
(Signed) H. Morgenthau, Jr.

Secretary of the Treasury.

HNG:fns

Photo file in Diary

Orig. file direct to
Graves' office

WAR DEPARTMENT
WASHINGTON
NOV 23 1942

The Honorable,

The Secretary of the Treasury.
Dear Mr. Secretary:

In reply to your letter of November 9, 1942, regarding the
sale of War Savings Bonds by the War Department, the following information is submitted.
The acceptance of pay reservation authorisations for the
purchase of War Savings Bonds by pay roll deduction from civilian and
military personnel of the War Department began in April, 1942. It
was estimated there would be received by December 31, 1942, approximately 1,000,000 authorizations. This estimate proved to be far too
conservative as the reservations received, to include July 31, 1942,
were 1,216,424 and as of November 11, 1942, total 2,648,491. Receipts by months were as follows:
April and May
June

July
August
September
October

November 1-11 inclusive

390,713
492,171
333,540
373,196
475,746
388,485
194,640
2,648,491

of the above number it is estimated that approximately
600,000 represent civilian participation in the plan and the balance
military.
As a result of the authorisations mentioned in paragraph
hereof there has, as of October 31, 1942, been deducted from pay
rolls for the purchase of War Savings Bonds the sum of $35,932,296.16.
1

The October deduction WAS $15,952,845.59, which indicates an annual

purchase of bonds by all War Department personnel of $191,434,147.08

per year. This figure will increase as it is to be noted that new

reservations are currently being received at the rate of approximately
17,000 per day, and it is further noted that many reservations already
received are effective at future dates.

There is in progress at this time a campaign to enroll over

90% of the oivilian employees of the War Department in the War Bond

Savings Plan, and to secure reservations of at least 10% of their gross
pay. This campaign is producing excellent results, and it is confidently expected the goal will be attained.
Sincerely yours,

Henry Stimson
Secretary of War.

- -2-

313

Analysis of Exposure to Payroll Savings Plans
December 5, 1942

Number exposed

to payroll

savings plans

Total number

in the

Percent

country
(estimated)

of total
exposed

Part A - Summary by Number of Organizations Exposed

I. Business organizations

(5) Firms with less than 100 employees
(6) Total business organizations

473

99

5,646

5,785

98

25,076

29,083

86

31,192

35,341

88

130,179

.

161,371

II. Governmental organizations

.

(4) Subtotal - large firms

470

.

(1) Firms with 5,000 employees or more
(2) Firms with 500 to 4,999 employees
(3) Firms with 100 to 499 employees

*
*
#

III. Grand total

161,371

*
*

Part B - Summary by Number of Employees Exposed

I. Business organizations

21,736,199
3,187,080

24,923,279

.

(6) Total business organizations

.

(5) Firms with less than 100 employees

7,405,313
5,685,795

*

(4) Subtotal - large firms

8,645,091

.

(1) Firms with 5,000 employees or more
(2) Firms with 500 to 4,999 employees
(3) Firms with 100 to 499 employees

32,900,0001

76

II. Governmentalorganisations
(1) Federal Government
(2) State and local governments

2,376,067
1,405,443

2,900,000

48

(3) Total governmental organizations

3,781,510

5,700,000

66

38,600,0001

74

III. Grand total

Treasury Department
1

28,704,789

2,800,0001

85

December 11, 1942

Excludes agricultural employees, military personnel, employees on WPA or NYA or CCC projects
proprietors, firm members, self-employed, casual workers and persons in domestic service.
Data not available.

314

Firms Employing 100 to 499 Persons Participating in Payroll Savings Plans
(As reported by the War Savings Staff's State Administrators)
Number of firms with payroll
Apr. 18

Alabama

Connecticut
Delaware

113

136

277

570

21

District of Columbia

Georgia

133

Idaho

Indi ana

Kansas

Kentuoky

Louisiana

Maine

Maryland

Massachusetts
Michigan
Minnesota

Mississippi

Missouri

1,300
415
160

Nevada

New Mexico
New York

North Carolina
North Dakota
Ohio

Oklahoma
Oregon

Pennsylvania
Rhode Island
South Caroline
South Dakota
Tennessee
Texas

Utah
Vermont

Virginia

Washington

West Virginia
Wisconsin

Wyoming

80

40

82

32

91

65

214

214

392

691

96

25
69

96

83

91

79

79

99

100

32

94

94

33

94

100

100

92

92

8o

80

67

67

96

96

2,253

58

860

68

263

61

299

92

303

45

176

86

419

33

2,081

91

86

698

686

136

226

226#

179

284

286

60

155

160

177

172

346

35

90

347

93

405

44

85

86

639

1,143

689

1,005

376

440

59

95

472

712

40

135

14

21

89

141

463

1,155
1,010

980

317

56

1,550

41

1,308

53

75

75

90

90

74

75

77

77

99

99

440#

416

84

96

112

53

85

86

715

962

49

74

74

49

82

100

100

72

94

95

27

52

78

78

170

52

85

85

1,182

39

83

83

98

49

103

49

14h

127
21
145
986

33

41

2,060

41

42

3,921

79

98

483

4,257

68

282

3,929

92

92

485

552

51

88

14

88

20

20

20

1,126

70

1,736

100

100

1,743

2,030

55

86

86

166
211

301

301

323

51

93

9x

295

295

1,682

307

69

96

2,276

2,285

96

2,285

74

99

154

100

289

292

361

43

890

81

158

173

61

91

91

26

71

158

21

26

26

199

410

411

326

712

712*

36

hh

44

59

68

68

281

234
134

278
17

78

78

33

72

72

4h

828

73

81

100

100

100

93

93

364

386

73

357

358

456

51

78

79

220
482

220#

43

70

70

491

314
680

61

71

72

23

23

23

74

100

100

100

100

100

94

94

94

53

86

86

2

2*

2

15,360

100

38

527

Railroads
49

81

363

Alaska

Total

61

288

New Hampshire

New Jersey

54

91

288

Montana

Nebraska

48

65

142

2,074

276

44

576

33

176

100

137

210

74

100

1,248

166

Dec. 5

74

100

59

392

31

Nov. 28

61

792

1,072

213

savings plans

Apr. 18

71

720

166

147

Percent of total having payroll

347

54

59

52

Florida

(estimated)

71

720

1,072

of firms

256#

48

512

Colorado

Dec. 5

71

44

756

number

256

43

Northern California
Southern California

Iowa

Nov. 28

149

Arizona
Arkansas

Illinois

Total

savings plans

2

:
:
:
:

State

49

24,971

49

25,076

52

29,083

94

94

Treasury Department
December 11, 1942

.

Data are for November 28, inasmuch as no December 5 report was received.

315

Firms Employing 500 Persons or More Participating in Payroll Savings Plans
(As reported by the War Savings Staff's State Administrators)
Number of firms with payroll

State

savings plans
Nov. 28

:

Apr. 18

Dec. 5

:
Alabama

41

Arisona
Arkansas

14

9

Northern California
Southern California

130

130

151

Colorado

Connecticut

31

114

Delaware

District of Columbia
Florida

Georgia
Idaho

Illinois

391

Indiana

126

11

11

493

88

Iowa

156

Louisiana

38

Maine

29

Massachusetts
Michigan
Minnesota

93

100

100

318

320
287

11

34

100

100

100

100

78

99

53

89

47

47

25

92

100

75

96

56

98

87

100

100

76

100

100

52
55

111

330
287

36

36

140

72

96

92

100

28

28

28

5

29

32

196

32

196

5

5

759

907

103

908

137

98

100

100

94

100

74

99

75

100

100

82

100

100

100

100

100

100

72

99

99

100

100

100

82

97

98

74

98

98

96

96

197

140

0

0

31

52

52

48

55

55

0

484

-

Oregon

502
52

60

100

100

55

87

100

100
98

551

621

623

636

61

77

78

85

98

98

84

98

82

87

98

72

91

92

86

100

100

100

100

100

54

96

South Dakota
5

5

5

Virginia

5

Utah
Vermont

99

80

931

137

483

Oklahoma

Tennessee

97

100

0

412

Texas

96

100

91

32

5

142

Ohio

Pennsylvania
Rhode Island
South Carolina

100

72

4

5

North Dakota

85

51

5

North Carolina

85

3

New Mexico
New York

99

90

4

23

Nevada

New Hampshire
New Jersey

92

68

Montana

Nebraska

98

92

100

1999

81

138

100

98

58

126

81

81

138

63

48

ill

287

26

97

65

52

237

103

99

97

93

49*

49

51

79

100

99

100

25

265

Mississippi

Missouri

25

111

100

69

55

84

94
93

81

40

48

Maryland

99

100

165
ANA
51

ins

40

23

99

100

31

Kansas

Kentucky

Dec. 5

64

78

494

ili?

22

131

44

126

11

60

17

50*

44

86

Nov. 28

23

50

28

68

14

154

23

32

savings plans

Apr. 18

31

153

15

Percent of total having payroll

17

151

25

(estimated)

14

17

122
121

of firms

67

67

16

Total
number

50

88

120

63
8

12

88

120

92

121

96

52

99

10

10

10

80

100

12

100

12

12

100

100

100

99

Washington

93

102

102

102

91

100

100

West Virginia

49

73

73

73

67

100

100

47

100

100

154

82

100

100

25

100

100

100

100

100

Wisconsin
Wyoming

36

127

77*

77

154

154

4

Alaska
3

3

3
3

Railroads
109

109

109

115

95

95

95

864

6,103

6,116

6,258

78

98

98

Total

Treasury Department
December 11, 1942

.

Data are for November 28, inasmuch as no December 5 report was received.

CONFIDENTIAL

316
Sales of United States savings bonds, Series E
December 1 through 10, 1942

Compared with sales quota for same period

(At issue price in millions of dollars)
Actual sales

:
2

3
7
8

9

10

to date

:

:
:
5

:

4

:

December 1

December 1

$ 4.1

$ 4.1

4.5

8.6

10.0
39.7
16.6

18.6
58.3
75.0

46.4
11.9
17.9
13.6

121.4
133.3
151.2
164.8

11

12

14
15
16

17
18
19

:

:

Daily

:

Date

Quota,
December 1

to date

$ 5.5
11.0
23.1
35.2
57.1

95.3
110.2
133.2
158.5
181.5
194.2

24

26

472.7

22
23

28
29
30
31

Office of the Secretary of the Treasury,
Division of Research and Statistics.

74.5%

78.2
80.5

165.6
131.3

127.4
121.0
113.5
104.0

233.6
248.8
272.9
300.4
326.3
340.8
385.5
402.3
428.2
457.9

21

Sales to date
as percent
of quota

518.4
551.3
585.3
650.0

December 11, 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.

CONFIDENTIAL

317

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)
Cumulative sales by business days
December

:

October

November

:

:

:

sales

:
:
:

Date

:

: December
daily

December as

:percent of November

:
cember 1942

197

527

2,688
13,947
12,303

3,214
17,161
29,464

17,522
2,872
9,576
5,651

46,986
49,858
9,434

65,085

$

1
2

3
4
5

8
9

fice of the Secretary of the Treasury,
Division of Research and Statistics.
urce:

$

303

1,115
7,846
14,720
31,425

34,030
43,940
49,326
58,842

65.0%

20,322
24,325

47.3
41.0
116.6
93.8

31,922
46,695
55,998
59,711

138.1
113.5
120.5
110.6

-

10

$

329

-

7.

197

$ 2,218

December 11, 1942.

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.

318

TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION

DATE December 11,
TO

Secretary Margenthau

FROM

Mr. Haas

1942

Subject: Recent Changes in Prices and Yields of Government
Securities

Prices of taxable Government securities rose slightly
last week, while those of tax-exempt securities showed

further small declines. The strength in taxable securities
was concentrated in bonds with first call dates in the
Fifties, while the weakness in the tax-exempts was concentrated in the short and medium maturities.

The regular weekly offering of bills was awarded at
an average rate of 0.367 percent, fractionally less than
the average rate of a week ago. Yields of outstanding

certificates showed no change except for the February 1943
maturity which declined .02 percent.

The comparison of present prices and yields with those
prevailing on September 1 in Table II shows that prices of
all but 5 Government notes and bonds outstanding on
September 1 are now below their levels of that date. Yield
changes, on the other hand, are almost evenly divided between rises and deolines. The difference is, of course,
due to the amortization factor discussed in a number of
previous memoranda of this series.
As discussed in last week's memorandum, Table III,
which compares yields on the basis of the September 1
pattern of rates, gives the best comparison of the actual
change in the market since that date. Reference to the last
column of this table will show that the market, as a whole,

has risen in yield (lost ground) since that date - the

average adjusted increase in yield amounting to about .03

percent.

Purchases of Government securities by the Federal
Reserve System totaled $426 millions during the week. They

consisted of $225 millions of bills, $120 millions of oertificates, $7 millions of other taxable issues, and $74
millions of partially tax-exempt securities. Sales, bill confined solely to bills, amounted to $71 millions and the

maturities totaled $3 millions, with the result that

net increase in the System's holdings was $352 millions.

Attachments

319

Price and Yield Changes of United States Securities
December 3, 1942 to December 10, 1942

(Based on mean of closing bid and asked quotations)
Prices

Security

Dec. 3, 1942

Yields

Dec. 10, 1942

Dec. 3. 1942

Change

(Decimals are thirty-seconda)

Dec. 10, 1942
(Percent)

Change

TAXABLE SECURITIES
Hills

12/1/43

36

-

:03

-

-

-

-

-

7/8

5/1/43
8/1/43
11/1/43

-

7/8

7/8

2/1/43

-

.65

-

5/85

-

Certificates

.37

-

-

-

.37

.00

.34

-.02

.53

.00

.68

.00
.00

.79

.79

n.q.

n.q.

.41

.51
.97

-

Average rate last issue

Taxable Notes

3/15/43
9/15/44

3/45

1-1/9

1-1/2

3/15/45

12/15/45
3/15/46
12/15/46

Taxable Bonds

3/15/48-50
6/15/48

2-1/2
2-1/4

100.02
99.20
100.04

-.01
-.01

99.01
99.04

.00

-.01

100.02

101.07

100.01

-.03
+.02

+.01

101.07

.00

1.76

100.01

.00
.00

1.74

1.76
1.74

3/15/50-52
12/15/51-55

100.04
100.01
103.13
101.04
102.26

100.04
100.02
103.15
101.05
102.29

100.03

2-1/2
2-1/2

6/15/62-67
12/15/63-68
9/15/67-72

+.02

1.08
1.28
1.48

100.13
100.10
100.07

3/15/56-58

+.10

1.19

100.13
100.10
100.07

3/15/52-54

.95

1.22
1.08
1.26
1.49

6/15/49-51
9/15/49-51
12/15/49-51

2-1/2

2-1/2

100.03
99.21
100.02
99.01
99.05
100.01

+.02

.00

.00

.00
+.01

+.02

.00

-.01

.00
.00
.00
.00

1.95
1.97

1.93
1.95
1.97

1.98

1.98

.00

2.00
2.09

1.99
2.09
2.12
2.25

-.01

1.93

+.01
+.03

2.12

100.03

2.49

100.01

100.01

.00
.00

100.17

100.16

-.01

2.47

2.25

2.50

2.49
2.50
2.47

.00

.00
.00

.00
.00

.00
.00

TAX-EXEMPT SECURITIES
Notes
1-1/8

104.15
108.20
106.21
107.01
114.06

104.14
108.18

-.01
-.02

12/15/47

103.27
107.06

103.27
107.06

9/15/48

106.18

10/15/43-45

2

3-1/8
2-1/2
2-1/2

2-1/4
2-1/4
2-7/8

.34

-.02

Bonds

2-3/4
2-1/2

.32
.27
.41

101.16
102.06
103.12
106.08
104.27

9/15/44
3/15/45

4-1/1

-.01

101.18
102.08
103.14
106.10
104.29

6/15/44

3-1/8

.33

100.13
100.29
100.16

3/15/44

2-1/2
3-3/4

.36

100.13
100.30
100.15

1-1/8 12/15/43

2-3/4

.70

100.01
100.13
100.16
100.26
100.24

6/15/43
9/15/43

4/15/44-46
12/15/44-54
9/15/45-47
12/15/45

3/15/46-56
6/15/46-48
6/15/46-49
10/15/47-52
3/15/48-51

12/15/48-50
12/15/49-52
12/15/49-53
9/15/50-52
6/15/51-54
9/15/51-55
12/15/51-53

103.23
110.11
105.30

106.10
107.30
110.01

106.21
107.01
114.01

106.16
103.22
110.11

105.30
106.10
107.30
110.01

104.17

104.17

6/15/53-55

103.03
104.23

3/15/55-60
4/15/56-59

109.02

103.03
104.23
109.02

6/15/58-63

12/15/60-65

106.09
106.12
108.31

108.09
108.12
108.31

0/32**

.00

.00

100.01
100.13
100.17
100.28
100.24

-.02
.00

+1/32**
-.03

.32

+.02
+.05

.40

-.01
.00

48

.48

-.01

.47

.48

+.01

+.01

.54

.53

-.01

-.02

.42

43

.63

.64

.71
.86

.66

+.01
.00

.96

.97

+.01

1.00

1.00

1.07
1.07

1.07

.00
.00

1.09

1.06
1.08

-.01
-.01

1.23

1.26

+.03

1.21
1.34

1.21
1.33

-.01

.00

-.02
-.02
-.02

.00
.00

-.05
.00
.00

-.02
-.01
.00
.00

.00
.00

.00
.00
.00
.00
.00
.00
.00
.00

.72

+.01
+.01

.00

1.32

1.32

.00

1.36
1.57

1.36

.00

1.56

-.01

1.60
1.63
1.74
1.76
1.71

1.60

.00

1.63
1.74
1.76
1.71

.00

1.68
1.80

1.68
1.79

2.04

2.06
2.11
2.15

.00

.00
.00

.00

-.01

2.04

.00

2.06
2.11
2.15

.00
.00
.00

December 10, 1942.

Treasury Department, Division of Research and Statistics.
100.00 bid, 100.02 asked.

Excess of price over zero yield.

Table II

320

Price and Yield Changes of United States Securities
September 1, 1942 to December 10, 1942

Issues outstanding on both dates only
(Based on mean of closing bid and asked quotations)
Prices

Security

Yields

Sept. 1, 1942
Dec. 10, 1942
(Decimals are thirty-seconds

Change

Sept. 1,1942

Dec. 10. 1942
(Percent)

Change

TAXABLE SECURITIES
Bills

Average rate last issue

.76

.37

.00

.34

-.18

.58

-.08

-

-

-

-

-

8/1/43

-

7/8

2/1/43

-

artificates

.37

100.03
99.17
99.01
99.05
100.05

100.02

-.01

57

.51

-.06

99.20
99.01

+.03

.98

.97

-.01

.00

1.05

99.04
100.02

-.01

1.24
1.46

1.08
1.28

101.05

101.07
100.13
100.10

+.02
+.02
+.02

100.07
100.02

+.01

1.97

.00

1.99

103.15
101.05

-.08

102.29
100.03
100.16

-.06
-.10
-.22

2.07
2.12
2.23

Notes

12/15/45
1-1/2

12/15/46

Taxable Bonds

100.11
100.08
100.06
100.02
2-1/2

2-1/4
2-1/2
2-1/2
2-1/2

103.23
101.06
103.03
100.13
101.06

3/15/52-54

6/15/52-55
3/15/56-58
6/15/62-67
9/15/67-72

.03

-.01

+.03

1.48

+.04
+.02

1.78

1.76

-.02

1.95
1.96

1.93

-.02

1.95

-.01

1.97
1.99

.00
.00

2.09
2.12
2.25
2.49
2.47

+.02

2.47
2.44

.00

+.02
+.02
+.03

TAX-EXEMPT SECURITIES

ex-exempt Notes
1-1/8
1-1/8

Tax-exempt

2-3/4
2-1/2
3-1/8

2-1/2
2-1/2

2-1/4

2-3/4

.48

-.02

.48

-.01

.49

100.14
101.01
100.16

100.13
100.29

-.01
-.04

.49

100.16

.00

.55

.53

-.02

-.24

.50

.43

-.07

102.08
102.28
103.28

-.22
-.16
-.21
-.13

.66

.64

-.02

6

.72

-.11

.86

.99

.97

.50

12/15/45
3/15/46-56
6/15/46-48
6/15/46-49
10/15/47-52

104.31
109.00
106.31
107.13
114.28

104.14
108.18
106.21
107.01
114.01

-.17
-.14
-.27

1.15
1.11
1.12
1.24

104.09

103.27

-.14

1.16

12/15/47
3/15/48-51

-.04

1.37
1.31

106.29

107.10
106.28

12/15/48-50
12/15/49-52

104.06
110.19

12/15/49-53

106.09
106.20
108.12
110.15

105.01
103.15

2

-.09

-.01

105.13

110.02

109.10
109.15

110.02

107.06

-.10

-.12

106.16
103.22
110.11

-.12

105.30
106.10
107.30
110.01
104.17

-.11

103.03
104.23
109.02
108.09
108.12

-.12
-.22

106.31

-.16
-.08

.00

.33

105.08

12/15/51-53

-.07

.40

-.04

-.06

.21

12/15/44-54
9/15/45-47

9/15/48

+.01

100.24

-.0

101.16
102.06
103.12
106.08
104.27

2-3/4
2-1/4

Bonds

.34
.32

.33
.39

100.30
100.25

6/15/44
9/15/44
3/15/45

+2/32**

-.13

100.20
100.22

9/15/43
12/15/43
3/15/44

0/32**

100.01
100.13
100.16
100.26

100.14

.96

1.00
1.07
1.06
1.08
1.26

-.08
-.02
+.04

-.08
-.05
-.04
+.02
+.05

1.21
1.33

-.04

1.30
1.58

1.32
1.36

+.01
+.06

1.56

-.02

1.58

1.60

+.02

-.10

1.62

1.63

+.01

-.14
-.14
-.16

1.72

1.74

1.74
1.66

1.76
1.71

+.02
+.02
+.05

1.65

1.68

+.03

1.74
1.97

1.79
2.04

1.99
2.05

2.06
2.11

+.05
+.07
+.07
+.06

2.09

2.15

+.06

-1.00
-1.01
-1.03

-1.03

December 10, 1942.

Treasury Department, Division of Research and Statistics.
Excess of price over zero yield.

