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Book No. 598
CONTINUED
FROM
PAGE 305
THE SECRETARY OF THE TREASURY
WASHINGTON
Mr. Donald M. Nelson
Chairman,
War Production Board.
Dear Mr. Nelson:
Pursuant to the Provisions of Section 1(b)
of the Act of December 13, 1942, (Public Law No. 815,
77th Congress), consultations have been held at which
representatives of this Department and representatives
of your office have discussed the problem of coining a
one-cent piece out of such materials as will operate
to conserve strategic metals in furtherance of the
war effort.
A plan has been adopted for the use of steel
with a coating of zinc in the one-cent niece. If you
agree that the use of such meterials will operate to
conserve strategic metals in furtherance of the war
effort, will you please signify your approval by
signing the notation at the foot hereof and returning
the same to me.
Very truly yours,
Secretary of the Treasury
DO him
Chairman of the
War Production Board.
THE SECRETARY OF THE TREASURY
WASHINGTON
Mr. Donald M. Nelson
Chairman,
War Production Board.
Dear Mr. Nelson:
Pursuant to the Provisions of Section 1(b)
of the Act of December 13, 1942, (Public Law No. 815,
77th Congress), consultations have been held at which
representatives of this Department and representatives
of your office have discussed the problem of coining a
one-cent piece out of such materials as will operate
to conserve strategic metals in furtherance of the
war effort.
A plan has been adopted for the use of steel
with a coating of zinc in the one-cent piece. If you
agree that the use of such meterials will operate to
conserve strategic metals in furtherance of the war
effort, will you please signify your approval by
signing the notation at the foot hereof and returning
the same to me.
Very truly yours,
SE
Secretary of the