Table

III

321

Yield Changes of Government Securities Relative to September 1, 1942 Pattern of Rates
September 1, 1942-December 10, 1942

Issues with 3 months or more to run outstanding on both dates
(Based on mean of closing bid and asked quotations)
Security

Actual yield
as of Dec. 10

Change in

actual yield

Estimated

Estimated

change in yield
required to
maintain Sept.
pattern of rates

change in yield

relative to

1

Actual yield
as of Sept. 1

Sept. 1

pattern of rates

TAXABLE SECURITIES
Bills

Average rate last issue

Certificates

8/1/43

.37

-37

.00

.00

.00

.76

.68

-.08

-.10

+.02

-.17
-.06
-.05

+.11
+.05

-.05

+.09

-.05

+.07

-.04

+.02
.00

Notes
.57

.51

-.06

.98

.97

-.01

1.05

1.08
1.28
1.48

+.03
+.04
+.02

1.24
1-1/2

1.46

12/15/46
Bonds

2-1/2
2-1/4
2-1/2
2-1/2
2-1/2

1.76

-.02

1.93

-.02

1.95

-.01

1.97
1.99

1.97

.00
.00

2.07

2.09
2.12

1.78
1.95
1.96

6/15/52-55

2.12

6/15/62-67

9/15/67-72

1.99

+.02

2.47

2.25
2.49

.00
+.02
+.02

2.44

2.47

+.03

2.23

+.08

-.02
-.02
-.02
-.01

+.01
+.02

-.01
-.01
-.01

+.03

.00
.00

+.02
+.03

-.06

+.01

+.01
+.03

TAX-EXEMPT SECURITIES
Notes
.33

1-1/8

2

2-3/4
2-1/2
3-1/8

2-1/2
2-1/2

2-3/4

2-1/4

+.06
+.06

-.07
-.09

-.04

-.03

-.04

-.05

-.02

-.03

+.01

-.03
-.02

+.02

-.08

+.01
+.05

-.04
-.04
-.04
-.04

6/15/44

.50

9/15/44

49

.48

-.01

3/15/45

.55

.53

-.02

50

.43

.66

4/15/44-46
12/15/44-54
9/15/45-47

.83

.64
.72

.94

.86

.99

.97

-.07
-.02
-.11
-.08
-.02

12/15/45
3/15/46-56

.96

1.00

+.04

1.15

1.07

10/15/43-45

4-1/4

-.05

.00

.34
.32
.40
.48

12/15/43

Tax-exempt Bonds

3-1/8

+.01

6/15/46-48
6/15/46-49
10/15/47-52

1.11
1.12

1.24

12/15/47

1.16

3/15/48-51
9/15/48
12/15/48-50
12/15/49-52
12/15/49-53
9/15/50-52
6/15/51-54
9/15/51-55
12/15/51-53

1.37

1.31

1.30

-.03

+.08

1.33
1.32
1.36

+.01
+.06

-.03
-.03
-.03

+.04

-.03

+.01

-.03

+.05

1.74
1.76

1.65

1.68

2

1.99
2.05
2.09

-.01

+.05

1.71

1.97

+.08

-.04

1.21

1.66

2-3/4

+.02

1.26

1.60
1.63

2-1/

-.04

-.05
-.03

.00
+.05

1.58
1.74

-.05

-.03

1.56

1.62
1.72

-.05
-.04

-.06

+.02

1.58

1.74

12/15/60-65

1.06
1.08

-,08

-.07

.00

1.79
2.04

2.06
2.11
2.15

Treasury Department, Division of Research and Statistics.

-.04
-.02
+.02
+.01

+.02
+.02
+.05
+.03
+.05
+.07
+.07

+.06
+.06

-.02
-.02

-.01
+.09

+.03

-.02
-.02

+.04
+.04
+.07

-.02

+.05

-.01

+.06

-.01
-.01

+.08
+.08

-.01

+.07

.00

+.06

December 10, 1942.

322

MEMORANDUM FOR THE SECRETARY.

December 11, 1942.

Mail Report

Mail during the past week continued to be exceed-

ingly heavy but of little variety or novelty. Bonds

overshadowed all other topics, and the general impression

is of minor dissatisfactions over one aspect of the

program or another.

Complaints or criticism deal with: Increased and
unwarranted cashing of Bonds, difficulties in connection

with the limitation on Series E Bonds, failure to re-

ceive Bonds purchased through payroll deductions, failure on the part of families to receive Bonds thus purchased by men in the service, limitation on farmers,
salesmen, and others affected by gas rationing, the
draft, etc., and incidental charges for cashing Bonds,
keeping them in safe-keeping, etc.
The number of Bonds actually submitted for redemp-

tion continues to be quite high. It might be well to

investigate conditions at Patchogue, New York, since
for some time there has been a small but steady stream
of Bonds coming in for redemption from this small

Long Island town. In all, 30 employees of the War

Department complained that they had not received Bonds

long since paid for.

The most encouraging part of the Bond mail was

that relating to Victory Fund Committees. These letters reflected excellent morale and good response to

local activity.

Most of the tax mail was made up of individual

as to the of the new

a dozen who
opposed the
perhapshalf
inquiries
application
Taxnew
Bill. Bill For in

general, there were 15 who concretely urged a pay-as-yougo plan, the Ruml scheme being mentioned by name in

323

-2Memorandum for the Secretary.

December 11, 1942.

about half these letters. There were 6 letters
approving the Sales Tax and 1 opposing it.
The general mail continued to bring in many
complaints against Government extravagances. With
increasing frequency families of service men are re-

porting their failure to receive allotment checks

sometimes adding that complaint has already been
made to the War or Navy Departments without any

reply being received.

There continues to be a small but gratifying

stream of gifts, often Government checks turned back

as a contribution to the War effort. Form letters

containing a total of $75.00 in cash were received

from 30 citizens of Codorus, Pennsylvania, who, some-

what curiously, called themselves "Fifth Columnists
of America Acting as Santa Claus to Uncle Sam".

Authorized

324
General Comments

Charles C. Lawrence, Stillman, Maynard & Co., N.Y.C.

As a voluntary worker for the Victory Fund drive of the
U. S. Treasury, I consider the address of Mr. Paul of
your Department extremely untimely and ill-chosen.
Threatening to force saving and subscription to U. S.

Government issues at this time will not particularly

help our drive. In fact, I have run into very dis-

agreeable reactions to this threat. May I also add
that the President's remarks at a press conference
yesterday on limitation of incomes and salaries to
$25,000, are not what you might say good "sales talk"
for the larger prospects
George Procunier, Grand Rapids, Mich. I am enclosing
my compensation check to be used for the benefit of
the Veterans of this war. ($72.00) I have been amply

repaid for all sacrifices I made in the last War, and
am desirous that this money shall be used for the benefit of those who have made greater sacrifices in this

War. You will receive a check from me each month as
they come to me. I asked the checks be stopped but was
told they could not be stopped but to send them on to
you.

Guy W. Wolf, Secretary, Retail Merchants Association,

Oakland, Calif. (Telegram) Shortage pennies and
nickels here becoming serious handicap to retail operations. Have taken up with U. S. District Attorney and
Capt. Foster of Secret Service matter of getting Department approval our Association to issue scrip for use
during emergency. Time short and urgency hourly becom-

ing worse. One local bank today completely out of
pennies for store use. Respectfully request approval

plan issue scrip to be redeemed by Association upon

demand. Need is for one-cent, three-cent and five-cent
pieces.

325

-2Lonny C. Deweese, (Operator of Penny Scales), Houston,

Tex. May I suggest in order to get more pennies in
circulation that are now being held by thousands of

coin collectors, that you again mint INDIAN HEAD PENNIES?

In my 37 years of collecting pennies from penny weighing
scales over a wide area in Texas and Louisiana, people
are, and have been since 1909, keeping all Indian Head
pennies -- some for the novelty of having them, others
thinking some day there will be a premium on them. *
We believe if you mint new Indian Head pennies, there would
be no object of collectors holding the ones they now have.

Isidor Kaufman, Philadelphia, Pa. I got a Position with
the Quartermaster as a Jr. Clothing Inspector and got

discharged without Prejudice, on acount one or two persons

wich didnt like me they under mined so much till I got
the Gate. * # # Now, Mr. M, I had 25 yrs expierince in
the Clothing Field, furthermore I have expierience on

Raincoats, I can put the Paterns down on the cloth and
can cut and make a garment, I am a citizen and a good
Democrat. Mr. M, I am a Genius on Raincoats. You need
people to work for the Government, specially somebody
that understands everythink clothing and Raincoats wich

is verry essential, not to get Rid of them. I wish

you would get in tuch with Sect Stimson and Explain to
him about me.

326

-3Favorable Comments on Bonds

Benjamin Nathanson, Brooklyn, N.Y. We have a very
small business, but since the Japs atacket Pearl Harbor
we bought a bout fifteen hundred dollars in War bonds,
and now on Dec. 7th we are going to buy seven more War
bonds. Next monday is Dec. 7th and seven more bonds

will be bought from one family. Hopping for a quick
victory, Benjamin N.

A. Cyril Daldy, St. Louis, Mo.

Recently I caught

a patriotic friend of mine in the act of contributing

some unwanted articles of metal (in good condition) to

the scrap metal drive. I pointed out to him that he

could serve his country better by selling them to someone who had need of them, putting the proceeds into
War Bonds, and thereby taking the money realized out

of circulation. He decided to follow my advice and
obtained $30 for the articles at public auction. To

this he added $7.50 and bought a $50 War Bond. It seems

to me very likely that the purchaser of the articles,
if he or she had not been able to obtain them in this

way, might easily have spent the money on new merchandise

with consequent inflationary effect. Multiply the in-

cident by a few million and quite an appreciable amount
of good might be done through a publicity campaign.

P. B. Brill, Vice President, Tampa Shipbuilding Company,
Tampa, Fla. (Telegram) In addition to launching seven
naval vessels yesterday the employees and officials of
this company subscribed for approximately fifty thousand
dollars War Savings Bonds in special Pearl Harbor Day

campaign -- this in addition to regular weekly payroll
deduction of fifty-five thousand dollars, making total

deduction for subscriptions for this week twenty percent
of payroll.

327

-4Benjamin Wollberg, Washington, D. C. I would like to
make a suggestion in regard to the celebration of the
New Year. We are at home and enjoying the security
and comforts of home while our husbands, sons and

brothers are in all parts of the world fighting to

make our democracy safe and more secure for us to live

in. I think that every person who celebrates New Year's
Eve in any public place should be asked to purchase a

War Stamp, based on the amount of the cover charge.

I feel that the majority of the public would enjoy
their evening more if they contributed their bit for
the Nation in this small way.

Mrs. Mary B. Cook, Mill Valley, Calif. Your "Message

To The American Farmer" arrived about the same time as

a V-letter from my boy overseas. It seems an excellent
reply to any "doubting-Thomases' as to how the boys

over there feel about buying Bonds. This probably will

never reach your desk, but it gives me some small degree

of pleasure to send it. -- (Letter from Stephen C. Cook,
U. S. Naval Air Station, Maui, T. H.) Dear Mom, Dad, Al,
and Kay: Yesterday was Navy Day. Fortunately, I had a

chance to take part in it, and believe me it was one of
the most impressive things I have ever seen. It wasn't

the displays, but instead a few thousand people buying
Bonds. I only wish they could have taken moving pictures
of the show and then could have sent them back to the
States, so the people back there could really see true
Americans in action. Folks, could you imagine about half
the people in Marin County getting together and buying
$160,000 worth of Bonds in one day? Well, that's the
way they celebrated Navy Day on Maui. Everybody dug
down deep into their socks and pulled every last cent
to buy as many Bonds as they could. They hadn't saved

up especially for this one day. It was all spontaneous
and above their regular buying. Many of them pologized

for not being able to buy more because they had already
bought Bonds this month. And you should ave seen the

little shoe shine boys. They would go out and get a
customer, then come back and buy Stamps. The school

328

-5youngsters didn't hang back either. One school got
over six hundred dollars in Stamps alone. Another got
over four hundred dollars in Stamps, and that besides
the many Bonds they purchased. One man came up with

a pineapple can full of coins and said, "My son shines
shoes and has saved up this money to buy Bonds, and

I would appreciate your checking it for me". I dumped
the money out in a box, all half dollars and quarters.

They never seemed to stop rolling, and when I got
through counting, there was sixty-nine dollars worth.
To that sum this father added some more to make it come
out enough for $150 worth of Bonds. Maui was certainly

on a Bond Bender, and I'll bet there are plenty of

people pulling their belts in for the rest of this month.

The comment yesterday and today was, "It's too bad it

couldn't have gone another day to take care of all the
buyers". Frankly, I don't see how there could have been
anybody left to buy. If everybody in the States was
like the people out here, we could really cut a lot of
time out of this war. Out here they work until they are
ready to drop, and instead of complaining they turn

right around and make a showing as they did on Navy Day.
Maybe that explains some of my true feelings toward this

Island. You have to forget race and color when you see
such things. I was planning to send you a paper telling

all about it, but they didn't print half the story. Guess
they are too busy to spend any time bragging about their

accomplishments. #

Walter Herslman, Wheatfield, Ind. The letter you sent me
(A Message To The American Farmer) was just in accord

with the plan I have had in mind. You can send me Stamps
or Bonds for every cent of my AAA payment. If there are
two payments, make it all in one and as soon as I sell
my corn and soy beans, I am not going to put in just 10%,
but 40% of it.

329

Isabel A. Stevens, Miami, Fla. * I had over sub-

scribed $400 so I endorsed my Bonds and turned them in

to the Federal Reserve Bank of Atlanta, Ga. I then

received a communication informing me there is a new

ruling about co-owners and each one is entitled to
$5,000. maturity value, or $10,000. together. He said
he would send them back to me if I so wished. I requested him to return them to me, and on the strength
of his information, I bought some more Series E Bonds

yesterday. I had so much difficulty trying to convince
the Superintendent of one of the branches here that I

could buy more, that I am again wondering whether I am

within my rights or not. I showed him the letter I

received from Mr. McCorvey.

#

The Superintendent

of the branch Post Office called the main Post Office
and read the letter to someone there, but they still
insisted I could not buy any more, as they had not been
notified of the change. I needn't have spent so much

time and talk with them, and just bought my Bonds and
went along about my own business, but I thought they
would appreciate knowing of the change, but they seemed

to resent it instead, only saying they didn't know any-

thing about a change and they hadn't been notified.

If I may say so, I think it would be very beneficial

to a great many if these rules of buying Bonds were
simplified and made clearer. # * What happens for
example if I have my full quota of Bonds and some relative or friend bought Bonds in the same year and then
in 1945 or 1946 they passed away and left them to me?
Mrs. George W. Zimmerman, Grand Blanc, Mich. You would

sell more Bonds if you could find some way for us to
take care of them other than putting them in the bank
for safe-keeping. The bank charges $3.00 per year to

take care of the Bonds -- $30 for 10 years -- that is

too much for the working man with a family. We want to
buy Bonds to help America, not to give it all away to
the banks. # # Most of the workers are buying the $25
Bonds, and I think you could provide a safe place for
le each Bond. Our banker told us to pay him $3 on or
before the 15th of this month, so do something right
now about this matter.

330

Dear Mr. Morgenthau --

No gas.

No job.

No job.
No money.
No money. No Bonds.

Yours truly,
J. Burnett,
Portland, Oregon.

H. W. Wade, Sec.-Treas., Standard Hosiery Mills, Inc.,
Alamance, I.C. # * # We are deducting about $2,500 per
month now on payrolls, for War Bonds. We are endeavoring to pay our employees a Bonus, and this Bonus is

slightly larger than paid last year, and we have had

this TURNED DOWN. How can we go at our employees to
sell them more Bonds when the Government refuses to

permit their employer to give them a little Christmas

Cheer in the form of a Bonus? We have made applica-

tion to a higher board for the approval of this Bonus,

but why so much unnecessary work in order that we may

do a thing that our Directors are anxious to do? The
information requested takes quite a bit of time to get

up, besides the money spent by the Government in setting
up offices to handle these Bonus and Salary and Wage

Applications. Why not save these costs and let corporations and employers in general pay reasonable bonuses
and increases and thus create a better feeling between
employer and employee? Our employees know that it is

our intention to pay this Bonus, and if approval is
denied, they will doubtless cancel their Bond deductions.

Don't forget those increased taxes our employees
are going to have to pay the coming year!

David Pesetsky, Detroit, Mich. I am an employee of the

War Department Tank-Automotive Center, Detroit, Mich.
Last May I subscribed for War Savings Bonds, Class A

Pay Reservation. I have paid in about $100. Up to this

date, which has been a period of seven months, I have
not received a single Bond or any information or acknowl-

edgment thereof. In view of the fact that it is possible

to buy and receive a War Bond in a few minutes at any

Post Office, theatre, or bank in the United States, it
seems incredible that such a condition should exist

within a Government agency.

8

2

331

Mrs. Alva C. Frey, Port Orchard, Wash. We are the
average American family and we are trying to do our

part in the war effort. My husband works for the Puget

Sound Navy Yard and we have been putting 10% of our
# It became necessary the

wages into War Bonds.

other day to cash in three of these Bonds so we took
them to our bank to cash them and they charged us a

dollar for handling the Bonds, and I want to know if
they had any legal right to do so. We did not go to the

Post Office as we have to bother one of the merchants

to identify us, and we felt it was easier to go to the

bank where we were known. I thought the Government

should know about this as we, like many other families,
will not be able to buy so many Bonds unless we can
use them in our emergency without too long a wait and
too much expense.

Douglas Fosdick, Publisher, Rumford Falls Times, Rumford,
Maine. I am enclosing correspondence which I have had

recently with one of three local firms, the Stowell-

MacGregor Corporation of Dixfield, Maine, regarding
the sponsorship of a War Bond advertisement. It is my
understanding that the Stowell-MacGregor Corporation is
largely engaged in war production work. (Letter refused

curtly to sponsor ad, "no appropriation".) I think you

will discover in this correspondence the reason why we
publishers have been unable to sell the very splendid
advertisements you have sent us in mat form. In the
past year I have succeeded in selling but one of these
ads, and in my judgment it is a complete waste of your
time and energy, and the public's money, for you to main-

tain a staff of advertising experts and artists to put
out material which is practically impossible to sell.

I guarantee that this voluntary sponsorship program,

no matter how attractive the copy is, will not work be-

cause private business cannot see why it should be bur-

dened with a function that is not their own, but that

of the Treasury Department which is out selling something.

As far as my newspaper is concerned, you can save money
for the Government by taking our name from your war Bond

mat list. We have enough full-page mats on hand now to

8
-2-

331

Mrs. Alva C. Frey, Port Orchard, Wash. We are the
average American family and we are trying to do our

part in the war effort. My husband works for the Puget

Sound Navy Yard and we have been putting 10% of our
wages into War Bonds. # # * It became necessary the

other day to cash in three of these Bonds so we took
them to our bank to cash them and they charged us a

dollar for handling the Bonds, and I want to know if
they had any legal right to do so. We did not go to the

Post Office as we have to bother one of the merchants

to identify us, and we felt it was easier to go to the

bank where we were known. I thought the Government

should know about this as we, like many other families,
will not be able to buy so many Bonds unless we can
use them in our emergency without too long a wait and
too much expense.

Douglas Fosdick, Publisher, Rumford Falls Times, Rumford,
Maine. I am enclosing correspondence which I have had

recently with one of three local firms, the Stowell-

MacGregor Corporation of Dixfield, Maine, regarding
the sponsorship of a War Bond advertisement. It is my
understanding that the Stowell-MacGregor Corporation is
largely engaged in war production work. (Letter refused

curtly to sponsor ad, "no appropriation". I think you

will discover in this correspondence the reason why we
publishers have been unable to sell the very splendid
advertisements you have sent us in mat form. In the
past year I have succeeded in selling but one of these
ads, and in my judgment it is a complete waste of your
time and energy, and the public's money, for you to main-

tain a staff of advertising experts and artists to put
out material which is practically impossible to sell.

I guarantee that this voluntary sponsorship program,

no matter how attractive the copy is, will not work be-

cause private business cannot see why it should be bur-

dened with a function that is not their own, but that

of the Treasury Department which is out selling something.

As far as my newspaper is concerned, you can save money
for the Government by taking our name from your war Bond

mat list. We have enough full-page mats on hand now to

9

332

- 10 -

last us for the duration if the duration is five years.

As you must realize, the newspapers are giving your
Department, and all other Government Departments, a vast
amount of free space, on which we receive no return what-

ever. * * We cannot afford to run these full pages for

nothing. I earnestly recommend that it is now time for

your Department to adopt a business-like policy along the

lines have indicated above. (Campaign of paid Advertising.)

Senator Vandenberg forwards copy of letter written by
F. H. Beach, President of the Eaton County Savings Bank,-Charlotte, Mich., and addressed to Mr. George C. Haas.
I wish to inquire if you or the head of the Government
are aware what they are doing to the Banks in the U. S.

In our little Bank we are short of labor yet we are

spending about $100 per month in selling Bonds, and

practically every day we are asked for a report from
someone who has a fine office, probably draws a nice
salary and has nothing to do but sign his name. The
majority of Bankers probably haven't got the guts to

write this type of letter. I wish you would take this

matter up with Mr. Morgenthau, Jr., and ask him which
he would prefer to have us do, sell Government Bonds or
spend the time answering inquiries which undoubtedly
would be filed away and n ever seen by any one.

R. Malley, General Chairman of Machinists, St. Louis
Southwestern Railway, Pine Bluff, Ark. (Telegram) On
account of the Bonds not being delivered either by the
Federal Reserve Bank of St. Louis or the Railroad Co.,
the employees whom I represent have informed me that

they are going to ask that their deduction orders for
Bonds be cancelled unless this condition is corrected.

T. A. Williams, Riverside, N.J. I am writing to you

as an appeal, as I have more trouble buying Bonds than

I have getting the money to buy them with. # * # As it
happened, this day I was at the Post Office at 5:30 p.m.
and the Postmaster would not sell me a Bond -- this is not

333
10

- 11 -

the first time I was refused. I am a shipyard worker,
a ten percenter at the yard. At times I would buy

more Bonds, but I can' t buy them at the Post Office if

it is after 5:30 p.m., although the Post Office is open

until 6:00 p.m. # # # I have 22 Bonds, but I would have
at least 10 more if the Postmaster were more patriotic

to his country instead of his time.

Pvt. Jerome Smolinsky, Aberdeen Proving Ground, Md.

I have written you a number of times previously concerning two $100 Bonds I purchased while employed at Picatinny

Arsenal. Up to the present time I haven't received any

answer from you, and I would like to know whether or not
you intend to send me my Bonds. The deduction of $10
per week was taken out of my pay check, commencing with
the May 11, 1942, payday. Seven months have passed and

I still have not received the Bonds. *

11

- 12 -

334

Unfavorable Comment on Taxation

Donald Fisher, Elizabeth, New Jersey. I was recently
approached by a friend who works for a bank and is interested in the sale of U. S. Government Bonds. I advised him that, after caring for my present commi tments,
I would have to lay aside any spare funds that I might
have to take care of my next year's income tax. He
brightened and said, "That is what Series A. Bonds are
for. Invest in them and give the Government the use of

the funds in advance." I remarked that it had already

cost me about $80 this year to help the Government in
that way. On March 10, 1942, I was advised by my employer that $1,094.26 paid to me as sickness benefits
in 1938 should have been classed as nontaxable income

and that I should make a claim for a refund. My claim
($82.85) was filed immediately and I was subsequently

advised that it had been disallowed as the application
should have been filed within three years of the time
that the return was filed (February 16, 1939). I have
since learned that several of my fellow employees who
received similar notification on the same day have been
reimbursed. Why? Because they waited until the eleventh
hour to pay their taxes, whereas I endeavored to give
the agents a "break" by filing mine ahead of time.

Since Deputy Commissi oner Mooney's decision is probably

final, I presume that there is little use in appealing
to you. However, I thought that it might serve some

purpose to call this injustice to your attention in the

hope that the cause can be corrected. As for buying
Series A Bonds to pay taxes, I fear the hidden rules and
hesitate to get "burned" again.

335

December 11, 1942.

Dear Mr. Nelson:

Thank you for your letter telling me of
the establishment of a Procurement Policy Board,
and asking that the Treasury nominate a member

to sit with this body.

J should like to have Mr. Clifton Mack
serve in this capacity, and hope that you will
call upon him whenever you are ready to do so.
Sincerely,
(Signed) H. Morgenthan, Jr

Honorable Donald M. Nelson,
Chairman, War Production Board,
Washington, D. 0.

Photo file in Diary
GEF/dbs

File to Thompson

WAR PRODUCTION BOARD
WASHINGTON, D. C.
IN REPLY REFER TO

December 3, 1942

My dear Mr. Morgenthau:

2y General Alministrative Order No. 2-68,
copy of which is attached, there is established R
Procurement Felier 3card AS the successor to a committee move formerly PS the Purchases Policy Committen and Inter S the Procurement Policy Connittee.

In recordance with the provisions of that
order. 111 you 0e good enough to nominate one member. The Treasury Department member of the previous
comittee WEO Mr. Clifton Nack.
Sincerely yours,

Donald H. Nelson
Chairman

Honorable Heary Morgenthau, Jr.

Secretary of the Treasury
Washington, n.c.

FORDEFENSE

BUY

KURY GA-In

(3.2)

United States of America

GENERAL ADMINISTRATIVE ORDER NO. 2-68

WAR PRODUCTION BOAND

MANUAL OF POLICY
AND PROCEDURES

12
EFFECTIVE DATE

SUPERSEDED ON

BY

December 2, 1942
SUBJECT

PROCUREMENT POLICY DIVISION AND PROCUREMENT POLICY BOARD

Section 1. Establishment of the Procurement Policy Division and
Procurement Policy Board:

.01 There is hereby established within the Executive Office of
the Chairman a Procurement Policy Division.
.02 There is also estaolished within tno Procurement Policy

Division A Procurement Policy Board.

03 One member of the Procurement Policy Board shall be
nominated by each of the following for appointment by the Chairman of the
War Production Board: The Secretary of War: the Secretary of the Navy;
the Secretary of the Treasury; the Chairman of the Maritime Commission,

and the Administrator of the Office of Price Administration. The Director

of Procurement Policy of the War Production Board shall be a member of the
Board. The Chairman of the War Production Board shall designate the Chairman of the Procurement Policy Board from azong its members. The Chairman
of the Procurement Policy Board shall appoint an Executive Secretary.

Section 2, Functions of the Procurement Policy Division:
.01 The Procurement Policy Division shall determine broad policies
in accordance with which the several Federal departments, agencies and

establishments shall perform their functions with respect to war purchasing
and contracts. This statement shall include but not be limited to:

a) The determination of policies to be followed by the

contracting departments in negotiating war contracts.

b) The determination of policies to be followed in the
renegotiation of contracts under Section 403 of

Public LAW No. 528. known BLB the Sixth Supplemental

National Appropriations Act of 1942, or any amendments
thereof.

c) The stimulation of such war contract forms, war
contract provisions, and methods of setting prices
in WAY contracts BB will preserve and increase the
efficiency of war production.

(over)
2413863

GAO 2-68
Page 2

.02 The Procurement Policy Division shall administer and
maintain continuous reappraisal and examination of the general procurement

principles currently set forth in War Production Board Directive No. 2
(Amended) and the War Production Board Clothing Procurement Policy.

.03 The Procurement Policy Division shall, on behalf of the
Chairman of the War Production Board, study and develop policies dealing
with the broad problems of war contracts, their origin, negotiation,
effectiveness in enhancing war production, change. and termination.
Section 3. Functions of the Procurement Policy Board:
.01 The Procurement Policy Board shall assist the Procurement

Policy Division in the performance of its functions and review policy
determinations prior to issuance. The Board shall be concerned primarily

with policy problems which simultaneously involve more than one of the
procurement agencies and shall continuously review the performance of
the respective
agencies in carrying out policy determinations which have
been
established.

Section 4. The Staff of the Procurement Policy Division;
01 The Director of Procurement Policy shall employ such
personnel As my be necessary to provide the Division and the Procurement
Policy
Board with information on which to base decisions and to carry out
determinations.
.02 The Director shall assign personnel to such procurement
agencies as the Procurement Policy Board shall recommend in order to
coordinate Governmental procurement.

03 The Director shall appoint such joint procurement sub-

committees for specific commodities as shall be recommended by the
Procurement Policy Board.

Section 5. Effective Date:
01 This order shall take effect on December 2, 1942, and
rescinds General Administrative Order No. 12 as amended by General
Administrative Order No. 2-31.

02 Nothing herein shall be considered to supersede or modify
the provisions of General Administrative Order No. 2-51 or General
Administrative Order No. 2-63.
I CERTIFY THAT THE ORIGINAL OF THIS ORDER
DULY APPROVED AND SICNED BY THE COM.
PETENT5th
EXECUTIVE WAS FILLD WITH ME ON THE

DAY OF December, 1942.

MLBiu
W. L. Batt

Vice Chairman
CHIEF OF MANAGEMENT SERVICES
2-13H

338

DEC 11 1942

My dear Mr. Ecoles:

I - calling a mosting for 3:00 P.N. on
Tuesday, December 15 to give further considers-

tion to proposals for post-ear monetary stabilisation which, you will remember, have been the
subject of study by an interdepartmental technical

subconsittee.

I would appreciate it very such if you or
someone you would care to designate could attend
this mosting.
Sincerely yours,
(Signed) H. Morgenthan. Jr

Secretary of the Treasury.

The Honorable Marrinor S. Eccles,
Chairman, Board of Governors of the
Federal Reserve System,
Washington, D. C.

Copy in Diary
Copies to Thompson

By Ness. Givens 4:27
12/11/42

HDW dal

12-11-42

339

DEC 11 1942

My dear Mr. Secretary:

I - calling a meeting for 3:00 P.M. on

Tuesday, December 15 to give further considere-

tion to proposals for post-ear monetary stabiliza-

tion which, you will remember, have been the
subject of study by an interdepartmental technical
subconsittee.

I would appreciate it very much if you or

someone you would care to designate could attend
this meeting.
Sincerely yours,
(Signed) H. Morgenthau, Jr.

Secretary of the Treasury.

The Honorable Jesse Jones,
Secretary of Commerce.

Copy in Diary
Copies to Thompson

By Mess. Givens 4:27
12/11/42

HDWidal

12-11-42

340

DEC 11 1942

Dear Mr. Vice President:

I an calling a meeting for 3:00 P.N. on

Tuesday, December 15 to give further consideration to proposals for post-mar monotary stabilisation which, you will remember, have been the
subject of study by an interdepartmental technical
subcomittee.

I would appreciate it very much if you would
designate sonsone to represent the Board of
Economic Warfare at this meeting.
Sincerely yours,
(Signed) H. Morgenthau, Jr.

Secretary of the Treasury.

The Honorable,

The Vice President.

Copy in Diary
Copies to Thompson

By Mess. Givens 4:27
12/11/42

HDWidal

12-11-42

341

DEC 1 1 1942

My dear Mr. Secretary:

I an calling a meeting for 3:00 F.M. on
Tuesday, December 15 to give further considere-

tion to proposals for post-war monetary stabilizetion which, you will remember, have been the
subject of study by an interdepartmental technical
subcomittee.
I would appreciate it very much if you would

designate someone to represent the Department of

State at this meeting.

Sincerely yours,
(Signed) H. Morgenthan. Jr

Secretary of the Treasury.

The Honorable,

The Secretary of State.

Copy in Diary
Copies to Thompson

By Mess. Givens 4:27
12/11/42

HDW1rl

12/11/42

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342

How

WAR DEPARTMENT

OFFICE OF THE UNDER SECRETARY
WASHINGTON, D.C.

December 11, 1942.

Honorable Henry Morgenthau, Jr.
Treasury Department,
Washington, D. C.
Dear Henry:

This will confirm appointment for luncheon
at your office on Tuesday next with General Somervell.
We will be there at one o'clock unless you notify me
of a change.

There is inclosed for your information a
copy of restricted document relating to the subject

of military procurement. I think you will be interested
in it and hope you will get time to look through it before our luncheon meeting. It is sent for your per-

sonal information and not for publication.

Sincerely yours,

Edward S. Greenbaum,

Colonel, Ord. Dept.,

Executive Assistant to
Incl.

Under Secretary of War.

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The annexed document sets forth the War Department's policy with respect to
legislation
in support limiting
of suchmilitary
policy. control of the procurement of munitions of war, and the proposed reasons

344
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THE NECESSITY FOR CONTINUED MILITARY
RESPONSIBILITY FOR EQUIPPING
THE ARMED SERVICES

1. Introduction. S 2871 and H. R. 7742 propose to transfer to an Office of War Mobilization the procurement of materiel. Another suggestion is that civilian control over procurement
be achieved by executive or administrative order. No plan envisages the transfer of all steps
required in the acquisition of weapons, as it is conceded that only the Armed Forces can establish the military requirement of types, quantities and relative urgency. The proposals vary
from
having a civilian agency do the contracting to having it do the scheduling and follow-up of
production.
2. Dissatisfaction With Dislocations of War. The resurgence of proposals to take procurement of weapons away from the Armed Forces is traceable to the dislocations which war
makes inevitable. Industrial America has been converted from peacetime pursuits, and stress
has resulted. There is longing for pre-war conditions. The hope is that somehow someone
other than the Army and Navy, although not trained or experienced for the task, could do the job
better. Then all businesses, large and small, efficient and inefficient, would be able to continue
undisturbed; there would be no dislocation of labor or housing problems; and an even-balanced
flow of munitions would be transmitted painlessly to the troops. In short, the movement for a
new control is a phase of "business as usual". although we are engaged in unusual war business.
3. Procurement Must be Handled as Part of a Single Flow. It is simple to propose an
administrative arrangement whereby one agency determines what It needs for victory while another agency attends to the fulfillment of the needs and the delivery of the completed items to
the using forces. It is, however, an impossibility thus to separate the military program into
parts and to introduce divided responsibility, without a complete disruption of the Army and of
its successful military operations.
The flow of munitions depends first on strategic and tactical planning of military
operations. This requires research to develop new and improved weapons and their design,
specifications and drawings. Pilot models must be produced and tested. Facilities must be
examined for capacity to produce in sufficient quantities at the times required. Part of the necessary production must be placed in the Army arsenals. New facilities must be constructed
where existing facilities are inadequate. Contracts must be placed, and their performance followed up and expedited. There must be inspection for quality, testing and proof firing. Manufacturers must receive shipping orders. Transportation, both domestic and overseas, must be
provided. The supplies must be distributed through bases, depots, holding and reconsignment
points and ports of embarkation. The supplies and equipment must be maintained in the field,
and this includes distribution of spare parts and tools, salvage and rehabilitation.
There is no strict chronological sequence whereby some of these functions may be
culled out from the rest and given to a separate agency. The flow is indivisible. Strategic and
tactical planning continues throughout and is in turn affected by the progress of munitions manu- of
facture. Programs are readjusted while production is in process. Research and preparation
specifications overlap production and change the course of production. Military testing and inspection occur simultaneously with production. Battle experience must reach the production line
with minimum delay. Weapons already completed must be modified or changed in light of such
experience or the particular use required. To accomplish a proper flow of munitions, production
schedules must be frequently and promptly changed directly with a manufacturer to meet the
varying needs of task forces and combat operations overseas. Whole programs must be revised
without delay, in light of changes in the military situation. These things cannot be done with
dispatch and decision through the complexities of a dual organization.
Any dual arrangement would result in innumerable delays, in difficulty of defining the
functions of each agency, with resulting jurisdictional disputes, and in complete breakdown a
of exact procurement. We are not ordering safety pins at a department store. We are procuring make nec-

myriad of complex and difficult items, constantly changed as testing and experience thousands
essary. The administrative red tape involved in the submission of schedules for
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1

345
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of weapons and tens of thousands of components for approval and placement by another agency

presents Insurmountable difficulties. particularly when revisions in quantities and specifica.
tiona are constantly required as the result of strategic and tactical changes. For example.
strategic and tactical developments in the Aleutiana created an emergent necessity for a
change in bomb fuses. The existing funes, though eminently satisfactory for high altitude or
dive-bombing, were not adapted to the new type of bombing required. To correct this situation, an Ordnance officer with Air Force experience was flown to the Aleutiana and partici-

The Army and Navy "g" symbolizes the direct relationship between every working man and
the
fighting forces. No civilian procurement officials could obtain the same measure of
support.
5. Procurement for the emedForces is the Result of Planning. Transfer of procure.

ment to a civilian agency would be entering an untried field, whereas the present method of
obtaining military supply is the result of years of study. In 1920 Congress gave to the Assistant Secretary of War the job of planning for mobilization of war resources in the next
During the period since then, the Army and Navy, with the advice and guidance of seasoned war.
counsellors such as Bernard M. Baruch and Hugh S. Johnson, prepared our Industrial war
plans. These plans envisaged the execution by the Armed Services of the procurement
pro-

pated in bombing attacks on Japanese ships. He flew back to Picatinny Arsenal and in a few

days, as a result of his observations, designed a fuse for this particular type of operation.
He supervised production line changes and flew the first units produced to the Aleutians where

he supervised the trials and the instruction of other officers in their use in actual battle, The
Air Forces now report that 98% efficiency is attained with this fuse. No such rapid and effective

gram. The supply services were decentralized and their officers trained at the Army Inuus.

change would have been possible under dual control of production.

trial College and other business and technical schools. 30,000 manufacturing establishments

It is difficult, even within one agency, to relate munitions requirements to available
production facilities and material. The reorganization of the War Department last March,
with its creation of the Services of Supply, accomplished such coordination. It would be im.

were surveyed by our officers and their facilities allocated. The Industrial Mobilization Plan,

as amended and supplemented from time to time, was reported to Congress. Control of re-

sources and conversion of the civilian economy to war economy were assigned to War Re.

possible to bring about a coordination between two different agencies in the accomplishment
of a single Indivisible program of production.

sources Administration and subordinate civilian agencies. Under this plan, the Army has now
had on
more
than two years
sail
an uncharted
sea. of actual practice. To proceed under a new organization would be

4. The Armed Forces Alone Can Direct This Flow, No one but the Armed Forces is
competent to establish and change military requirements or to receive, use and maintain the
material in the field. This much is conceded by advocates of a department of munitions,
Hence a dual arrangement and interruption of the flow can be avoided only by placing the

6. The Proper Function of Civilian Agencies, It has never been the thought of the

Armed Forces that they alone could mobilize the country for war. The Industrial Mobilization Plan called for creation of a War Resources Administration and allied civilian agencies.

entire process of production of weapons in the Armed Forces. Aside from the insurmountable administrative difficulty, tha proposal would place the responsibility for production of

Their function is to provide an increased supply of critical materials, the facilities for the
production of emi-finished products required for military end items, the administrative
control of the flow of materials and the elimination of these materials for non-essential pur-

military weapons in a civilian agency utterly lacking in experience in production of weapons,

Modern warfare is largely a war of logistics, and the control of military procurement and
supply is essentially a part of the strategy governing the distribution and use of our Armed
Forces. It is the basic mission of the War Department, under the supervision of the President

poses. They also are charged with the duty of continuing civilian supply necessary to support

.

0

as Commander-in-Chief, to organize, equip, dispose and direct our armies in conjunction
with those of our Allies so as to defeat the armies of the enemy completely and without delay.
Complete responsibility and authority in a single chain of command for the design, procurement, storage, distribution, use, maintenance and salvage of weapons of war is an essential

and fuel, transportation, finance, food and foreign trade. In some of these fields the Army
and Navy Control
have had no
special training and experience. Here civilian leaders are required
critical
be

in

the

hands

of

a

must

civilian

agency

for

two

reasons. First, civilians familiar with the production of steel, copper and like materials have
had more experience with problems in such production than Army and Navy officers. Second,

the demands for materials are not confined to the Army and the Navy. Civilian activities

essential to the war effort must also be met.

in

the production of munitions. This to recognized in the bills before Congress, where It is
provided that Army and Navy officers will be transferred to the civilian agency and placed on
non-military status. But it is only by keeping such men with the Armed Forces that they can

There is no thought that the military departments should control American economy.
It is essential morely that the Armed Forces procure munitions which they alone are able to
procure while civilian agencies direct the economy of the country to assist and make pos-

sible ah military procurement.

remain in the chain of unified command or that they can be sent to theaters of operations to

carry out planned supply operations, returning from time to time to transmit their direct

7. Production Accomplishments of the War Department. Proponents of a change are
faced by the accomplishments of the War Department in military production. The War
Department is not and probably never will be satisfied with the progress of procurement

example, when the development of

Rommel activities in Libya indicated the growing importance of the tank in desert warfare,
the Ordnance sent an officer to participate with the British in actual battle with our tanks in
use by British Armored Forces. An result of months of frontline experience he not only
redesigned the system for supply and maintenance of armored forces, but also returned to

and

production of munitions. This is inevitable in total war of resources against fully mobilized,
powerful enemies who understand such a war. The limit upon the amount of weapons desired

is the limit established by our resources of materials, facilities and manpower. Hampered

this country and engaged in designing and supervising the production of our newer tank models.
No one but an Army officer could have done this,

by the lack of a munitions industry in the United States and constantly changing control of
the flow of materials by civilian agencies, deliveries of munitions of war have been unprec-

edented

Army and Navy officers are free from criticisms which, rightly or wrongly, have
been leveled at civilian agencies. No officer has favored "business as usual" A transfer of
procurement functions to a civilian agency would enhance the criticism which such agencies

and

are

now

serving

well

our

troops

and

those

of

our

Allies

on

world-wide

fronts.

This production has been so balanced that more than 80% of our production output has been
placed in the hands of troops. The performance of our aircraft, tanks and other weapons is

have already encountered and thus divide the united efforts of the Nation.

praised by all who have used them or seen them in action. They are winning victories. The
British have reported, "The tanks, M-4 (American) have made great impression on every.

There is also a morale factor in continuing production under the Armed Forces.

one and the troops are thrilled with them. The long gun is magnificent both in accuracy and

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in penetration.' Our supply is growing in quantity and quality. Production for the War
Department, which was less than billion dollars in 1940, reached some 3 billion dollars in

2

1941. In the first 10 months of 1942 this production has approximated 14 billion dollars.
(
3

experience into production of better weapons at home. For

materials

of

inherent in the responsibility for the performance of this basic mission. Strategy and pro-

duction of weapons are inseparable If the war is to be won.
The Armed Forces alone have a trained personnel who have specialized for years

the war effort. Among the duties of such agencies are priority and price control, allocation
of facilities, control of raw materials and other commodities, control of labor supply, power

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In addition to this tremendous progress in quantity, the supremacy of our equipment in quality
over that of our enemies is being proved in combat. While examples of this can be multiplied
indefinitely, an outstanding example of quality and performance is that of our fire control

The British had and no Industrial Mobilization Plan with well-developed military organization of
procurement
supply. England' a Industrial economy differs from
in scope. Industry is less specialized and is split into smaller units. both in nature and

equipment
used
on tanks and self-propelled guns whereby accuracy of fire has been increased
as
high as fifty
percent.
Great facilities have been constructed for ordnance and aircraft manufacture where

duction Department of military believes that our and system. system under which the Armed Forces attend the War to pro-

weapons a civilian agency mobilizes the national resources in

had practically non-existent industries. Over 91% will be completed by the end of 1942.

of such production, a system that worked well in 1917-1918, works better than the British support
duced. plan and is more responsive to the needs of the troops who must fight with the weapons pro-

In spite of the continuance of unnecessary commercial industry up to and considerably after
Pearl Harbor, 3996 of our national output has now been converted to the war effort which, in

a period of approximately a year, is equal to the effort being made in England after four

transfer 11. There is No Danger of Military Control of American Economy. The proponents of

years. It is approaching the war effort of Germany which has reached 4395 of national output

the of the procurement of military supplies to a civilian agency profess fear of

after 10 years of preparation for war. No apology is needed for what the War Department

military regimentation of America, These fears are wholly unfounded. All War Department &
plans call for civilian control over the mobilization of the country' resources. We do not
desire to enter the field of directing the country's economy.

has achieved and is achieving. The same is true of the Navy Department.
as

a

Army

8. Impossibility
of Changing
Organization
Now, The existing organization of the
machine
both
for
combat our
and
such
that

is

physical impossibility
separate these two parts without a complete disruption of the Army and its current success.
supply

is

it

to

and
Furthermore, the War Department itself 18 not devoid of civilian viewpoint
personnel. The Armed Services are under the civilian leadership of the Secretary,
Under
Secretary and Assistant Secretaries of War. While we have in the War Department the only
professional cadre of experienced executives in the procurement of munitions, without whom
such procurement would be a practical impossibility, these men have been in constant contact
with civilian life and experience. They have been trained in the Army Industrial College and
other schools of business. They have spent their lives in dealing with civilian industry.
These professional officers are but a small part of the present Army engaged in the
Services of Supply and the Material Command of the Air Forces. The percentage of Regular

ful military operations. Contracts have been placed and are being administered by the Army.
Contractors and subcontractors have learned to meet military requirements, specifications
and procedures. A procurement organization has been established throughout the country and

overneas. change in the middle of the war, even were theoretically destrable at some
other time.
would disastrous
The destruction
ofthea going organization in favor of one
untried
and
inexperienced
loss
might mean
of

war.

Even

If

It

the

were

physically

pos-

aible to make the transfer without delay of a year or more, there is no assurance that the
new agency could do the job. The civilian super-agencies have been changed repeatedly, both
in organization and personnel. There is no reason to suppose that a transfer of procurement

Army officers differs in different branches. In the supply services It averages 9% It has

been necessary and advisable to augment the regulars by large numbers of civilians of whom

to civilian control would not result in further reorganizations and new transfers, than

Generals Knudsen, Glancy, Harrison and Pyron and Colonels MacKeachle, Browning and

one swap of horses in the middle of the stream.

o

9. Reasons for Existing Dialocations, There is no doubt that the war has brought certain centrations of Industrial employment and local ahortages of labor, while elsewhere

not mean that our procurement and supply officers are "brass hats" or Fascist-minded mill-

there have been, temporarily at least, areas of comparative idleness and distress. Some
Industrial establishments have been enlarged and filled with armament business, while others,

deprived of materials for commercial supply, are relatively idle.
Most of these difficulties are inherent in the situation. The Armed Forces had
take America as they found It. We had no munitions industry. Our facilities for aircraft
production were inadequate. Only portion of our industrial establishments were equipped

tarists who seek Army control of the civilian economy and population They are a cross

section of our most patriotic civilian leaders. The Army of the United States is truly a civiltan Army. No Army in history has so quickly made use of civilian plans and experience and
adopted them to the performance of its military mission as quickly and completely as this
one. While the procurement officers constitute primarily a civilian Army, It would have been
impossible to create it and to continue it in efficient action without the framework and leader-

to

ship of Regular Army officers especially trained for the task.

with the facilities and skills that could be converted to the manufacture of modern weapons.
Speed was of the essence. A number of plants had to be erected. Others had to be enlarged
placed
and converted.
newemployees
facilities are
erected
or old ones enlarged and existing plants are
threeWhen
upon
shifts,
must
come
from

somewhere.

Congestion

and

Sarnoff are examples. Thousands of Reserve Officers and others commissioned from civil
life are engaged in Army procurement. The fact that they wear the uniform of the Army does

12. Conclusion and Summary,

(a) To shift the scheduling and procurement of munitions from military to civilian

would mistake time because divides responsibility and authority

housing

difficulties are unavoidable, On the other hand, those plants unable to manufacture military

the milltars prosecution of the war and because procurement, logistics and augoly are
inextricably interwoven into the pattern of modern war.

items forthcoming.
found their civilian business diminished, particularly when critical materials were no
longer

(b) Such shift at this time would be disastrous since it would require a complete

The Armed Services have endeavored to use all industrial plants useable in the war

disruption of the organization of the Army at time when that Army is engaged in major and
successful military
operations with the enemy, and would seriously jeopardize the successful
prosecution
of the war.

effort. Thousands of small businesses have been brought into the program. Subcontracting
has been insisted upon. Every attempt is made to place contracts and facilities, where
possible, in areas of sufficient labor supply.

(c) Although the War Department is not satisfied with the progress of procurement

and production, since the need for military supplies in total war is War Depart.
ment is proud of its accomplishments to date. The facilities/were the equipment
has been produced in the quantities, times and places Army and Allies for

But It has been impossible to change from commercial to military production without distress,
civilian
supply.particularly when many industries desired and even still desire to continue in

successful against enemy.
(d) There
War expertedce DOE in experience of
our Allies
toour
theWorld
proposal.

10. British Experience Does Not Favor a Change. It is sometimes argued that the
British Ministry of Supply, a civilian agency, has been more successful in procuring munitions than the Armed Forces in the United States. It is urged that we follow the British

(e) Allfarthe
upon and
operations
contemplated

example, The British Ministry enters only part of the military procurement program,
roughly equivalent to ordnance items. The situation in England is entirely different from ours.

to which
pro-

aurement. To disrupt well-laid plans and successful

vita disaster and defeat,
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'

(f) We cannot afford the risk of changing "Enough and on Time" for "Too little and

too late
13.

Additional Data. There are documents appeared giving additional details in support
of the foregoing statement.
5

we

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4

347
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ADDITIONAL DATA
I

ed promptly in the manufacturing processes. In many cases equipment must be taken directly
from the
production
line and
placed
transports
at the of
port
of embarkation Battle experience
must
reach
the production
line
with aonminimum
number
delays.

THE INTE JRATION OF SCHEDULING AND PROCUREMENT

in

WITH MILITARY OPERATIONS.

However, the effect of any proposal to place War Department purchasing and production
the hands of an outside civilian agency will nevertheless be to transfer from War Depart-

ment control at least all of these activities listed in paragraphs L to above. The effect of
this would be to split an tergrated process into three parts: the beginning and the end to be

under the jurisdiction of the War Department and the middle under the jurisdiction of an
independent civilian agency, Such split is, to say the least, impracticable, and It is, in the

In the Army the functions of scheduling purchasing'and production of munitions are CO
pletely integrated, within the organizational framework of the War Department, with other purely military activities, particiuarly those concerned with strategic planning, logistica, and the supply of troops in training and combat. It is impossible to pull out of this framework the purely pur-

view of the War Department, impossible of successful at this time. First,

there is the virtually Impossible task of attempting to define in understandable

terms, capable of being acted upon, the exact division between the three parts. Where does the
Army leave off in stating its needs? With the bare end Items? With the accessories which go
into these end items? With the tools and spare parts? How are emergency needs not originally
planned, filled? Who determines what work shall be placed in government-owned arsenals and
shipyards? Where does the civilian procurement agency leave off? Who is responsible for inspection for quality? Who is responsible for production and testing of pilot models? Who is

chasing and production activities without & complete reorganization of the structure of the War Department, & complete reorganization of the established systems and procedures enforced to supply
the troops, and a disruption of the flow of munitions to the troops which would set back military

activities, insofar as the Army is concerned, by at least six months to one year, If It could be done
at all in the midst of war. The very nature of the flow of military supplies and equipment from the
strategic planning stage to delivery into the hands of the troops in North Africa, for example, is
such that it cannot be divided into various parts, some of which are not under the control of the
Department.
serious
andflow
immediate
danger
of disastrous failures and tragic consequences.
Thewithout
major steps
in the
of munitions
are:

responsible for proof firing? Who gives shipping instructions to the manufacturer? Finally, If

War

Strategical and tactical planning.

Development of need for all types of supplies
and equipment based on that planning.

a Research to develop new and improved weapons
and other material to meet strategic and

.

tactical needs.

6

d Design of items of supply and equipment, including
the preparation of specifications and drawings.
e The production and testing of pilot model,

L The determination of facilities capable of produting the end items of military supplies and
equipment in sufficient quantities at the times
required

flight across the North Atlantic or for fighting in the Alaskan theater, requires a totally differ
ent modification for service in North Africa. For this reason no program of requirements

& The construction of faculties for production

for military supplies and equipment can be fixed and handed over to second agency for production. Production schedules must be frequently and promptly changed directly with the manufacturer to meet the varying needs of task forces and combat operations overseas. Whole
programs must be modified and revised with dispatch with changes in the strategic and tactical
situation. Qualifications in models and changes in specifications must be made directly with
the manufacturer as a result of combat experiences. These things cannot be done with dispatch
and decision through the complexities of a dual organization. Such an organization is out of the
question for the duration of this war, even If it might ever prove destrable in planning for
another.

where existing facilities are inadequate.

The placing of contracts.

Expediting and following up of production
Inspection for quality.
Testing and proof firing.
Shipping orders to the manufacturers.
Transportation both domestic and overseas,
Distribution through bases and intermediate depota,
subdepots, holding and reconsignment points, and
ports of embarkation to troops either in the United

What would happen under this plan to such finely coordinated and effectively functioning activities as the cooperation of the Ordnance Department, Chemical Warfare Service, and
Army Air Forces in the design, construction, and operation of Ordrance and Chemical Warfare munitions manufacturing plants and of Air Forces airplane manufacturing plants? What
would happen to Ordnance and Chemical Warfare manufacturing arsenals? How long would It the
take and what wasteof manpower would be involved in effecting, through the super-agency,
changes
in program enforced on these services by the almost daily changes in the global
military situation?

States or overeeas.

a Maintenance of supplies and equipment, including
procurement
distribution of spare parts and tools,
salvage,
and and
rehabilitation

These activities do not occur in any strict chronological sequence which may be Indicated by the order of listing. Strategical and tactical planning continue throughout. Programs
are readjusted and readjusted while production is in process. Research and the preparation
of drawings and specifications overlap production. Military testing and proof firing and inspection for quality are simultaneous with production, and the results thereof must be reflect6

(

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Even If It were possible to segregate procurement from the technological processes
of research, design, and development on the one hand, and from the processes of storage, issue,
transportation, maintenance and salvage on the other, such a separation would raise insurmountable obstacles to the accomplishment by the supply services of their traditional mission of timely supply of the troops.
The procurement activities of the several supply services are highly decentralized by
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7

a

the finished product does not arrive in time or fails in action, who is to blame?
These and innumerable other questions will arise, many of them on an emergency
basis of the most vital importance to military success, in the twilight zone of juriadiction between the Army and the civilian agency which would lead tc fatal Indecisions and delays. It is
simple enough to state in words that all the Army has to do is to state what it wants, when it
wants it, and where It wants It, and then an independent agency can and will deliver the goods
in accordance with these requirements. This assumes that -planning and programming in war
can be done once and then remain fixed; It assumes that the activities listed above are performed in strict chronological sequence with no simultaneous overlapping. As pointed out
above, such is far from the case. Strategical and tactical planning, of which the programming
of supplies and equipment required by an Army is an inseparable part, is never finished. It In
a continuous process with constant changes of qualifications forced by circumstances and new
experiences in the actions of the enemy. After production, aircraft must be modified for service in various theaters of operations. The airplane, which must be equipped for winterization

348
6

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regional areas. These regional breakdowns are not co-terminous, since they were independent
ly developed on the basis of the type of supplies procured and the areas in which the materials
and manufacturers needed for such'supplies were concentrated Although the Services of

II

Supply had direct military control over the several services, It has been found that It would

THE INDUSTRIAL MOBILIZATION PLAN

be dangerous to the success of the military supply system to tamper with these divergent re-

gional organizations at this late date. Any attempt to force them into some uniform civilian-

controlled regional system of administration would be even more disastrous.
To supplant one of the few phases of the war effort which has proceeded according to
plan and which is based upon proven organizational and procedural methods developed over
twenty years of planning and over three years of operations and which 18 highly integrated

Since the World War, the War Department has, in its successive Industrial Mobilization
Plans, taken the lead in urging the necessity for an emergency agency of the civil government

to supervise and control the mobilization of our total resources for war. In fact, the War De.

with the rest of the organization of our armed forces, now engaged in successful military operations on all fronts with an untried, unproven experiment consisting of the assumption of
military responsibilities and authority by another civilian agency, is unsupportable. Evenwere

partment in the persons of the then Secretary of War, Mr. Baker, with Generals March,
Goethals, Williams, and Johnson together with outstanding leaders of industry including Bernard
M. Baruch, were the fathers of the modern concept of total mobilization of economic resources

It desirable if we were starting over again, It would be disastrous now.

for war. Yet the War Industries Board, the successful result of the efforts of this group, never
purchased
orthis
manufactured
so much
asspoke
a carpet
tack.
procurement was done by the Services,
It is of
group that our
enemy
when
beAll
said:

"Her brilliant, If pitiless, war Industry had entered the service of patriotism
and had not failed it. Under the compulsion of military necessity a ruthless
autocracy was at work and rightly, even in this land at the portals of which
stood
war. of Liberty flashes its blinding light across the seas. They underthe Statue
(Field Marshal von Hindenberg)

1

In 1920, the Congress, then acutely mindful of the sad lessons of 1917 and the notable success of the War Industries Board in 1918, gave the Assistant Secretary of War and the Army and
Navy Munitions Board the job of planning for the mobilization of war resources in the next war.
The Army Industrial College was established to train a body of Army and Navy officers as
specialists in industrial mobilization and procurement planning. The various supply services, as
they became indoctrinated with the lessons of the last war and the plans for the next war, set up
procurement planning districts whereby the graduates of the Industrial War College, as representatives of the Supply Services, kept constant contact with industry on regional basis and
acquired practical experience in these field laboratories for the further development and mod.
ernization of these plans. Thus all these plans were developed in Intimate conjunction with
industryand
andHugh
with Johnson.
the advice and guidance of seasoned counsellors in this field such as Bernard
Baruch

6

In 1930, Congress created the War Policies Commission to review and revise the then

current plans for Industrial mobilization. As result of the Commission a review of this plan,
as well as of the views of all the leading civilian and military authorities, and in the light of
its subsequent recommendations there was submitted to the Special Senate Committee
Investigating the Munitions Industry, the Industrial Mobilization Plan of 1933.
This plan contained a complete blueprint for both War Department procurement and the

organization of the civil government for mobilization of total resources in time of war. It has
formed the basis of all successive Industrial Mobilization Plans, which were kept currently
revised in great detail until 1939, taking into full consideration modern developments as they
occurred in our own industrial and military framework and drawing heavily upon the current
experiences of other countries later to become our major enemies and allies,
Since 1939 the War Department has carried out its part of that plan C.e., procurement
of munitions) according to that plan with an outstanding degree of success in view of the fact

that the other part of the plan organization of the civil government for mobilization of resources has only recently begun to shape up fully as envisaged by that plan.
The outline of both parts of the Industrial Mobilization Plan is simply and briefly set
out in Senate Document No. 134 (76th Congress, 2d Session) in 18 short pages. Detailed
annexes covering many hundreds of pages were developed which contained specific plans and
suggestions for the initial organization policies and activities of the proposed War Resources
Administration and for the various subordinate civilian emergency agencies proposed to carry

out the various detailed phases of total mobilization for war. While our mobilization before
(

the declaration of war and other developments led to many changes in detail, the basic fundamentals of the War Department's plan are believed still to be fully applicable insofar as they

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6

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apply these:to the procurement of munitions and the mobilization of material resources. They are
briefly
The organization of the War Production Board in January, 1942, the reorganization of
the Army and Navy Munitions Board in February 1942 and of the Army Supply and Adminis
trative Services into the Services of Supply in March 1942, followed by the reorganization
and strengthening of other phases of the civil organization for war mobilization since then,
for example the Office of War Information, the Office of Economic Stabilization and the
War Manpower
Commission
have allPlan
been
the direction of the final outline of the War
Department's
Industrial
Mobilization
ofin1939.

1. The determination of military requirements is the responsibility of the armed services.
This includes the research, design and technological development necessary to develop these

requirements in the light of military experience and necessity; the fixing of time schedules of
deliveries of end items of munitions to comport with strategic plans; inspection for maintenance of standards and performance in production and delivery; power to change specifications

and time schedules even of products actually in production in order to meet strategic military
developments. All of this, of course, implies rigid control over the substance and procedure
of the actual contracts and control over their performance. Otherwise the fundamental control over military requirements is reduced to a shadow authority in no way compaible with
the absolute necessity of military control over military requirements. This is summed up as

The steps taken by the Services of Supply since March 9. 1942, to eliminate competition
between the Supply Services of the Army and to integrate their procurement activities with
the mobilization of industrial resources activities of the War Production Board, together with
the most recent reorganization of the War Production Board, have gone far toward the ultisupply.
mate goal of the Industrial Mobilization Plan in the fields of procurement, production, and

follows
in the Industrial Mobilization Plan of 1939 setting out the part to be played by the
Armed Services:
"The methods and organization necessary for the execution of the procurement program, including specific plans for the procurement of the

The present organizational relationship and division of responsibility between the Services of Supply, the Army and Navy Munitions Board, and the War Production Board are now
close to those envisaged by the Industrial Mobilization Plan. This relationship is simple and
clear and is based upon the closest collaboration between the trained technical military officera of the Services of Supply and the civilian leaders in the War Production Board at every
level, particularly in the industry and commodity committees, the very heart of every Indus.
War
Production Board.
trial mobilization
plan from the World War Industry Board to the present organization of the

required items, the control or acquisition of essential commodities,
the development of suitable contract forms, and the augmentation of
personnel
necessary for the expansion of peacetime procurement organizations."
Nothing in this plan ever contemplated that the actual process of military procurement would
ever be exercised by any agencies other than the military.
2. Army and Navy Procurement must be coordinated by the Armed Services, The deten-

mination of the relative urgency and order of production and delivery of various munitions for
use by the armed services on air, sea, and ground is a military strategic decision of prime
e

6

3. The actual execution of plans for total mobilization of economic resources must be
undertaken by civilian leaders. The basic policies governing control of resources as between
conflicting demands of the military and other agencies ought not to be in the hands of the leaders of any one competing agency. At the same time the fundamental philosophy governing these

"To let alone what is being successfully done and Interfere as little as
possible with the present normal processes of purchase and delivery
in the several departments.
This has been a basic requirement of every subsequent plan.
All the power to effect the purposes of the War Resources Administration,
insofar as the procurement of munitions is concerned, as envisaged by the War Departments's
Industrial Mobilization Plan of 1939, now resides in the War Production Board by Executive
Order No. 9024 of January 24, 1942. In the last few weeks this power has been exercised by
the War Production Board in a reorganization of its methods and procedures for control of
materials in a manner closely aldn to that contemplated by the Industrial Mobilization Plan.
The thing to do is to make this work.

civilian leaders must be that in total war there in one prime mission, the early and complete
military defeat of the enemy, and that military considerations and requirements must thus be
paramount.
wasagencies
to be theunder
field of
activity of the War Resources Administration and its
subordinate This
civilian
the Industrial
Plan.

Briefly,

it

Mobilization

comprised:

Priority Control, Price Control, Allocation of Facilities, Control of Raw Materials and other
commodities, Control of Labor, Power and Fuel, Transportation (including Ocean Shipping),
Finance, Propaganda, Foreign Trade, Selective Service, and Food.

4. If the creation of adequate civilian agencies is delayed, the Army and Navy Munitions

Board must assume the for industrial mobilization during the transition period.
The original plan contemplated that the personnel and records of the Army and Navy Munitions

Board would form the cadre of the civilian organization for the mobilization of war resources
under civilian leadership. For over two years, while the procurement activities of the armed
services went on according to plan under the supervision and control of the armed services,
the complement to these activities, i.e., the mobilization of resources, in considerable measure
had to be carried out by the Army and Navy Munitions Board. This It was never designed to
do on any large-scale or for any extensive period. It has neither the required civilian leadership nor the statutory authority to perform these tasks. It was essentially a planning and
coordinating agency. Nevertheless a great deal of all that was accomplished during this period
in the way of mobilization of resources was sponsored by the Army and Navy Munitions Board.
During this period, inventorying and allocation of facilities and commodities were undertaken
and a priorities system was started with the assistance of the Army and Navy Munitions Board.

11

10

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]

importance which must be made by the military and which must be subject to their constant
control so that changes may be made without delay as the exigencies of the military situa.
tion dictates. The IMP of 1939 contemplated that this function would be performed by the ANMB
under strategic direction of the Joint Army-Navy Board.

No matter what form the organization of the civil government may eventually take for
the mobilization of resources, there must never be violation of this fundamental relationship between those responsible to the Army and Navy for the procurement of munitions and
those responsible to the civil government for the mobilization of material resources.
A plan which would have violated this relationship had been considered during the last
war and had been discarded "after careful consideration, in favor of the method of strengthening a going and successful organization of men who knew their job".
A fundamental guide is that given to Mr. Baruch by President Wilson in his letter of
March 4, 1918 -- the Magna Charta of the War Industries Board:

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THE ARMY'S SCHEDULING, PROCUREMENT AND PRODUCTION RECORD

Ordnance the War Department Department knew had where and how to have the work done. Within four

all of its received its initial appropriation of $2,000,000,000, months after the
and in placing orders, and 9896 of the work was placed in plants which It had succeeded

The War Department is not satisfied with progress made to date. Until the war is won It
will never be satisfied. Until the enemy is defeated the military need for munitions is unlimited
But
our facilities, our raw materials and our manpower are far from unlimited. Nevertheless
the War Department feels justified in feeling that good job is being done. It welcomes criti.
clam, but does not believe it is fair to say that it has failed on the production line. The oc.

engineering It skill and which had been allocated under the Industrial Mobilization the know-how

was fully realized that time was of the essence and that lost time Plan.

covered. Accordingly, in placing the initial contracts it was deemed essential never could be regiven to the facilities best calculated to produce the most within the shortest that the time. work be

Existing facilities were used for that purpose to the maximum degree possible

upation of North Africa by American troops could not have been achieved with failure on the

production line.

All available branches of the War Department proceeded in this manner. possible. They utilized

found has as result of their years of study. Priceless time was saved. It the facilities work

An army of over 4,000,000 men has been fully armed. Over 900,000 of them have been
sent overseas fully equipped for combat duty, with the most modern and highly technical equip.

our
allies.
which
made possible the fulfillment of our present task of arming our troops and was those this of

ment known in history. They are presently conducting successful military operations in many
theatres in all parts of the world. They are armed with varied and specialized equipment nec.

on December
29,
1940,
in whichfor
bePresident
said
This was
the
background
Roosevelt's famous "arsenal of democracy" speech

essary to combat unprecedented conditions in the Artic, in the tropics, on mountains, in swamps,

American industrial genius, unmatched throughout the world in the solution of
production problems, has been called upon to bring its resources and its talents
into action. Manufacturers of watches and of farm implements, of linotypes,

deserts and jungles. A continuous flow of supplies is going to them daily. This would not have

been possible with failure on the production lines.
While we have been supplying and equipping our own forces, we have furnished arms and

cash registers and automobiles, and of sewing machines and lawnmowers and

equipment to our allies on all fighting fronts. The three billion dollar value of the munitions
already shipped to our allies is only one measure of their worth. Their quality and effectiveness
have been generously praised by Prime Minister Churchill in his report to Parliament on Novem.
ber 11th concerning the British drive against Rommel. According to the Prime Minister our
"tanks and high-velocity guns played an important part in General Alexander a battle. The aid
furnished by our planes has received equally high praise. Such aid could not have been rendered
if we had failed on the production line.
The requirements of the huge Army Supply Program are being met. The extraordinary

and er-increasing demands of global warfare impose heavy burdens. While they entail constant

locomotives
are now
making
shells, and pistols
and
tanks, fuses, bomb tacking crates, telescope mounts,

a
6

change in planning, with corresponding changes of the procurement program, there has been no
breakdown on the production front. Deliveries are being made and approximately 80% of our war
products have been issued to troops in the field.
Germany began its all-out war program over ten years ago. It is now devoting 43% of its

national product directly to war. The United Kingdom began its program in 1936. It la now devoting approximately 399 of its national product to war. The United States did not begin its
prorram
until is
the
summer
It is now devoting approximately 39% of its national product
to war. This
not
recordofof1940.
failure.
This did not just happen. It was the result of years of painstaking planning. It was the task

The watch manufacturers and other companies to which he referred had been given an educational order and acquired the know-bow which enabled them immediately to undertake the
manufacture of fuses. The work of converting industry to war time production had started.
The President's faith in the Industrial gentus of America was justified. There are many
cases in which procurement objectives which were thought difficult of attainment have been
plants,
exceeded, This is true in privately owned plants, government-owned and privately operated
and in government-owned and government-operatedplants.
A privately owned plant developed the use of cast breech rings in place of forgings, thus
saving valuable machine hours and reducing the cost by about 50% The result was greatly
increased production for 155 mm. Howitzers. 57 mm. guns and 3 inch guns.
A government-owned, privately operated plant originally designed to produce 400,000 pounds
of TNT a day is now producing 700,000 pounds & day. This increase is due entirely to efficiency
in operation and was accomplished without the purchase of further machinery. Similar increase
has
been attained in smokeless powder plants.
The Springfield Armory, a government operated plant, has increased its rate of production
on Garand rifles over 160% from November, 1941, to October, 1942. This WILLS accomplished by

of the Army to plan for the design, development, procurement and production of munitions. This
work had to be done during peacetime when most of the country regarded war in the past tense
and as something which could never again come to us. For more than 20 years the War Department has been designing and developing improved weapons of war and teaching its officers and
industry how they could be best produced For more than 20 years the War Department and the
Army and Navy Munitions Board have been surveying American industry. large and small, with

developing substitute methods of manufacture, heat treatment and by stamping instead of machining many components as well as by training and employing women workers to overcome the labor
shortage.
Superimposed upon the program of rearming our own country has been the program of
supplying the countries who have now become our allies. Vast additional requirements were
added by the passage of the Lend-Lease Act on March 11, 1941.
It was not possible to have all the work done in existing facilities. Because of the nature
of the products there were no existing facilities in which many could be produced. This was
particularly true in the case of ordnance and aircraft items, and over 86% of new construction
has been for their production. There is no peacetime armament Industry in this country which
could be converted to the manufacture of ammunitions and many other ordnance items. The
manufacturing arsenals of the Ordnance Department have been experimental laboratories devoted
to the design and planning of weapons of war. Only a small part of the huge requirements for a
world war could be manufactured in them. It was accordingly necessary to build government-

a view to its most effective use for war production. As result more than 11,000 different

lishments were selected as best suited to meet specific munitions requirements at the incep-

tion of the present program. They were earmarked as facilities available for production of was
material. In 1938 the War Department finally succeeded in obtaining a meager appropriation of
$12,000,000 with which it could start placing educational orders with industry to familiarize It
with the technical requirements of war production. Facilities machinery, management and avail
able labor in
were
studied with a view to making mass utilization of existing facilities and
equipment
the fully
war effort
It was this planning which has enabled the attainment of procurement objectives beyond those
which had been thought possible. When in the summer of 1940 initial appropriations were made,

owned plants for this purpose. These new facilities had to be located to large extent in areas
removed from heavily populated centers. The danger inherent in this type of work made this

necessary.

Existing facilities for the production of aircraft furnished a foundation from which this

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6

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industry could be expanded. But they could produce only a small part of the greatly increased
requirements. It was essential to build new facilities and to build them promptly. Such action

of higher Thus, prices, for provided the small contractor can produce as expeditiously as the large
tractor.
example, an order for bandages has been placed with con-

was imperative in order to enable production to get under way in time.

$2.09 whereas a larger company bid $1.82 for the same article. Dynamotors small company at

done in
the 91%
face of
ofthis
conservative
estimates
thatcompleted
it would take
from
months
Over
new construction
will be
by the
end18
of to
this24year.
This after
Pearl has been

Harbor to gear industrial capacity to the output of military requirements.
Existing facilities could have been utilized and converted to a far greater extent had

chased from a company with 22 employees at a price of $43.38, although a large have been pur-

over 1500 employees bid $27.50. Orders for the purchase of 3,425,000 pairs of company with

the

placed with 75 contractors in 26 different States, each of them employing under 500 trousers were

country been ready for it. Such utilization and conversion was repeatedly sought by the War

Department. It urged the necessity for such use and rapid conversion. However, existing facili-

other
examples
could
be given.
as 46 lower
bidders
in a more
concentrated area could have handled the entire order. men, Numerous where-

taking "defense" orders. There was little interest. Non-defense business was too good. Most

It is not possible to place all War Department business on such a basis. A small manufacturer just cannot manufacture a tank, an airplane or numerous other items which the War
Department must produce. Figures indicate that there are over 180,000 manufacturers in

ties were too busy producing non-essential civilian goods at an unprecedented rate.
The War Department took numerous steps to interest manufacturers, large and small, in

companies, both large and small, were unwilling to give up this profitable business and venture

country. Of this number 133,280 employ 20 employees or less, It is probable that most the

into a new and strange field. It was not until the early summer of 1941 that the pinch of priorities began to be felt. It was not until then that the bulk of manufacturers evidenced any interest

5 or 10 people. Neither the War Department nor any other agency can use a majority of employ these

in obtaining this new type of business. Even then the War Department had to combat the views

companies
it is merely
wishful
thinking
assume that a shift of procurement responsibility
to
a civilianand
agency
will correct
this
basic to
situation.

that we could arm ourselves in our spare time by utilizing idle capacity and labor and leaving
the level of civilian activity untouched. The prevalent attitude was still "business as usual.

Similarly, It is often impossible to place business where a labor surplus exists, Business
must be placed in areas where a labor shortage exists when those areas are the only ones equipped to handle that particular type of work. Indeed, It is the existence of the facilities in those
areas, with the attendant labor demands, that create the labor shortage. The procurement author.
ities, of necessity, had to take the Industrial life of the country as they found it. Even in peace-

Automobiles continued to be produced in huge volume and production of non-essentials rose to

record figures. The country was not willing to discontinue this business and convert to a wartime industry. It was not until Pearl Harbor that the attitude of the country underwent a real
change, and It was not until then and more recently that the country has been prepared to autho-

time there is an overconcentration in certain localities and lack of business in others. The

rize program which would utilize every scrap of equipment and every worker that can be spared
for military objectives of the United States and her allies.
A dislocation of our economic structure has necessarily occurred. Many businesses have
suffered and certain localities have been hit. Just as war causes hardship and suffering to those

in the armed forces, so It causes inconvenience and distress wherever it strikes. The War Department is and has always been fully conscious of this. it has done everything within its power
to minimize these consequences. That is, everything consistent with attaining its objective
winning the war in the shortest possible time. It has doubtless made mistakes and errors. No

c

e

War Department, in conjunction with The War Production Board and other interested agencies,
sought to locate new facilities at points best calculated to meet this situation, coupled with the
limitation of strategic and other considerations which had to be met. Efforts to place business
in a surplus labor area have borne fruit. A recent example is New York City. On October 22,
1942, Governor "Herbert H. Lehman thanked the Under Secretary of War "for the fine cooperation
which the State and City officials have been receiving from the War Department in connection

with the placing of contracts in the New York City area.

The dangers of a change in direction at this crucial time have been dwelt on before. They
cannot be overemphasized. It is freely admitted that mistakes have been made. No doubt some
mistakes will be made in the future. But the War Department submits that others, no matter
how capable, who were unacquainted with the weapons of modern war, unfamiliar with their relationship to other branches of the service and unaware of the characteristics of the weapons of
the

matter what agency had been entrusted with this gigantic job, mistakes and errors would have
been committed. Assigning procurement and related duties to another agency will not alleviate

the distress incident to war but it will seriously jeopardize the all important task of supplying
and equipping our troops and those of our allies in a manner consistent with strategic necessities.
No possible method of handling war production can result in giving orders to every manu.

enemy, would inevitably made more mistakes.

facturer. This is borne out by the experience in England and Germany. It is inevitable that much

Weand
cannot
afford to risk a change which may substitute "Too little and too late," for
"Enough
on time,"

of civilian industry is incapable of being converted to the production of the munitions of war.
The War Department has done and will continue to do everything within its power to spread
the work and to utilize existing facilities to the maximum extent possible consistent with the needs

of producing in the quickest possible time. It has taken many steps to utilize all facilities, large
and small, which are capable of conversion to war production. It has aided businesses, large
and small, with government funds to accomplish this conversion and has taken many steps to b

bring about subcontracting. The attached appendix briefly summarizes some of the instructions

which It has issued to accomplish this purpose.
The record shows that these instructions have been followed and borne fruit, The zealour
attention given to subcontracting is shown by the ever increasing volume of subcontracts. The
Quartermaster Corps, Signal Corps, Chemical Warfare Service, Corps of Engineers, Ordnance
Department, Medical Corps and Transportation Corps have increased their subcontracts as
follows:
Prime Contracts:
Subcontracts

7/1/41

1/1/42

7/1/42

22,994

32,593

71,839

81,813

694,694

826,182

153,671

497,894

9/1/42

Similar results have been achieved by Army Air Forces,
Preference is given to small contractors even though purchases from them involve payment
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1

IV.

OFFICER PERSONNEL
OF THE SUPPLY SERVICES

merely because the supply services are uniformed services. This is necessary
their members serve alternately with troops and in procurement In peacetime, because

these services wore uniforms when with troops and civilian clothes when officers of
whatever they were wearing, the technical experience they were gaining by procurement, this constant But

In the war of total resources it is almost impossible to differentiate between the military

terchange of duty was invaluable to the Army. In time of war It is wholly fitting that in-

and the non-military. Certainly the bombs, torpedoes and bayonets of the enemy have made no

soldiers of supply wear the uniform of their country. To put them into another these

such distinction. Yet those who seek to differentiate between control of military procurement by
"military" personnel or by "civilians," appear to make this distinction on the basis of the
clothes worn by those responsible It is the view of the War Department that this control must
remain with those responsible for the success of military operations, Le., with the War Department. Yet the War Department is headed by civilians--the Secretary and Under Secretary of War
and
the Assistant Secretaries of War. The Commander-in-Chief is a civilian, Ours is a civilian
Government

take their
uniforms
away
in the
middle of
of the
war wouldtheir
be blow
to their morale agency and would and
make
them
infinitely
less
capable
performing
duries.

The development of military aircraft for the Army Air Forces has for the past
twenty years been function of the Material Command, consisting primarily of Army combat
flying officers. There exists no similar civilian agency. The relief of these officers from

active duty and their attachment to a civilian agency would not make them civilians.

more the relief of such officers poses an almost impossible administrative task. It is Further diffi-

The officers in the top positions of responsibility for procurement and supply are for the
most part professional soldiers who have spent their lives in the perfection of this highly technical

cult to say just which officers are engaged in that part of the supply is concerned with procurement and manufacture of war material They are all an integral part

and most essential phase of modern military art. Their background and knowledge could have

been built up in no other under the peacetime organization of our civil and military economy
It was only through War Department appropriations, limited as they were, and by Army officers
that the procurement planning and technical development necessary for proper preparation for

this war was carried on. Whether this was the best way is not now material. The fact remains
that the only skilled, trained body of experienced executives we have for the procurement of

munitions has been built up for twenty-four years by regular Army officers. Under the teaching
of the Army Industrial College, through the practical experience of the Army Procurement Districta and by the active participation of the supply arms and services with the field forces, these
officers have gained experience of Inestimable value to Army procurement They are tacticiana

0
4

as well as technicians. Such a combination can only be developed by the Army. The constant interchange between the supply services and the field forces which the organization of the schools

of the combat services and the organization of the Army for and training afforded

throughout these years, has built up a technically trained corps of officers for the performance
of its procurement and supply functions, which must continue to function as a team with other
branches of the service, Any attempt to remove this corps would lead to a complete breakdown
the Army Supply System and consequent defeat of our field forces.
This is even more dangerous at the present time than It would have been early in
We are now engaged in both military and naval operations of the largest scale with both of our

for competition with the enemy. Such spirit is reflected throughout the entire system of
present production. Munitions are not merely procurement Items but instruments of war. Enthustasm andagency.
determination at the most critical stage would be lost If taken over by a civilian
procurement

of

1940.

Industry and labor look up to and respect the Army and Navy's skill and knowledge of
technical problems. The Army has maintained an attitude of complete impartiality and fairness

major enemies on widely separated fronts. These officers no longer comprise a cadre. They

towards labor. The result is that labor's attitude towards the Army is one of trust and con-

are an Integrated part of a vast supply system on which these operations are based. To change
this system now that it is in successful operation would be disastrous.

fidence. This has been achieved largely because of labor a realization of the necessity of working with the Army and Navy as such, The Army and Navy have regarded the workmen as soldiers
on the production line and they have been called the "men behind the men behind the guns. The
success of the Army and Navy E Awards and the manner in which theyware eagerly sought is an

But these leaders and keymen, trained in the peacetime regular army supply services,
form only the thinnest leaven of military experience and technical knowledge throughout the Army.
No army in history has so quickly made use of civilian brains and experience and adopted them

indication of management and labor's attitude to Army and Navy procurement It is difficult to

to the performance of the military mission as speedily and completely as this one. Without
'this skeleton framework of regulars this would have been Impossible. In the Services of Supply
and the Material Command, Army Air Forces, engaged in procurement and related work, there
were 6883 officers on duty on September 30, 1942. Only 626 about 9% are Regular Army
officers, The remainder came from civilian life. Obviously these procurement and supply
officers are not "brass hats" orfascist-mindedmilitarists who seek for Army control of the
civilian economy and population. They are a cross-section of our most patriotic civilian leaders
who have volunteer their services to make the army procurement and supply system work
quicklyoccupations.
and efficiently to the end that they can speedily return to their far more profitable
civilian
While these officers are for the most part under the control or guidance of the technically trained regular officers of the supply services, large numbers of them occupy important positions with heavy responsibilities. Many are Colonels, several are Generals. Generals
Knudsen, Glancy, Harrison, Pyron, Colonels Mackeachie, Sarnoff and Browning came direct from
civil life, as did many other keymen in the Army Supply organization. They are in uniform
16

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of the Army. Just as other branches of the Army are dependent one upon another, no la this
part of the supply program dependent upon the balance of the military: program. Regular
Army and other officers who were formerly on duty in Washington or in the Districts on
the procurement phase of the supply program have been transferred elsewhere Some of them
are in Australia, England, Iran, North Africa, New Guines and elsewhere on transportation,
maintenance and other supply problems, Indeed a large staff was sent to England for procurement purposes. In time of war an officer who was on duty in Washington two months ago today
serves with an Ordnance maintenance battalion in the armed forces in Tunista and two months
from now may be ordered back to Detroit to apply his battle experience to the modification of
tanks on the production lines there. It is essential that this integration be maintained so that
the Army may be permitted to utilize the service of any of its officers where best fitted.
It must be recognized that technical military personnel, with the background of fighting experience, psychologically bring to the problems of procurement and production the
spirit of demanding that the best possible airplane weapons and other munitions be produced

forecast the consequences of the future relations of management and labor to the War productton program If the Army and the Navy cease to be the contracting parties. Anyone who seeks to
disturb the present successful relationship is assuming a responsibility that may entail disastrous
consequences.

The great majority of this country is proud of its Army and Navy. There is hardly a
family that does not have son, brother or father in uniform. Labor and business men, large
and small, are in this category. It in difficult to overestimate what has been accomplished in
the field of procurement because of the spontaneous patriotic desire to cooperate with the
armed services. This could never have been accomplished by a civilian bureau.

17

0

0

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353
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1

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VI

SPECIALIZED WARFARE

EXAMPLES TACTICAL OF CHANGES IN PRODUCTION NECESSITATED BY
DEVELOPMENT AND OF THE NECESSITY FOR CONTROL STRATEGIC OF SUCH AND

CHANGES BY MILITARY TECHNICIANS AND TACTICIANS

A. World War I was fought in climate and terrain essentially the same as the train-

ing

grounds of continental United States, Troops landed without opposition at well-equipped
docks with modern conveniences that made Amphibian Operations unnecessary. Armored

In the of fields constant of aircraft, ordnance, and signal equipment examples can be

definitely changes in design and schedules necessitated by the multiplied in-

Force Tactics and Aerial Warfare made their first beginning, but with no thoughts of Airborne Troops or Parachute Troops. Warfare spread into the Arctic and into the Desert only
at the fringes and in relatively small numbers. Jungle Warfare was limited to small colontal
actions: Imountain Warfare existed on both sides of the Alps, but on a relatively stabilized
front with no participation from United States Forces. To very considerable extent the War
was still confined to the great historic fighting Arms, the Infantry, Cavalry, and Artillery.
B. World War II required immediate redesign of old equipment, and development

who and tactical combine situation first-hand which requires the immediate control and supervision fluctuating of strategic

production
these specialized
weapons.
the of
tactical experience
with technical
background, training, military and ability men in
craft Outstanding bomb examples are the development of the M-4 Medium Tank and the

air fuses. In the first case, the same officer who spent months change in

in Lybia returned to this country and, making use of his first-hand battle with the British

of new items for an age of specialized warfare.

in the design and production of our newer type tanks, With regard to the experience, helped developed peculiar to conditions in the Aleutians which cessitated a new angle fuse, of a situation

(1) Airborne Troope required lightness in all equipment and supplies, in order to

deliver the greatest number of men over the longest possible distance.

attack, At this angle the existing fuse was not satisfactory. A new one had to.be bombing effected

once. An officer who had had air force training as well as being an Ordnance fuse specialist, at
flow to the Aleutians where he actually participated in attacks upon Japanese ships. He flew
back to a laboratory and, in the light of his former experience. designed fuse which he flow
back to Kiska, and directed its being put into effect. This new fuse obtains 98% efficiency
This is the type of job that is being done daily by the supply services and which could be done
by none except those who actually participated in the front lines and nothing can be substisupplyforservices,
tuted
the highly developed and integrated organization of the Army as a whole and its

(2) Amphibian Warfare lays stress on the need of waterproofing all character of
supplies, unition, and ordnance. Such troops must have sufficient striking power to be

able to take a well-protected beachhead from highly exposed landing boats.

(3) Arctic Warfare stresses warmth of all clothing, with redesign of equipment
stand conditions of extreme cold. More than ever before in the Arctic, mobility is also required. Types of clothing and equipment suitable for Arctic exploration were often impracti-

to

scale.
cal for

military purposes because of the necessity of procurability and production on a huge

Missions of the Supply Services are with every theater of operation and their daily reports to the offices of the supply chiefs rush changes both in the production. lines as to design
and in schedules as to quantities and immediate deliveries, What today appears to be the
Number
necessity
may fallsituations,
off tomorrow to the point where all production is stopped because of One
the change
in tactical

(4) The Armored Force must be able to operate either in the deserte of North
Africa, or inbyvery
cold
conditions. Equipment must be compact and adaptable to independent
operations
small
groups.

(5) Desert Warfare requires the ability to operate under conditions of extreme
heat, with dust and sand. The alternating see-saw progress of the War in the desert thus far
has
indicated
more clearly than in any other region the prime necessity of excellent design in
clothing
and equipment
silently

and

Officers returning from Africa with first-hand information as to anti-tank guns are
ever effecting radical changes in present armament. These changes will continue to occur
daily with effects on schedules and changes right on the production lines. These must be
ditions,
supervised
and controlled by the same authority that controls strategy and tactical con-

(6)
In Jungle Warfare
the emphasis
is on camouflage and being able to operate
independently
under
difficult
exceedingly

climatic

conditions.

(7) Mountain Warfare places emphasis on lightweight mobility of troops able to

In the Signal Corps perhaps more than any other service radical changes have been
made in the past and undoubtedly will be required in the future to adapt signal equipment to
the basic equipment on which It la mounted. Furthermore, a change in the disposition of
controops in every theater, especially in regard to the Allies with whom they must maintain
tact, require emergency changes in design and methods of operation which must be made in
the production lines by those who understand the uses to which the equipment is to be put.
The emergency and highly integrated nature of tactical and technical information in the Signal
Corps
presents
problems
which
can only
The following
two
cases are
examples
of be
this:handled by experienced Signal Corps officers.

operate under any conditions of terrain either in high heat of summer, or in cold of high
mountain blizzards in winter. Independent operations require that a mountain patrol be cap-

able of operating at least week entirely separated from all other sources of supply, relying

only upon the contents of the soldier a pack.

(8) Parachute Troope require special clothing and equipment so that they are
ready to fight with great effectiveness immediately upon hitting the ground. They must be

able to operate for 2 to 3 days without hope of help from outside sources. For that reason,
lightweight equipment exactly designed for the precise job intended is essential.

(9) Ranger Troops must rely upon lightweight mobility and exceptional ability
destroy personnel and material in the short time they are in operation.

to

During the summer of 1942 certain item of Signal Corps equipment was developed by one of our allied nations. A sample was brought to this country for test
under Army supervision. About September 1, 1942 it became necessary to have some
of this equipment manufactured for an American overseas Task Force and to have the
complete equipment and men trained in its use available in approximately one month.
A manufacturer was contacted by the Signal Corps and arrangements made for him to
produce the items, To speed manufacturing, certain component parts were diverted

from other contractors. This equipment was ready at the prescribed time. While it
was being produced the Signal Corps was simultan only training the personnel for
its operation. This equipment and its personnel are participating in the North African
campaign. This required the most complete integration of tactical and technical control over production.
RESTRICTED
0

18

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19

354
6

RESTRICTED

RESTRICTED
an

A request was received from a Task Force in a Theater of Operation indicating
immediate tactical need for equipping Ordnance vehicles with communication equip-

APPENDIX

ment different from any at that time available. Many Ordnance vehicles then ready for
shipment and equipped with regular electrical systems were converted by Signal Corps

Laboratories within a period of ten days to different electrical system. This was

SUMMARIZING CERTAIN OF THE INSTRUCTIONS
ISSUED BY THE WAR DEPARTMENT
WITH RESPECT TO USE OF EXISTING FACILITIES

accomplished through obtaining component parts from various manufacturers of other

Army equipment and by installing such parts in building the necessary system. The
vehicles were delivered 8 board ship in time for shipment and were subsequently used
in the African campaign. This change could not have been effected by a dual arrangement. Unity of control was necessary.

June 12, 1940. Directive from the Assistant Secretary of War to the Supply Arms and Services,
directing that special consideration be given to 'spreading work to sub-contractors,"

Changes in aircraft have to occur almost daily in order to meet the requirements of
battle experience. For example, the first Jap attack on our B-17's developed the necessity
for increased armament both in the waist and in the front part in order to fill up blind spots
which Japanese tactics of attack developed. Similarly the requirements of aircraft production

July 2, 1940, Directive from the Assistant Secretary of War to the Supply Arms and Services,
directingfacilities
that consideration
given
to necessity of placing orders so as to avoid overloading
or creating be
labor
congestion.

must be changed daily as the demand of theaters change and the strategic picture changes.

These alterations must be made immediately. For example the installations of air cleaners
in our aircraft in Africa, especially in the B-26 was made necessary by these operations.

December 20, 1940. Memorandum from the Assistant Secretary of War to the Supply Arms
shops".
and
Services, stating that prime contractors should sub-let more of their work to "small

These changes cannot wait for the approval of agencies who have had none of the information

or experience.

There is an intimate day-to-day relationship between the air fighting that is going on

and the air craft that are being produced. It is difficult to understand how any ta: agencies

February 17. 1941. Memorandum from the Under Secretary of War to the Supply Arms and
Services, defining the functions of the Defense Contract Service, set up to facilitate subcontracting, with respect to the War Department.

could possibly improve the present situation.

February 19, 1941. Directive from the Secretary of War to the Chief of Ordnance, directing
that maximum utilization be made of such equipment as may be on hand and available
that existing capacity should be used to the fullest extent, and that: "The thought of
emergency.
idle
equipment, or of facilities not employed to capacity, is intolerable in the present
May 20, 1941. Directive from the Under Secretary of War to the Supply Arms and Services,
entitled "Sub-Contracting of Prime Defense Orders" emphasizing the "necesalty of

using every facility available". and directing that Haison officer or qualified civilian

be appointed in each District Procurement Office to make information available to
prime
"with with
the general
purpose
of expediting deliveries through farming
out thecontractors
work to plants
available
factities"

June 30, 1941. Directive from the Under Secretary of War to the Supply Arms and Services,
entitled "Distribution of Defense Orders among a Greater Number of Contractors".
September 5, 1941. Directive to the Supply Arms and Services, stating that "large requirements will be broken up in order to spread production to the greatest practicable
extent and to assure equitable distribution of the load throughout potential producing
cable,
areas

and with as many producers within each area as may be possible and practi-

January 14. 1942. Directive to the Supply Arms and Services, entitled "Selection of Contractors for War Production". directing that "great weight must be placed upon the
contractor's agreement to sub-contract a high percentage

May 20, 1942. "Directive for Wartime Construction" jointly promulgated by the War and
Navy Departments and War Production Board. stating that "It is essential that all
construction, whether financed by Government or other funds, be reduced to the absolute

minimum necessary for the War Effort.'

May 22, 1942. Regulations adopted by the Secretary of War and the Secretary of the Navy for
issuance of Necessity Certificated under Section 124 of the Internal Revenue Code,
0

20

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21

RESTRICTED

RESTRICTED

allowing five-year tax amortization to companies undertaking necessary expansions.
These Regulations state "Every attempt should be made to utilize existing productive
capacity in the United States for the production of supplies required in the interest of
National Defense, through the medium of prime contracts, sub-contracts, conversion, or
otherwise, before expansion of facilities for emergency purposes is undertaken."
July 1, 1942. Procurement Regulation No. 10 promulgated by Headquarters, Services of Supply
This Regulation recognizes the necessity of "the fullest possible utilization of existing
facilities, whether structures, machinery or equipment.

August 20, 1942. Directive to the Supply Services, directing that contracts be distributed so as
to "relieve unemployment where there is a labor surplus; concentrate as much business
as
possible in smaller plants; avoid placing business in areas where there is a labor
shortage."
September 5, 1942. Procurement Regulation No. 2, containing statement that contracts shall
be placed with concerns needing to acquire the least amounts of additional critical
materials,
and be
thatplaced
contracts
itemsconcerns.
involving relatively simple production problems
shall
normally
with for
smaller

September 15, 1942. Directive to the Supply Services, in which "all procurement agencies"
were "directed to expeditiously examine all contracts with a view to the possibilities of
further sub-contracting." It is also directed that "all prime contractors be advised of
the necessity for cooperating in placing all work practicable under existing and
proposed contracts with small plants on a sub-contract basis", and that: "The cancellation of orders for new machine tools and equipment must be made in all cases where
the corresponding operations can be handled by sub-contracting eventhough it is
necessary as a result of such sub-contracting to amend the contract to provide for
increased costs because of less efficient methods of production."
September 30, 1942. Directive to the Supply Services, entitled "Placement of Contracts in
Distressed Areas". In this Directive, it was stated that "development work on new items
of munitions will be placed in smaller plants to the greatest practicable extent in order
to assist such plants in securing 'know-how' and subsequent production contracts."
October 30, 1942. Directive from Lieutenant General Somervell to the Supply Services,
directing them to examine existing prime contracts, in cooperation with representatives
of the War Production Board, to determine the possible extent of additional sub-contracting
thereunder; to advise prime contractors of the necessity for sub-contracting, and to
endeavor to secure sub-sub-contracting by sub-contractors.

22

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355

DEC 11

My dear Senator:

I have your letter of December 7, 1942
making a number of inquiries with regard to
Lend-Lease operations between this country

and Great Britain.

Your questions relate in general to

operations which fall within the jurisdiction

of the Lend-Lease Administration rather than
of the Treasury, and I am confident that a

letter addressed to that agency will result in

your obtaining the information you are seeking.

I believe that a similar inquiry addressed to

the State Department would also be productive,
but the Lend-Lease Administration would, in
my view, be the best single source.
Sincerely yours,
(Signed) H. Morgenthau, Jr.

Secretary of the Treasury.

Hon. Allen J. Ellender
United States Senate
Washington, D. C.

Photo file in Diary
File to Thompson.

JJO'C.Jr/lsw
12-9-42

WILD MADE
JAMES J. DAVIS PA.

HIRAM CALIF.

United States Senate
COMMITTEE ON NAVAL AFFAIRS

December 7, 1942

Honorable Henry Morgenthau, Jr.
The Secretary or the Treasury
Washington, 1. C.

Dear Mr. Secretary:
i.e: Lease-Lend Program.

If consistent with your d ties, I would like to have you in-

form me what arrangement, if any, our Government has with the Government

of England with respect to the disposition or distribution of American.
lease-lend Coods sent to England for account of the civilian population.
For example, if a cargo of civilian Foods should be sent to the Govern-

ment of England for distribution aro the English civilian population,
are those goods sold by the overnment of England? "h t becomes of the
proceeds? Aho regulates the price 01' the Foods sold to the consumer?

If sald at a profit, who onefits?

I should like to have the same information with respect to
the handling of such matters with other foreign governments.

If the goods are not sold by the Pritish Government, but instead are turned over to the military cr other departments of government,
I should like to be advised how the goods are distributed after they
reach England, and what England does or promises to de to compensate

us for the value of such goods. Also, I should like to knor. the value
of civilian goods that have Lee shipped to etc to England and to
other governments for distribution among their respective peoples.

I would also like to have infor ation, if consistent vit your
duties, as to He manner and method of accounting between our Covernment and the various governments receiving aid from us with respect to
implements of war and other military items including food and clothing,
shipped under our lease-lend program.
Not knowing how the Foods are handled under the lease-lend

program, it is rather difficult for re to be more specific with my
questions. 1 shall greatly appreciate any light this you may be in a
position to throw on the subject.
"ith kindest regards,
Sincerely,

BFL

Kits

357

DEC 11 1942

My dear Mr. President:

There is attached a report of items purchased
by the Treasury Procurement Division which will be
available for the Soviet Government under the LendLease program during December.

Because of the lack of shipping, it will be
noted that the tonnage on hand at the end of December
will have increased by approximately 35,000 tons over

the November availability.
Yours sincerely,
(Signed) H. Morgenthau, Jr.

The President
The White House
JE:ERG

357

DEC 11 1942

My dear Mr. President:

There is attached a report of items purchased
by the Treasury Procurement Division which will be
available for the Soviet Government under the LendLease program during December.

Because of the lack of shipping, it will be
noted that the tonnage on hand at the end of December

will have increased by approximately 35,000 tons over
the November availability.
Yours sincerely,
(Signed) H. Morgenthau, Jr.

The President
The White House
JEiERG

TREASUR. PARTMENT - U. S. S. R.
MATERIALS AVAILABLE FROM STORAGE AND PRODUCTION DURING MONTH OF DECEMBER 1942
(SHORT TON DESIGNATIONS)

COM/ODITY
STEEL BARS

PRIORITY CARGOES
SPECIFIED FOR DEC.
1942

AVAILABLE
IN TRANSIT
STORAGE

TO STORAGE

PRODUCTION

2,000

27,542

7,266

19,379

51,987

1,000
500

77,774
5,670

8,253
3,885

1,400

299

107

22,424
7,497
2,012

107,451
16,552
1,018

43,428
11,592
9,282

3,255
3,108
2,415
147
5,471
6,471
4,095
7,799

4,205
13,599
3,299

50,888
28,299
13,996

940

87

16,731
7,146
6,721
5,157
3,500
2,018
3,500

59,582
117,643
15,850
22,594

544

1,573
1,491

3,500

300

SHEETS, STRIP, PLATES,
SHAPES AND MISC.
SHELL STEEL
TOOL AND DIE STEEL
RAILROAD RAILS AND
ACCESSORIES

RAILROAD WHEEL SETS
BARBED WIRE
CABLE (OTHER THAN COPPER)

1,000
1,000

WIRE PRODUCTS

PIPE AND TUBING
TIN PLATE
COPPER AND COPPER PRODUCTS
ZINC

ALUMINUM INGOTS AND SHEETS
NICKEL AND NICKEL PRODUCTS

1,000
2,500
1,500
3,200
5,000
3,200

PERROCHROMIUM

FERROSILICON
MOLYBDENUM
MAGNESIUM

3,200

COBOLT

3,200
1,200

CHEMICALS

37,380
105,026
7,514
11,138
84

3,360

798

231

1,008

483

966

MERCURY

129

300

645
126

14,998

4,742

1,194

14,934

84

214

719

1,017

AUTOMOTIVE EQUIPMENT
AND PARTS

300

750

126

6,000

300
462

3,500

INDUSTRIAL AND CONSTRUCTION
MACHINERY, ACCESSORIES
AND PARTS

BALANCE

358

CONTINUED - PAGE 2

AVAILABLE

PRIORITY CARGOES
SPECIFIED FOR DEC.
COMMODITY

TIRES AND TUBES
OIL FIELD MACHINERY
FIRE FIGHTING EQUIPMENT
GRAPHITE - METAL ELECTRODES
LEATHER AND LEATHER PRODUCTS
FURNITURE AND OFFICE

SHIPMENT

IN TRANSIT
STORAGE

6,500

126

TO STORAGE

PRODUCTION

BALANCE

399

6,230

255

21

10

31

2

250

2

1,397

1,647

EQUIPMENT

CLOTHING AND TEXTILES
RUBBER PRODUCTS

42

154

PLASTICS
RADIO EQUIPMENT

PRECISION INSTRUMENTS
PHOTOGRAPHIC EQUIPMENT
HAND AND MACHINE TOOLS
BALL AND ROLLER BEARINGS
PAPER AND PAPER PRODUCTS
MISC. SUPPLIES AND EQUIPMENT
(GAS MASKS, DETONATION
CORD, ETC.)
AIRCRAFT INSTRUMENTS
MEDICAL SUPPLIES & EQUIPMENT
GREASES AND PARAFFIN

1

205

9

13

14

1

100

250

1

210

141

213

562

84

21

860

865

776

252

602

1,630

264

356

370
6

HARDWARE

44,000

168

205

356,053

63,109

6

373

137,924

513,086

359

TREASUR

PARTMENT - U. S. S. R.

MATERIALS AVAILABLE FROM STORAGE AND PRODUCTION DURING MONTH OF DECEMBER 1942
(SHORT TON DESIGNATIONS)

AVAILABLE

PRIORITY CARGOES

SPECIFIED FOR DIC.
COMMODITY

STEEL BARS

1942

IN TRANSIT

STORAGE

TO STORAGE

PRODUCTION

BALANCE

2,000

27,542

7,266

19,379

51,987

1,000
500

77,776
5,670

8,253
3,885

1,400

299

107

22,424
7,497
2,012

107,451
16,552
1,018

43,428
11,592
9,282

3,255
3,108
2,415

4,205
18,599
5,299

50,888
28,299
15,996

147

940

87

5,471
6,471
4,095
7,799

16,731
7,146
6,721
5,157
3,500
2,018
3,500

59,582
117,643
15,830
22,594

544

1,573
1,491

3,500

300

3,500

300

SHEETS, STRIP, PLATES,
SHAPES AND MISC.
SHELL STEEL
TOOL AND DIE STEEL
RAILROAD RAILS AND
ACCESSORIES

RAILROAD WHEEL SETS
BARBED WIRE

CABLE (OTHER THAN COPPER)

1,000
1,000

WIRE PRODUCTS

PIPE AND TUBING
TIN PLATE
COPPER AND COPPER PRODUCTS
ZINC

ALUMINUM INGOTS AND SHEETS
NICKEL AND NICKEL PRODUCTS

1,000
2,500
1,500
$,200
5,000
3,200

PERROCHRONIUM

FERROSILICON
MOLYBDENUM
MAGNESIUM

3,200

COBOLT

3,200
1,200

CHEMICALS

37,380
105,026
7,514
11,188
84

3,360

798

232

1,008

483

966

MERCURY

129

750

126

300
462

300

645
126

INDUSTRIAL AND CONSTRUCTION
MACHINERY, ACCESSORIES
AND PARTS

6,000

14,998

4,742

1,194

14,934

84

214

729

1,017

AUTOMOTIVE EQUIPMENT
AND PARTS

CONTINUED - PAGE 2

AVAILABLE

PRIORITY CARGOES

IN TRANSIT

SPECIFIED FOR DEC.
COMMODITY

TIRES AND TUBES
OIL FIELD MACHINERY
FIRE FIGHTING EQUIPMENT
GRAPHITE - METAL ELECTRODES
LEATHER AND LEATHER PRODUCTS
FURNITURE AND OFFICE

SHIPMENT

STORAGE

6,500

126

TO STORAGE

PRODUCTION

BALANCE

399

6,230

255

21

10

31
2

2

250

1,647

1,397

9

205

EQUIPMENT

CLOTHING AND TEXTILES
RUBBER PRODUCTS

42

154

PLASTICS
RADIO EQUIPMENT

PRECISION INSTRUMENTS
PHOTOGRAPHIC EQUIPMENT
HAND AND MACHINE TOOLS
BALL AND ROLLER BEARINGS
PAPER AND PAPER PRODUCTS
MISC. SUPPLIES AND EQUIPMENT
(GAS MASKS. DETONATION
CORD, ETC.)
AIRCRAFT INSTRUMENTS
MEDICAL SUPPLIES & EQUIPMENT
GREASES AND PARAFFIN

1

13
1

210

100

250

141

1

211

562

865
1,630

84

21

860

776

252

602

266

356

370
6

HA DWARE

44,000

168

205

356,063

63,100

14

6

STS

137,924

515,086

361

ON LEND-LEASE OPERATIONS
For the Period Ended December 11,1942

DECEMBER 11, 1942.

CONFIDENTIAL:

To be held in STRICT
CONFIDENCE and no
portion. synopsis, or intimation to be published or given out
until the READING of the President's Message transmitting
this report has begun in the Senate or the House of Represent-

atives. Extreme care must therefore be exercised to avoid
premature publication.

STEPHEN EARLY,
Secretary to the President.

SEVENTH REPORT TO CONGRESS

ON LEND-LEASE OPERATIONS
For the Period Ended December 11,1942

"The President from time to time, but not less frequently than once
every ninety days, shall transmit to the Congress a report of operations
under this Act except such information as he deems incompatible with
the public interest to disclose."
[From Section 5, subsection b of "An Act to Promote the Defense of the
United States''(Public Law No. 11, 77th Congress, 1st Session).]

CONTENTS

Page

Chapter

President's Letter of Transmittal
1. Lend-Lease Progress

5

7

2. U. S. Production and the United Nations

15

3. The African Offensives

21

4. Liberated Areas

24

Appendix
I. Lend-Lease Act

26

II. Lend-Lease Appropriations and Authorizations

30

III. Status of Nations

30

IV. Declaration by United Nations

32

V. British Master Agreement

33

3

PRESIDENT'S LETTER OF TRANSMITTAL

To THE CONGRESS OF THE UNITED STATES OF AMERICA

I am transmitting herewith the seventh quarterly report
on operations under the Lend-Lease Act.

Since the last report, the war has entered a new phase.

United Nations' forces attacking from Egypt and North
Africa are contesting with the Axis for control of the African

coast line of the Mediterranean. The Soviet Army, having
held with stubborn bravery at Stalingrad, has now assumed
the offensive. The Japanese have been recklessly expend-

ing ships and men in the Solomons, a battleground of our
own choosing.

The Axis Powers have, temporarily at least, lost the initiative. We must do all we can to keep them from regaining it.

We must bring the full strength of all the United Nations
to bear directly against the enemy. We must bring together
our joint productive capacity and our material resources, our
finished munitions and our fighting manpower; and we must

do this in accordance with a single world strategy. That
we are making good progress in this direction I think is
shown by recent developments, and by this report on the part
played by lend-lease.

We also have another task, which will grow in magnitude
as our striking power grows, and as new territories are liberated from the enemy's crushing grip. That task is to supply

medicines, food, clothing, and other dire needs of those
peoples who have been plundered, despoiled and starved.

5

The Nazis and Japanese have butchered innocent men and
women in a campaign of organized terror. They have stripped

the lands they hold of food and other resources. They have
used hunger as an instrument of the slavery they seek to

Chapter 1

impose.

Our policy is the direct opposite. United Nations' forces
will bring food for the starving and medicine for the sick.

LEND-LEASE PROGRESS

Every aid possible will be given to restore each of the

Lend-lease assistance to our allies in the past three months
totaled $2,367,000,000. This is more than a third higher than
the figure for the previous quarter, and four times the total for
the three months immediately preceding our entrance into the

liberated countries to soundness and strength, so that each

may make its full contribution to United Nations' victory,
and to the peace which follows.

war a year ago.

FRANKLIN D. ROOSEVELT.

At the same time, the United States has equipped and supplied rapidly growing numbers of American forces overseas,

THE WHITE HOUSE,

December 11, 1942.

who will number more than 1,000,000 by the end of this
month. And, in combination with the British, we launched

the North African offensive, which involved the greatest single
overseas expeditionary force in history.
We have used the rapidly rising output of American factories

both to equip our own forces and to send more to the other
peoples who fight our enemies. But there is still not enough.
Many more American ships, planes, tanks, and guns will
be required before the United Nations can wage the great
)

offensives that will bring victory. Meanwhile, within the
limits of available production, we have sought to carry out the
strategic principle embodied in the lend-lease idea: This is one

war; it can be won only by all the United Nations together,
combining their resources in such a way as to meet the enemy

with the maximum force at the chosen times and places.

Total Lend-Lease Aid
From the beginning of the lend-lease program on March
11, 1941, to November 30, 1942, the dollar value of goods
transferred and services rendered is $7,496,000,000. This
compares with $5,129,000,000 reported in the Sixth Report to
Congress three months ago.

For the 12 months ending November 30, the first year of

our participation in the war, lend-lease aid totaled
7
6

$6,526,000,000. The current rate of assistance is approximately

$10,000,000,000 annually. This is about 15 percent of the
current rate of spending on the over-all United States war
program. Thus, we are now putting about one-seventh of our
total effort into lend-lease aid to the other United Nations.
Monthly lend-lease aid is shown in Chart 1.
GOODS TRANSFERRED AND SERVICES RENDERED
CUMULATIVE

SINCE MARCH 1941

(Millions of Dollars)
Goods

5,854

Services

1,642

Total

SERVICES

recorded as the goods are loaded and the figures for goods
Transferred will hereafter approximate lend-lease exports.

Chart 2 shows the monthly value of lend-lease goods

exported, by category. Exports of military items have risen
much more rapidly than exports of non-military items. For
the month of September 1941 total lend-lease exports were
LEND-LEASE GOODS EXPORTED EACH MONTH
BY CATEGORY

Million $

Million

Million

Monthly
1,000

600

600

500

500

800
400

400

7,496
600

300

INDUSTRIAL
MATERIALS
300

AGRICULTURAL
PRODUCTS

400

200

200

200

100

100

MILITARY:
ITEMS:

GOODS

0

1942

1941

1942

1941

Chart 2
Chart 1

$85,000,000. Only 25 percent of that amount was for arms, the

Goods Transferred
Goods transferred total $5,854,000,000; this constitutes 78

percent of total lend-lease aid. Transfers fall into three
categories: (a) military items such as planes, tanks, ships,
guns and ammunition; (b) industrial items such as steel, petroleum products, machinery and machine tools; (c) foodstuffs
and other agricultural products.

In the past, transfers have generally been made to lendlease countries before goods were loaded aboard ship. Consequently not all goods recorded as transferred have actually
been exported. About 10 percent is still in this country awaiting shipment. Starting December 1st, transfers are being

balance consisting of foodstuffs and industrial materials. For
the month of October 1942 (the last month for which export
figures are available) lend-lease exports were $537,000,000,
of which military items comprised 56 percent.
While total monthly lend-lease exports increased over six
times, lend-lease exports of military items increased fourteen

times. Although the percentages of food and industrial
materials to total exports have declined, the actual amounts
shipped increased greatly as shown in Chart 2.
The export figures do not include the great quantities of
supplies sent to our forces abroad.

498087 42 2
8

9

Services Rendered

Where Lend-Lease Supplies Are Going

Services rendered total $1,642,000,000; this constitutes about

Chart 3 shows exports of lend-lease goods by area of destina-

one-fifth of total lend-lease aid. In terms of making our aid
effective, the relative importance of these services is considerably greater than the dollar amount indicates.

tion. In October 1942 approximately 40 percent of lend-lease
exports went to the United Kingdom, 39 percent to the Middle
and Far East and other areas, and 21 percent to U.S.S.R.

Lend-lease supplies are of no use to our allies until they
reach the places where they are needed. About 50 percent of
expenditures for services is for shipping and supply servicesmostly for the rental and charter of ships to carry the goods,

LEND-LEASE GOODS EXPORTED EACH MONTH
BY COUNTRY OF DESTINATION

and the balance for the development and operation of air ferry

Million $

Million $

600

600

500

500

400

400

routes and supply bases abroad.

We have supply lines extending over many thousands of
miles of submarine-infested oceans, and across jungles, deserts

and hitherto inaccessible mountain ranges. We have to go
around to the far places, where transport facilities are generally primitive. Lend-lease has played a large part in keeping
these lines open and in increasing the volume of shipments

U.S.S.R.

300

MIDDLE AND
FAR EAST
AND OTHER.

200

over them.

200

100

At the receiving ends of many of these routes, it has been
necessary to develop harbors, build and equip docks, ware-

UNITED

o

1942

1941

have been made over into truck highways and railroad facilities have been either created or enlarged. Scores of newly

routes. American participation with the Russians, the

100

KINGDOM

houses, assembly plants, and supply depots. Camel trails
developed airfields are way-stations on the bomber-ferry )

300

Chart 3

I

expenditures for production facilities-factories and shipyards-built in the United States to manufacture certain

The chart also shows the higher proportion of lend-lease
shipments to the Middle and Far East and U. S. S. R. during
1942. Since January 1942, monthly exports to the United
Kingdom and to the Middle and Far East have more than
doubled. October shipments to U. S. S. R. were nine times
those in January, when goods were first exported to Russia
under lend-lease (as distinct from direct purchase exports).
Part of the military equipment exported to the United Kingdom has been sent by the British to U. S. S. R., Egypt, India
and other areas of the Middle East. In addition, Great Britain
has sent a major share of its own production of war supplies

types of lend-lease articles.

to these fronts.

British, and other allies in this development program has
been carried out in important measure through lend-lease.
Another 15 percent of the funds spent for services has been
used to repair in our yards hundreds of allied merchant and
naval vessels damaged by enemy action. Similar repair services are being rendered for damaged American warships and
merchant vessels abroad, under reciprocal lend-lease.
The balance of 35 percent of services rendered represents

The United States and Great Britain have between them
shipped (not delivered) to U. R. during the past year, over
10

11

the northern route alone, more than 3,000 planes, more than
4,000 tanks, more than 30,000 trucks, jeeps and other vehicles
and hundreds of thousands of tons of food, industrial raw mate-

rials, medical supplies and other products. Not all of these
supplies have arrived. Convoys over the North Atlantic route
have been subjected to heavy punishment by Nazi air, surface
and undersea raiders.

Shipments by the southern route to the Red Sea-Persian Gulf
area have had to travel ocean distances of 10,000 to 13,000

miles and there are long additional overland distances to be
covered before our supplies reach bases and front lines in the
U.S.S.R. In the Red Sea-Persian Gulf area, ports, unloading

and assembly facilities, roads and railroads were either inadequate or non-existent. They have been greatly improved with
the aid of lend-lease funds.

lease supplies into China. United States Army and China
National Airways cargo planes are plying this dangerous route
regularly but the quantities they have been able to carry so
far have been small. We shall find ways to send more.

Lend-Lease Exports and Direct Cash Purchases
In addition to lend-lease aid, the United States has supplied
the other United Nations with weapons and other materials

TOTAL MONTHLY EXPORTS
FROM THE UNITED STATES
Million $

Million $

800

800

600

600

400

400

Supplies aggregating nearly 2,500,000 tons have been shipped

over all routes from the United States to U. S. S. R. in the
past year under lend-lease and direct purchase. Although
transportation to U.S.S.R. continues to present extraordinary
difficulties, we are succeeding in delivering the great majority

DIRECT

PURCHASE
200

200

of our shipments.

LEND-LEASE
0

o

The part played in the Egyptian campaign by the increased
lend-lease exports to that area is described in Chapter 3. In
addition, considerable shipments have gone to India and other

1942

1941

strategic points in the Middle East, to Australia and New
Zealand.

Chart 4

Lend-lease exports to China have always been limited by a
transportation bottleneck that was made still tighter when the
Japanese took Burma. Until that time, we were able tomove a

thin but steady stream of supplies over the Burma Road.
With lend-lease funds we had considerably increased the capac-

ity of the road, supplied thousands of trucks, and assisted

China in building a railroad which would have provided,
when completed, a supplementary supply line from Lashio to
Kunming.

Since the loss of Burma, air transport across the Himalayas

from India has been the only direct means of bringing lend-

purchased by them for cash, just as they have supplied us,
both by direct purchase and reciprocal lend-lease.
From the point of view of effective pooling of United States
resources with those of other United Nations, the distinction
between lend-lease and cash exports has little significance.
For in the winning of the war, what counts is that our suppliesby whatever method they are provided-reach the hands of
those who need them in order to fight our enemies. This is
equally true of the supplies we receive from our allies.
From March 1941 through October 1942, cash purchase
exports to our allies totaled $6,450,000,000, compared to lend-

lease exports of $4,685,000,000. The proportion of lend-lease
12

13

exports to total U.S. exports has risen from 1 percent in March
1941 to 70 percent in October 1942 as shown by Chart 4.

Other Forms of Aid
The entire story of the aid rendered by the United Nations

to one another cannot be told in statistical terms alone.
It would be impossible to attempt a mathematical appraisal of
many of the respective contributions of the allied nations or
to evaluate the role each is playing in encompassing the defeat
of the Axis. The principle followed is one of mutual assistance
in waging a coalition war.

Our own contribution is of course not limited to the proportion of the output of our farms and workshops which is
exported to our allies. American troops fight side by side
with those of the other United Nations; our navies engage
in joint as well as independent operations. Supplies, equipment, and ammunition are fully shared on the battlefield. An
American tanker, during combat, will service any allied de-

stroyer requiring fuel. Our aircraft carriers have brought
sorely needed planes to posts exclusively manned by our allies.

We have assumed the responsibility for defending some of the

distant outposts of the world to relieve veteran allied troops

for more active theaters. We have been the recipient of
similar aid from our allies. The United Nations are not
engaged in a series of separate wars; ours is a joint enterprise
with one goal.
NOTE.-Previous reports have carried figures for lend-lease "goods in
process." These were expenditures made for completed equipment that
had not yet been transferred and for equipment still in process of manufacture. In the Sixth Report to Congress the dollar volume of such goods
was estimated at $1,360,000,000. This figure, however, included only
expenditures made from lend-lease funds appropriated directly to the
President. It did not include expenditures made by the War and Navy
Departments from funds appropriated to them. Military items procured
by these departments are not generally separated as between those for
our own forces and those for lend-lease purposes until manufacture is completed and final assignments are made by the Combined Munitions Assign-

ments Board. This Board assigns all military items produced in the
United States. It is therefore impossible to determine with any degree of
accuracy the lend-lease proportion of expenditures made on goods in
process by the War and Navy Departments. Since any figure on lend-lease
goods in process which does not include these amounts fails to give a
complete picture of such expenditures, the category of goods in process
will no longer be included in these reports.

Chapter 2

U. S. PRODUCTION AND THE UNITED NATIONS
Combining United Nations Resources
All available resources of the United Nations are dedicated

to the common end of winning the war. It is in the joint
interest of the United Nations to equip and supply all their
armed forces, to maintain the flow of industrial materials to
war factories everywhere, and to meet the essential war-time
civilian needs of all anti-Axis peoples. In this task they are,
within the limits of their resources, supplying both their own
needs and the needs of each other.

We are dependent upon each other in many ways. Although
the United States has the greatest resources for the production

of war materials and civilian supplies, many of our own vital
requirements are being obtained by purchase from our allies.
Certain raw materials, essential to making planes and tanks,
come from many parts of the British Empire, Latin America
and other United Nations. For example, ninety-five percent
of our nickel comes from Canada and our mica from India and
Brazil. We are still getting precious supplies of tungsten from
China.

Our troops overseas are receiving many important supplies
and services from Great Britain, India, Australia, New Zealand, and Fighting France under reciprocal lend-lease.

Up to six months ago, Great Britain and Russia were producing more arms than we were. Great Britain has supplied
the larger part of its own needs and has furnished quantities
of certain types of equipment to the fighting forces of Russia
and of the governments in exile. Great Britain has also provided most of the merchant ships and transports which carry
United Nations supplies and troops overseas.
15

14

Plainly Russia is able to send few supplies to its allies, but
the greatest land fighting of the war has been carried on for

two years principally with Russian equipment. Russian
planes and bombs and tanks have destroyed many times the
number of enemy troops killed in all the other war theatres
combined.

Our principal allies have reached the maximum rate of their

war production. American war production-already the
greatest in the world-will rise much higher still before
reaching its peak. Supplies from the United States have
had an important part in the war effort of the United Nations.
From now on, our production will play an increasingly decisive
role. But only by a vast increase in our output can we obtain
the overwhelming superiority over the Axis which is needed
for victory.

Distribution of American Production
Most of our production is used to supply our own armed
forces and civilian population. The proportion of war weapons
that goes to our Army and Navy and the proportion that goes
to our allies is determined by the strategic decisions of global
warfare. United Nations war production strategy determines
how much we should send abroad of our supply of industrial

materials. The food we produce-and food is a weapon of

other hand, there are many articles which we make entirely
for our own forces.

Although exports of military items have greatly increased
during the past year, our rate of munitions production has
increased still more rapidly. Consequently, a smaller percentage of our total military output is now being exported. Chart
5 shows how the percentage of exports has declined from 30
PERCENTAGE OF TOTAL MUNITIONS PRODUCTION

EXPORTED TO LEND-LEASE COUNTRIES
Per Cent

50

40

40

30

30

20

Military Supplies
About 15 percent of our present total production of military
items is being exported to the other United Nations under
lend-lease and direct purchase. These items include ordnance,

ammunition, aircraft, tanks, motor vehicles, and spare parts,
but do not include merchant and naval vessels.
The proportion of some combat weapons going to our allies
is considerably higher than the over-all average. Thus, we
are sending them about 30 percent of our production of combat

20

DIRECT
PURCHASE
10

10

LEND-LEASE!

1942

1941

Excludes Noval and Merchant Ships and All Shipments to U.S. Forces

war-is allocated to meet the needs of American armed forces
and civilians, and, so far as possible, the essential food requirements of our allies.

Per Cent

50

Chart 5

percent of total output in March 1941 to approximately 15 per-

cent in the past five months.
A large part of the munitions retained for our own forces

has been transported with our troops to bases abroad for
use in recent campaigns and in battles now being waged.
These shipments are not included in the export figures in
Chart 5.

Industrial Materials
The United States is exporting industrial materials to our
allies, particularly the United Kingdom, Canada and Russia.
The quantities which we send them are necessary to maintain

planes and 35 percent of our production of tanks. On the
17

498087*-4216

their production of weapons and ships, but are relatively small
in relation to our own total production of these materials.
The following percentages show the relationship of our lend-

lease and direct purchase exports of the more important
materials to total United States new supply of the indicated
industrial materials during the first six months of this year:
EXPORTS IN PERCENT OF U. S. NEW SUPPLY
First 6 Months of 1942
Percent

Aluminum

12.2

Cotton

5.0

Nickel

Britain's food that comes from the United States has meant the
difference between enough to sustain the British people's inten-

sive war effort and too little with which to carry on. Likewise, American food supplies are saving thousands from starva-

tion in Russia and the Middle East.
The following percentages show the relationship of exports
to the total United States supply of important foodstuffs for
the year ended June 30, 1942:
EXPORTS IN PERCENT OF SUPPLY

Percent

Petroleum Products

2.7

Copper

other than the United States. Nevertheless, the part of Great

Steel

Zinc

1.2

16.1

These are percentages of United States production plus im-

ports during the period. If our stock piles were taken into
account the export percentages would be smaller.
The percentages shown are for exports of these materials in
a form ready for use in the production of war equipment. Thus
in the case of steel, exports were 11 percent of our total new
supply of shapes, plates, bars, sheets, etc. They were considerably less than 11 percent of our new supply of steel in the
form of ingots. On the other hand, the export percentages do
not include the steel and other materials in finished products
such as tanks and guns.
Foodstuffs

United States exports of food, nearly all of which are under

lend-lease, have been particularly important to the United
Kingdom and to Russia. Yet our exports have been small in
relation both to their total food supply and to ours. The United
Kingdom, for example, now produces about 60 percent of its
own food as the result of an intensive three-year farm program,

and the major share of its food imports comes from sources
18

Percent

Percent

11.0

Tin

3.5

Year Ended June 30, 1942

5.3

All Milk Products (expressed in terms of

Beef and Veal

0.5

Lamb and Mutton

0.0

fluid milk equivalent)

3.9

Pork

13.0

Corn and Corn Products

0.5

Canned Fish

21.0

Wheat and Wheat Prod.

Eggs

Cheese

ucts

1.0

Sugar

1.0

8.1

23.1

Of the five meats now under voluntary rationing, we have
retained for our own armed forces and civilians more than 99
percent of all but pork, in which case the percentage retained
is 87 percent. And pork production has increased enough to
cover our exports and still leave a normal supply for our own
uses. Civilian shortages of these meats are due primarily to
the needs of our soldiers and sailors and to increased civilian
consumption.
We have exported under lend-lease 1,263,882,000 pounds of

evaporated milk, powdered milk and cheese. However, in
terms of fluid milk equivalent, this is approximately 4 percent

of our record-breaking milk supply. All the rest is going to
United States armed forces and civilians. Our exports provide
two out of every five ounces of the cheese which Britons eat
19

and almost all their powdered milk. Dried skim milk is
rationed at the rate of one ounce a week and supplements the

often slim British fluid milk ration (now 21/4 pints per week

Chapter 3

per adult).

Of our total egg production, we have retained 92 percent
for our own needs. Our exports have been almost entirely

THE AFRICAN OFFENSIVES

in the form of dried eggs in order to save shipping space. The

English ration of dried eggs, nearly all of which come from

The present campaigns in Egypt and North Africa illustrate
how United Nations resources can be pooled in the execution

the United States, is the equivalent of one fresh egg per person

of an offensive strategy. For both offensives, supplies and

per week, and supplements the ration of fresh eggs, which

shipping services were provided on a great scale in accordance

varies seasonally from one to a maximum of five eggs a month.

with the principles of lend-lease and reciprocal aid.

Our exports of sugar, wheat, flour, and cereals, although ex-

tremely small in relation to total U. S. supply, have been
particularly important to Russia, which has lost most of its
sugar-beet and its richest wheat-producing areas to the Nazi
invaders. So far we have not been able to find the shipping

space to send nearly as much food to U. S. S. R. as the

Russian people need.

Egyptian Campaign
In the Egyptian campaign, British and American equipment
was used and troops from the United Kingdom, the Dominions,

Greece, Poland, France, and the United States took part, but
British troops, planes, and ships did the bulk of the fighting,
under British command. It was in the field of transportation

We have exported a considerable percentage of our total
production of canned fish to supplement the restricted meat
rations of our allies' armed forces and civilians. Two-thirds
of Britain's canned fish supply comes from the United States
and most of the balance from Canada.

and supplies that United States assistance played its major role.
German and Italian forces could be supplied from their home

Record United States food production in 1942 has more than

12,000 miles by water, around the Cape of Good Hope and up

offset our lend-lease food exports. To meet the greater demands next year, Secretary of Agriculture Wickard has set
1943 production goals ranging up to 28 percent higher than
1942 totals for some commodities. United States civilians
will have less of some foods, in order that supplies may go

where they will contribute most to our victory. Even so,
Americans will still have more to eat than the overwhelming
majority of people elsewhere.

bases by shipping or flying their equipment a few hundred
miles across the Mediterranean. Supplies from the United
Kingdom or this country, on the other hand, had to travel
the Red Sea, before reaching the fighting zone. Even if sent
by air from the United States, a bomber or a cargo of urgently
needed materials must be flown over 9,000 miles via Brazil
across the Atlantic and over the jungles and deserts of Africa.
Nevertheless, in spite of all difficulties of weather, terrain,
and enemy action, our supply lines functioned so well that at
the crucial moment United Nations forces were able to take
the field with clear superiority in armored strength, artillery,
and air power.

This was possible because of action taken many months
before the offensive began, when it was decided that these
supply lines must be bolstered and improved in every way
possible.

United States and British funds, engineering skill and labor
have been used to build, reconstruct or enlarge supply bases,
20

21

where a few years ago no planes were ever seen, huge bombers

could alone have carried out at this time a task requiring the
greatest single overseas expeditionary force in history.
Hundreds of British and American cargo, transport and
naval vessels were pooled for the enterprise. The ground
forces include many British as well as American troops. The
United States Army Air Force and the Royal Air Force are
both taking part in this offensive, and each nation's air force
has been using, to some extent, planes manufactured by the

and transports now land daily, are fueled, and continue to

other, provided either under lend-lease or reciprocal lend-lease.

docks and naval facilities, air fields, and repair and assembling

shops in the Red Sea area and in Egypt. Work done under
this program has made it possible to unload cargoes and repair

damaged ships more quickly. And the facilities for assembling of trucks, tanks, and planes have speeded the flow of
weapons to the fighting front.
Air ferry routes have been created across Africa. In places
their destinations.

Most of the equipment of our troops was American-made,

Together with the British and Fighting French, we have
built or improved air fields all the way from the Atlantic coast

of Africa to the Anglo-Egyptian Sudan, and the Red Sea.
These fields have been used by planes on their way to Egypt,
to Iran and Russia, and to India.
The United States funds spent in these enterprises, and for
the necessary shipping, have come from lend-lease appropriations and funds appropriated to the War Department for its

but large quantities of miscellaneous supplies were lend-leased

to us by Great Britain.

In all phases of the campaign-in the careful work of
preparation as well as in the more spectacular moments of
battle-the United States and Great Britain have shared their
resources and operated under unified command.

own use.

Over these improved supply lines, the United States exported

to Egypt during the period from February to November over
1,000 planes, many hundreds of tanks, of which more than
500 were mediums, 20,000 trucks and hundreds of pieces of
artillery. Our British allies have emphasized the importance
of these weapons in the success of the campaign. In addition
to the American planes furnished the British, hundreds of
planes were sent to Egypt for the use of our own air forces.
One out of every five United Nations planes operating during
the desert offensives was flown by American crews or pilots.
American technicians have also been instructing the British,
South Africans and Australians in the maintenance and repair
of American equipment, and an increasing number of American
mechanics have been assisting in this work.

North African Campaign
The invasion of North Africa, even more than the campaign
in Egypt, has been a combined operation in the fullest sense

of the word. Neither the United States nor Great Britain
23

22

powdered and evaporated milk, and cheese, to meet the most
urgent food needs; cotton textiles, ready-made new and used
clothing, and shoes; copper sulphate to increase the production

of vegetables and fruits for the consumption of our troops as
well as the inhabitants; coal for transportation and kerosene

Chapter 4

for lighting. The United Kingdom will participate in this
program with the United States.

LIBERATED AREAS

The United Nations will help the victims of war in liberated territories, not only out of common humanity, but for

Less than a week after our landings in North Africa, the
Lend-Lease Administrator was instructed, in cooperation with
General Eisenhower and the State Department, to extend aid
to those areas in French Africa occupied by United Nations

forces.

The policy of the United States, already announced, is to
provide food, medicines, and other necessities to alleviate the
hunger and suffering of the people in any territory occupied by
our forces, so far as it is humanly within our power to do so.
Weapons will be furnished to the armed forces of these territories to hasten the defeat of the Axis.
Methods of carrying out this policy will differ between areas,
and different methods may be necessary within the same area.

Where commercial channels of supply have been cut off,
lend-lease can be the instrument for renewing them. Where
relief distribution is necessary, lend-lease can supply the materials of relief.

Steps have already been taken with respect to North Africa
in execution of this policy. About $5,000,000 worth of civilian
goods have been purchased for shipment to that area. Many
times that amount will be procured during the coming months,
to be sent as shipping space becomes a vailable. So long as
military operations continue in this area, the amount of available shipping space cannot accurately be predicted. Cargoes

necessary to maintain our armies in the field will have top
priority on shipping, but civilian supply will come next on the

C

the most urgent political and military reasons. Expansion of
the agricultural production of the reoccupied regions and the
improvement of their transportation facilities will be of great
value to our military forces. Increased food production on
the spot will enable us, after meeting the requirements of the
civilian population, to supply our forces with some foodstuffs,
thus saving valuable shipping space. Similarly any aid that
we can furnish North Africa in maintaining and increasing
its exportable production of certain strategic materials, such
as phosphate rock, manganese, and high-grade iron ore will
be of great value to the United Nations war effort.
The program of reoccupation will require the joint efforts
of many agencies of this government, and the fullest cooperation with the other United Nations. Relief and rehabilitation
of the reoccupied areas will be the common responsibility of
all the United Nations, and must be a combined operation in
the same sense as the military operations themselves. Success

in restoring the countries we free will be a powerful factor in
shortening the war, giving the liberated peoples their chance
to share in the victory.
The United Nations have shown that they are capable of

military teamwork of a high degree. In the field of relief
and rehabilitation, they have an opportunity to develop a constructive program that will have a most direct bearing on the
problems of the peace.

list.

Items purchased, or to be purchased, under this program
include: Medical and hospital supplies ranging from anaesthetics to operating knives, sulfa drugs and antitoxins; sugar,
24

25

APPENDICES

Appendix I

LEND-LEASE ACT
Further to promote the defense of the United States, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of

America in Congress assembled, That this Act may be cited as "An Act to
Promote the Defense of the United States."
Section 2.
As used in this Act-

(a) The term defense article" means(1) Any weapon, munition, aircraft, vessel, or boat;
(2) Any machinery, facility, tool, material, or supply necessary for
the manufacture, production, processing, repair, servicing, or operation of any article described in this subsection;
(3) Any component material or part of or equipment for any article
described in this subsection;

(4) Any agricultural, industrial or other commodity or article for
defense.

Such term defense article" includes any article described in this subsection

manufactured or procured pursuant to section 3, or to which the United
States or any foreign government has or hereafter acquires title, possession,
or control.

(b) The term "defense information" means any plan, specification,
design, prototype, or information pertaining to any defense article.
Section 3.
(a) Notwithstanding the provisions of any other law, the President may,
from time to time, when he deems it in the interst of national defense,
authorize the Secretary of War, the Secretary of the Navy, or the head of
any other department or agency of the Government(1) To manufacture in arsenals, factories, and shipyards under their
jurisdiction, or otherwise procure, to the extent to which funds are

made available therefor, or contracts are authorized from time to
time by the Congress, or both, any defense article for the government
of any country whose defense the President deems vital to the defense

(2) To sell, transfer title to, exchange, lease, lend, or otherwise dispose of, to any such government any defense article, but no defense
article not manufactured or procured under paragraph (1) shall in any
way be disposed of under this paragraph, except after consultation with
the Chief of Staff of the Army or the Chief of Naval Operations of the
Navy, or both. The value of defense articles disposed of in any way
under authority of this paragraph, and procured from funds heretofore
appropriated, shall not exceed $1,300,000,000. The value of such defense articles shall be determined by the head of the department or
agency concerned or such other department, agency or officer as shall
be designated in the manner provided in the rules and regulations issued
hereunder. Defense articles procured from funds hereafter appropriated
to any department or agency of the Goverment, other than from funds
authorized to be appropriated under this Act, shall not be disposed of

in any way under authority of this paragraph except to the extent
hereafter authorized by the Congress in the Acts appropriating such

funds or otherwise.
(3) To test, inspect, prove, repair, outfit, recondition, or otherwise to
place in good working order, to the extent to which funds are made
available therefor, or, contracts are authorized from time to time by the
Congress or both, any defense article for any such government, or to
procure any or all such services by private contract.
(4) To communicate to any such government any defense information, pertaining to any defense article furnished to such government
under paragraph (2) of this subsection.
(5) To release for export any defense article disposed of in any way
under this subsection to any such government.

(b) The terms and conditions upon which any such foreign government
receives any aid authorized under subsection (a) shall be those which the
President deems satisfactory, and the benefit to the United States may be
payment or repayment in kind or property, or any other direct or indirect
benefit which the President deems satisfactory.
(c) After June 30, 1943, or after the passage of a concurrent resolution by
the two Houses before June 30, 1943, which declares that the powers conferred by or pursuant to subsection (a) are no longer necessary to promote
the defense of the United States, neither the President nor the head of any
department or agency shall exercise any of the powers conferred by or
pursuant to subsection (a); except that until July 1, 1946, any of such powers
may be exercised to the extent necessary to carry out a contract or agreement with such a foreign government made before July 1, 1943, or before
the passage of such concurrent resolution, whichever is the earlier.

(d) Nothing in this Act shall be construed to authorize or to permit the
authorization of convoying vessels by naval vessels of the United States.

(c) Nothing in this Act shall be construed to authorize or to permit
the authorization of the entry of any American vessel into a combat area
in violation of section 3 of the Neutrality Act of 1939.

of the United States.
27

26

Section 4.

All contracts or agreements made for the disposition of any defense
article or defense information pursuant to section 3 shall contain a clause

by which the foreign government undertakes that it will not, without
the consent of the President, transfer title to or possession of such defense
article or defense information by gift, sale, or otherwise, or permit its use
by anyone not an officer, employee, or agent of such foreign government.
Section 5.
(a) The Secretary of War, the Secretary of the Navy, or the head of any
other department or agency of the Government involved shall, when any
such defense article or defense information is exported, immediately inform
the department or agency designated by the President to administer section
6 of the Act of July 2, 1940 (54 Stat. 714), of the quantities, character,
value, terms of disposition, and destination of the article and information
so exported.

(b) The President from time to time, but not less frequently than once
every ninety days, shall transmit to the Congress a report of operations
under this Act except such information as he deems incompatible with the
public interest to disclose. Reports provided for under this subsection
shall be transmitted to the Secretary of the Senate or the Clerk of the House

of Representatives, as the case may be, if the Senate or the House of
Representatives, as the case may be, is not in session.

Section 6.

Section 8.
The Secretaries of War and of the Navy are hereby authorized to purchase

or otherwise acquire arms, ammunition, and implements of war produced
within the jurisdiction of any country to which section 3 is applicable,
whenever the President deems such purchase or acquisition to be necessary
in the interests of the defense of the United States.

Section 9.
The President may, from time to time, promulgate such rules and regulations as may be necessary and proper to carry out any of the provisions of
this Act; and he may exercise any power or authority conferred on him by
this Act through such department, agency, or officer as he shall direct.

Section 10.
Nothing in this Act shall be construed to change existing law relating
to the use of the land and naval forces of the United States, except insofar
as such use relates to the manufacture, procurement, and repair of defense

articles, the communication of information and other noncombatant
purposes enumerated in this Act.

Section 11.
If any provision of this Act or the application of such provision to any
circumstance shall be held invalid, the validity of the remainder of the
Act and the applicability of such provision to other circumstances shall
not be affected thereby.

(a) There is hereby authorized to be appropriated from time to time, out
of any money in the Treasury not otherwise appropriated, such amounts as
may be necessary to carry out the provisions and accomplish the purposes
of this Act.

APPROVED, March 11, 1941.

(b) All money and all property which is converted into money received
under section 3 from any government shall, with the approval of the Director of the Budget, revert to the respective appropriation or appropriations
out of which funds were expended with respect to the defense article or
defense information for which such consideration is received, and shall be
available for expenditure for the purpose for which such expended funds
were appropriated by law, during the fiscal year in which such funds are
received and the ensuing fiscal year; but in no event shall any funds so
received be available for expenditure after June 30, 1946.
Section 7.

The Secretary of War, the Secretary of the Navy, and the head of the
department or agency shall in all contracts or agreements for the disposition
of any defense article or defense information fully protect the rights of all

citizens of the United States who have patent rights in and to any such
article or information which is hereby authorized to be disposed of and the
payments collected for royalties on such patents shall be paid to the owners
and holders of such patents.

28

29

Appendix II

LEND-LEASE APPROPRIATIONS AND TRANSFER
AUTHORIZATIONS
Lend-lease aid is provided from: (a) funds appropriated directly to the
President for lend-lease purposes; (b) appropriations to the War Department, Navy Department, and Maritime Commission which contain authorization for maximum amounts that may be used for lend-lease purposes.

The Declaration by United Nations, together with the original signatories, is printed in Appendix IV. The Master Agreement signed with
the United Kingdom is contained in Appendix V. Lend-lease agreements
with the following countries are identical with the British agreement:
China, U. S. S. R., Belgium, Poland, Netherlands, Greece, Czechoslovakia,

Norway and Yugoslavia. In addition, Australia and New Zealand have
accepted the same principles. Canada agreed to the principles set forth in

Article VII of the Master Agreements in an exchange of notes with the
United States, dated November 30, 1942.

Detailed information on the maximum amount of lend-lease aid which
can be provided by existing legislation is given in the following table.

STATUS OF NATIONS

Appropriations to the President

(LEND-LEASE COUNTRIES AND UNITED NATIONS)

First Lend-Lease Appropriation
Second Lend-Lease Appropriation
Third Lend-Lease Appropriation

$7,000,000,000
5,985,000,000
5,425,000,000
$18,410,000,000

Transfers Authorized from Other Appropriations
War Department-Third Supplemental, 1942
War Department-Fourth Supplemental, 1942
War Department-Fifth Supplemental, 1942
War Department-Sixth Supplemental, 1942

War Department-Military Appropriation Act, 1943
Navy Department-Second Supplemental, 1943
Maritime Commission-First Supplemental, 1942
Maritime Commission-Fifth Suppl. (Approp. Funds), 42.
Maritime Commission-Fifth Suppl. (Contr. Auth.), 1942.
Departments other than War-Third Supplemental, 1942

$2,000,000,000
4,000,000,000
11,250,000,000
2,220,000,000
12,700,000,000

*3,000,000,000
-1,296,650,000
+1,500,000,000

-2,350,000,000
800,000,000

$41,116,650,000

MAXIMUM AMOUNT OF AID THAT CAN BE PROVIDED

UNITED NATIONS
DECLARATION SIGNED

LEND-LEASE AGREEMENT

ELIGIBLE FOR

RECIPROCAL LEND-LEASE

LEND-LEASE AID

AGREEMENT IN EFFECT

SIGNED

ARGENTINA

INDIA

AUSTRALIA

IRAN

BELGIUM

IRAQ

BOLIVIA

LUXEMBOURG

BRAZIL

MEXICO

NETHERLANDS

CANADA

NEW ZEALAND

CHILE

NICARAGUA

CHINA

COLOMBIA

NORWAY

COSTA RICA

PANAMA
PARAGUAY

CUBA

$59,526,650,000

PERU

CZECHOSLOVAKIA

*Does not include the value of ships which may be leased by the Navy for the duration of
the emergency.

PHILIPPINES

DOMINICAN REPUBLIC

Value of ships which may be leased.

POLAND

ECUADOR

Appendix III

STATUS OF NATIONS
Twenty-nine nations have signed the United Nations Declaration,
pledging their full resources to the fight against the Axis powers, and
agreeing not to make a separate peace with the enemies. Of the 42 nations

which have been declared eligible for lend-lease aid by the President, 30
have signed lend-lease agreements. Formal agreements providing for
reciprocal lend-lease aid have been entered into by four of these nations with
the United States. Full information concerning the status of the various
nations is shown by the following chart.
30

SOUTH AFRICA

EGYPT

TURKEY

EL SALVADOR

UNITED KINGDOM

ETHIOPIA

UNITED STATES

FIGHTING FRANCE

U.S.S.R.

GREECE

URUGUAY

GUATEMALA

VENEZUELA

HAITI

YUGOSLAVIA

HONDURAS

ICELAND

31

Appendix IV

DECLARATION BY UNITED NATIONS
A Joint Declaration by the United States of America,

the United Kingdom of Great Britain and Northern

On behalf of the Government of the The Republic of Nicaragua
Union of Soviet Socialist Republics
by Leon DeBayle
by Maxim Litvinoff,
The Kingdom of Norway
Ambassador

The Commonwealth of Australia

Australia, Belgium, Canada, Costa Rica, Cuba, Czecho-

by R. G. Casey
The Kingdom of Belgium
by Cte. R. V. d. Straten

Guatemala, Haiti, Honduras, India, Luxembourg,
Netherlands, New Zealand, Nicaragua, Norway,

Panama, Poland, South Africa, Yugoslavia.
The Governments signatory hereto,

Having subscribed to a common program of purposes and principles cm-

bodied in the Joint Declaration of the President of the United States of
America and the Prime Minister of the United Kingdom of Great Britain
and Northern Ireland dated August 14, 1941, known as the Atlantic Charter,
Being convinced that complete victory over their enemies is essential to
defend life, liberty, independence and religious freedom, and to preserve
human rights and justice in their own lands as well as in other lands, and
that they are now engaged in a common struggle against savage and brutal
forces seeking to subjugate the world, DECLARE:

stierne

of China
Tse Vung Soong,
Minister for Foreign Affairs

Ireland, the Union of Soviet Socialist Republics, China,

slovakia, Dominican Republic, El Salvador, Greece,

by W. Munthe de Morgen-

National Government of :Republic

The Republic of Panama
by Jaen Guardia

The Republic of Poland
by Jan Ciechanowski

La Republique d'Haiti
par Fernand Dennis

Canada

The Republic of Honduras

by Leighton Mc Carthy
The Grand Duchy of Luxembourg
by Hugues Le Gallais
The Kingdom of the Netherlands
A. Loudon
Signed on behalf of the Govt. of the
Dominion of New Zealand
by Frank Langstone

by Julian R. Caceres
India

Girja Shankar Bajpai
The Union of South Africa
by Ralph W. Close

The Kingdom of Yugoslavia
by Constantin A. Fotitch

NOTE: Mexico, The Commonwealth of the Philippines and Ethiopia have
since adhered to the Declaration by United Nations.

(1) Each Government pledges itself to employ its full resources, military or economic, against those members of the Tripartite Pact and its
adherents with which such government is at war.
(2) Each Government pledges itself to cooperate with the Governments signatory hereto and not to make a separate armistice or peace
with the enemies.

Appendix V

The foregoing declaration may be adhered to by other nations which are,

or which may be, rendering material assistance and contributions in the
struggle for victory over Hitlerism.
Done at Washington
January First 1942

The Republic of El Salvador
by C. A. Alfaro
The Kingdom of Greece
by Cimon P. Diamantopoulos
The Republic of Guatemala
by Enrique Lopez-Herrarte
The United States of America
by Franklin D. Roosevelt
The United Kingdom of Great Britain
and Northern Ireland
by Winston Churchill

The Republic of Costa Rica
by Luis Fernandez
The Republic of Cuba
by Aurelio F. Concheso
Czechoslovak Republic
by V. S. Hurban

The Dominican Republic
by J.M. Troncoso

BRITISH MASTER AGREEMENT
Agreement Between the Governments of the United States of America
and of the United Kingdom on the Principles Applying to Mutual Aid in
the Prosecution of the War Against Aggression, Authorized and Provided
for by the Act of March 11, 1941.

Whereas the Governments of the United States of America and the
United Kingdom of Great Britain and Northern Ireland declare that they
are engaged in a cooperative undertaking, together with every other
nation or people of like mind, to the end of laying the bases of a just and
enduring world peace securing order under law to themselves and all
nations;
33

32

And whereas the President of the United States of America has deter.
mined, pursuant to the Act of Congress of March 11, 1941, that the defense
of
the United
Kingdom
United
States of
America;against aggression is vital to the defense of the

And whereas the United States of America has extended and is continuing to extend to the United Kingdom aid in resisting aggression;
And whereas it is expedient that the final determination of the terms
and conditions upon which the Government of the United Kingdom receives
such aid and of the benefits to be received by the United States of America
in return therefor should be deferred until the extent of the defense aid is
known and until the progress of events makes clearer the final terms and
conditions and benefits which will be in the mutual interests of the United
States of America and the United Kingdom and will promote the establishment and maintenance of world peace.

And whereas the Governments of the United States of America and the
United Kingdom are mutually desirous of concluding now a preliminary
agreement in regard to the provision of defense aid and in regard to certain
considerations which shall be taken into account in determining such
terms and conditions and the making of such an agreement has been in all
respects duly authorized, and all acts, conditions and formalities which it
may have been necessary to perform, fulfill or execute prior to the making

of such an agreement in conformity with the laws either of the United

States of America or of the United Kingdom have been performed, fulfilled
or executed as required;

The undersigned, being duly authorized by their respective Governments
for that purpose, have agreed as follows:

Article I
The Government of the United States of America will continue to supply
the Government of the United Kingdom with such defense articles, defense
services, and defense information as the President shall authorize to be
transferred or provided.

Article II
The Government of the United Kingdom will continue to contribute to
the defense of the United States of America and the strengthening thereof
and will provide such articles, services, facilities or information as it may
be in a position to supply.

Article III
The Government of the United Kingdom will not without the consent of
the President of the United States of America transfer title to, or possession
of, any defense article or defense information transferred to it under the Act
or permit the use thereof by anyone not an officer, employee, or agent of the
Government of the United Kingdom.

Article IV
If, as a result of the transfer to the Government of the United Kingdom of
any defense article or defense information, it becomes necessary for that
Government to take any action or make any payment in order fully to protect any of the rights of a citizen of the United States of America who has
patent rights in and to any such defense article or information, the Government of the United Kingdom will take such action or make such payment
when requested to do so by the President of the United States of America.

Article V
The Government of the United Kingdom will return to the United States
of America at the end of the present emergency, as determined by the Presi-

dent, such defense articles transferred under this Agreement as shall not
have been destroyed, lost or consumed and as shall be determined by the
President to be useful in the defense of the United States of America or of
the Western Hemisphere or to be otherwise of use to the United States of
America.

Article VI
In the final determination of the benefits to be provided to the United
States of America by the Government of the United Kingdom full cognizance shall be taken of all property, services, information, facilities, or
other benefits or considerations provided by the Government of the United
Kingdom subsequent to March 11, 1941, and accepted or acknowledged by
the President on behalf of the United States of America.

Article VII
In the final determination of the benefits to be provided to the United
States of America by the Government of the United Kingdom in return for
aid furnished under the Act of Congress of March 11, 1941, the terms and
conditions thereof shall be such as not to burden commerce between the
two countries, but to promote mutually advantageous economic relations
between them and the betterment of world-wide economic relations. To
that end, they shall include provision for agreed action by the United States
of America and the United Kingdom, open to participation by all other
countries of like mind, directed to the expansion, by appropriate international and domestic measures, of production, employment, and the exchange

and consumption of goods, which are the material foundations of the
liberty and welfare of all peoples; to the elimination of all forms of discriminatory treatment in international commerce, and to the reduction of
tariffs and other trade barriers; and, in general, to the attainment of all the
economic objectives set forth in the Joint Declaration made on August 12,
1941, by the President of the United States of America and the Prime Minister of the United Kingdom.
At an early convenient date, conversations shall be begun between the

two Governments with a view to determining, in the light of governing
economic conditions, the best means of attaining the above-stated objec35

34

tives by their own agreed action and of seeking the agreed action of other
like-minded Governments.

Article VIII
This Agreement shall take effect as from this day's date. It shall continue in force until a date to be agreed upon by the two Governments.
Signed and sealed at Washington in duplicate this 23d day of February,

1942.

For the Government of the United States of America:
SUMNER WELLES,

[SEAL]

Acting Secretary of State of the
United States of America.
For the Government of the United Kingdom

of Great Britain and Northern Ireland:
HALIFAX

[SEAL]

His Majesty's Ambassador Extraordinary
and Plenipotentiary at Washington.

36

U.S. GOVERNMENT PRINTING OFFICE 1941

363

TREASURY IMPARTMENT

OFFICE OF -

December 11. 1948

COMPLEMENTAL

Received this date from the Federal Reserve

Beak of New York, for the confidential informaSien of the Secretary of the Treasury. compilation
for the week ended December 2, 1942, showing

dollar disbursements out of the British Repire and

French accounts at the Federal Reserve Beak of
New York and the means by which these expenditures
were financed.

(smit.) SM.B

inc:12/11/42

364
0

FEDERAL RESERVE BANK
OF NEW YORK

December 10, 1942

CONFIDENTIAL

Dear Mr. Secretary:

Attention: Mr. H. D. White

I am enclosing our compilation for the week ended
December 2, 1942, showing dollar disbursements out of the
British Empire and French accounts at this bank and the means
by which these expenditures were financed.

Faithfully yours,
/8/ L. W. Knoke
L. W. Knoke,

Vice President.
The Honorable Henry Morgenthau, Jr.,

Secretary of the Treasury,
Washington, D. C.
Enclosure

copy:imc 12/11/42

Strietty
Feek Endod December 2. 19/2

CREDITS

DEBITS

Sales of
Securities

Gov't

Total
Debite
1,793.2

PERIOD

First year of war#
ar period through
December 1940
second year of wart

3rd year of warth

Total

Expendi- Other
tureo(a) Debits Credits Gold
605.611.187.61 828.2 1,356.1

2,792.3
2,203.0
1,235.6

1,425.6
1,792.2

1,356.7

904.8

330.6

56.1
46.7

37.1

19.0

410.8

2,793.1

2,109.5

2.189.1

1.193.7

1.361,5

Sept. - Sept. 30

Oct. Oct, 28

Oct. Dec. 2
Dec.

Dec.

39.2

19.3

5.5

4.6

575.6

35.0

10.8

Other

tures ()

Debits
449.7

878.3

421.4

456.9

Total
Credits

of Gold

10950

900.2

1,098.4

900.2

Sales

274.0

722.1

- 13.2

38.9

4.8

34.1

8.8

21.8

5.5

1.334.2

+125.9

18.5

-

18.5

4.4

-

-

0.5

81.1

+ 25.5

10.1

-

57.5

10.8

10.1

77.3

+32.6

-

77.3

16.5

Lb **

Total
Debits
866.36

-

-

0.1

-

0.4

-

-

0.3

-

0.1

0.3

-

-

Other

Credits

Net Incr.
(+) or
Dear, (-)
in $ Funds (a)
229.0

198.2

+220.1

8.8

-30.1

4.4

- 14.1

0.6
0.3

- 9.7
. 0.3

0.3

0.2

30

NEEK ENDED:
18

12.8

6.0

6.8

12.6
21.0

8.4

1.0

23.3

25

7.4

8.4

4.3

4.1

20.4

10.1

Nov.10

Dec.

27.4
23.2

108.0

Credita(c)

Proceeds

Dov't

-

1972

81,6

(Official)(b)
52.0

Other

(+) or
Decr. (-)

FRANCE

CREDITS

DEBITS

let Inor.

Proceeds of

OF

BANK

BANK OF ENCLAND (BRITISH GOVERNG

Cc

+

ANALYSIS OF AND ACCOUNTS
(In Millions of Dollard

2

Average Weekly Expenditures Since Outbreak of War

France through June 19, 1920) 19.6 Cution
England (through June 19, 1940) 27.6 million
England (since June 19, 1940) 33.3 million

12.6

21.0
23.3

20.((d)

2.5

8.2

=

0.1

t.14.9

12.0

0.3

0.3

0.1

-

-

Transfers from British Purchasing Commission to

#For monthly breakdown see tabulationsprior to April 23, 1941
For monthly breakdown see tabulation prior to October 8g 1941.
appFor monthly breakdown see tabulations prior to October 14, 1942.
(See attached sheet for other footnotes)

Bank of Canada for French Account
Week
ended December
2. 1940
1942
Cumulation
from July 6,

162.7

million
million

+0.3
-0-1

(a)

Includes payments for account of British Purchasing Commission, British Air Ministry, British Supply Board, Ministry of
Supply Timber Control, and Ministry of Shipping.

(b) Estimated figures based on transfers from the New York Agency of the Bank of Montreal, which apparently represent the

proceeds of official British sales of American securi ties, including those effected through direct negotiation. In addition
to the official selling, substantial liquidation of securities for private British account occurred, particularly during the
early months of the war, although the receipt of the proceeds at this Bank cannot be identified with any accuracy. According

to data supplied by the British Treasury and released by Secretary Morgenthau, total official and private British liquidation

of our securities through December, 1940 amounted to $334 million.

(c) Includes about $85 million received during October, 1939 from the accounts of British authorised banks with New York banks,
presumably reflecting the requisitioning of private dollar balances. Other large transfers from such accounts since October,
1939 apparently represent the acquisition of proceeds of exports from the sterling area and other currently accruing dollar
receipts.

(d) Reflects changes in all dollar holdings payable on demand or maturing in one year.
(e) Includes payments for account of French Air Commission and French Purchasing Commission.

(f) Adjusted to eliminate the effect of $20 million paid out on June 26, 1940 and returned the following day.
(g) Includes $11.6 million deposited
by British
Ministry
of Supply,
of which
$8.6facilities
million represents
the purchase
from
the British
of ship
building
in the U. U.
S.S. Government check covering
5.0 million transferred from Commonwealth Bank of Australia account here.
2.3 million to be held for credit of U. S. armed forces abroad.

Strictly

ANALYSIS OF CANADIAN AND AUSTRALIAN ACCOUNTS

(In Millions of Dollars)

DEBIT

BANK

Proceeds

to

PERIOD

Official
British
A/C

of

Other
Debits

DEBITS

CREDITS

Transfers
Total
Debits

COMMON BANK OF AUSTRALIA (and
Australian Government
CREDITS

CANADA (and Canadian Government)

OF

Total

Gold

Credits

Sales

Transfers

Transfers from Official
British A/C
For Own

For French

A/C

A/C

Net Incr.
(+) or
Dear. (-)

Other

Credits

31.2

3.9

57.9

14.5

First year of eart

16.6

306.4

504.7

412.7

20.9

38.7

16.6

460.6
460.4
525.5

707.4
462.0
566.3

534.8
246.2

20.9

110.7

41.0

230.2

December 1940

477.2

3.4

123.9

198.6

7.7

88.5
360.0

46.3

53.6

13.2

44.9

51.5

16.6

13.7

65.2

11.0

Oct. - Oct. 28

Oct. 29 - Dec. 2
Dec.

3

Dec.

44.9
43.7

-

-

-

-

-

-

40.4
34.9
54.2

A/C

Proceeds
of

Other

Total

Gold

Other

Debits

Credit

Sales

Credits

27.3

36.1

30.0

6.1

44

43.4

62.4

50.1

12.3

+4.5

62.9

18.3

17.2

95.0

-5.0

18.1
14,6

+0.3

1.6

72.2

16.7

55.5

81.2

40.5

107.2

57.4

49.8

112.2

7.3

28.0

20.5

7.5

18.1

6.6

14.3

12.0

2.3

14.6

5.0

2.4

9.3

21.5.

7.4

Net Inor.
(+) or
Dear. (-)

-

-

9.3

9.0
-99
+1.9

30

WEEK ENDED:

Nov 10

12.5

18

3.6

25

Dec.

-

-

Sept. Sept. 30

46.3

e

1942

-

0.3

-

+

-

.

460.4
525.8

Total
Dabita

$23.0

year of wares
mind year of ware+o

to

Official
British

Dr Pendi
181.7

32.4

ar period through

Confidential

Heek Ended December 2, 1942

12.3
15.3(G)

12.5

19.8

2.8

3.6

142

2.8

16.4

2.6

14.3(b)

2.8

12.3
15.3

17.0
11.0
13.8

11.5(c)

+ 7.3

1.1

11.1
4.1

0.5

- 1.0

-

1.1

1.3

0.3

-

0.5
0.3

Oats

S.S

5.0

0.5

2.1(d)

A

5.5

-

1.3
Oak

5.5

2.1

Weekly Average of Total Debi Since Outbreak of
War
million
8.4
Through December 2, 1942 U

For monthly breakdown see tabulation prior to April 23, 1941.

##For monthly breakdown see tabulations prior to October 8, 1941.
seeFor monthly breakdown see tabulations prior to October 14, 1942.
(a)Reflects changes in all dollar holdings payable on demand or saturing in one year.

(b)Does not reflect transactions in U. S. Treasury bills.
(c)Includes $10.6 million deposited by War Supplies, Ltd.
(d)Includes $2.0 million credited to Australia for account of Treasurer of Uni ted States

be

applied aga inst U. S. currency and Treasury checks negotiated,

+0.2
-0.1
+5.2

-3.4

368

DEC 1942

by dear Mr. Secretary:

Discussions have been taking place during the la t few
weeks between officials of this Department and Mr. Roward 11.
McClure, Assistant Director, Consulta Bureau, in your Depa risent,
regarding the changing to a reimbursable basis the work done

by that Division in furnishing us statistical tabulation of

United States exports to, and imports from, approximately 46
areas whose funds are at present frozen under Executive Order.
Under the present arrangement we are compensating you for

this project with three statistical clerks (grades CAF-3, $1620)
who work in your Department but remain on our pay roll. Mr. Mediure

estimates that the additional cost involved in the operation of

sorting, tabulating and photostating the reports COMES to $950 a
month and be has requested our consideration for a reimbursable

arrangement of this work in the future.

lie feel that we cannot at this time enter into an arrangement
that will require as to spend 6950 a month for the tabulation of
these data. Under the circumstances, we request you to terminate,
as of December 31, 1942, the preparation of these data for our
particular use.

It is our hope that from time to time we shall be able to

have those members of the Division of Monetary Research of this
Department who have been granted access to the Bureau of the Census

confidential trade files copy such data as we require from the re-

cords in the Census Bureau.

Sincerely,
(Signed) H. Morgenthau, Jr.

Secretary of the Treasury.

Photo file in Diery
The Honorable,
The Secretary of Commerce.
12/7/42

Orig. file direct to
White's office

By Mess Givens
4:27
12/11/42

OFFICE OF

THE DIRECTOR

DEPARTMENT OF COMMERCE
BUREAU OF THE CENSUS
WASHINGTON

September 1, 1942

Dear Mr. White:

Reference is made to your letter of July 29 requesting
that the report you have been receiving on the foreign trade of
the United States with selected countries during each 10-day
period be revised so as to drop trade with Burma and to add

trade with British India.

In this connection we have recently completed an

investigation of the cost of preparing the 10-day reports for
the selected countries. We find that the present cost is

approximately $750 and that the added cost resulting from dropping Burma and adding British India is approximat tely $200. The
cost of adding the one country to the tabulation is high because
of the large number of punch cards involved.
We are compensated for this job at present by an

allocation of three clerks to us by you, equivalent to approximately $450 per month. Since your present allocation does not
cover the direct cost involved in sorting, tabulating and photostating the report, I should appreciate your giving consideration
to a reimbursement arrangement for this work in the future.
Sincerely yours,

line

J. C. Capt

Director

01

26cc

Mr. H. D. White
Director of Monetary Research

037.30SM
CHARGENT

Treasury Department
Washington, Dr C.

to polatvia
donamenti

370

TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION

DATE November 27, 1942

Secretary Morgenthau

TO

Mr. H. D. White

FROM

For the past eight months the Department of Commerce

has been furnishing us statistical tabulation of United
States exports to and imports from blocked countries. In

compensation for additional costs we allocated three
statistical clerks (grades CAF-3, $1620) who remain on our
payroll.
Commerce has made a new estimate of the cost and now

requests that they be reimbursed on a cash basis of $950 per

month.

These reports are useful to us in our current work since
these figures are the best up-to-date trade data available.
We also distribute this data, after processing, to the

following:

(1) Studies go to the President, the State Department,
office of Strategic Services (Colonel Donovan) and
to you;

(2) A memorandum on Russian military exports goes to
the combined Chiefs of Staf and to you. Although
the combined Chiefs of Staff have the same material
available from Commerce, they find our summary

tables useful and helpful.

(3) Tables on exports to a selected group of countries
go to Military Intelligence Division and Naval
Intelligence Division.

infucial job a 4 mm/dd
mus twice used figines for
glance's position in data
Possible ti get only data Say to President

371

NOT TO Be RE-TRANSMITTED
COPY NO.

13

BRITISH MOST SECRET
U.S. SUCRET

OPTEL No. 129

Information received up to 7 A.M., 11th December, 1942.
1. NAVAL

MALTA. A convoy of 2 ships from Eastern Mediterranean arrived
safely yesterday. One of H.M. Destroyers had reached ORAN safely. One of H.M.
Submarinos sank a 1850 ton ship north of CORSICA on the 2nd. Another of H.M.

Submarines reports hits on 4 ships near BIZERTA of which 1 sank.
2. MILITARY

TUNISIA. 8th. Steady pain restricted operations to active
patrolling. Reconnaissance reports confirm no enemy west of a line MASSICAULT
to PONT DU FAHS. Prisoners report Germun morale low and ammunition shortage.

Attempts are boing made to mobiline Italiana of military age in TUNIS. Weather
also restricted air activity on both sides. Reported main street BIZERTA being
used as runway by Axis aircraft.
3. AIR OPERATIONS

heSTERN FRONT. TURIN. 9th/10th. About 143 tons of H.S. including
49 4,000 1b. bombs and 245 tons of incendiaries were dropped in good weather,

but torn partly hidden by ground haze and smoke. Accurate identification therefore difficult and illumination by flares somewhat hampered. Nevertheless,

towards end of attack 3 specially large fires reported near railway station and
Fiat works and at least 12 major fires counted with concentration in centre of

town. Defences strengthened, but still ineffective. 10th/11th. 17 enemy aircraf
were operating, mainly off the YORKSHIRE Coast, one destroyed by Benufighter

TUNISIA. 9th/10th. 5 Malta Wellingtons attacked TUNIS docks 10th.
4 Beaufighters bombed SOUSSE, hitting A warehouse and cargo on the quay side and

starting a large fire. 4 Beaufighters destroyed one and probably destroyed two
enemy transport aircraft 100 miles south of MALTA. 2 of our aircraft are missing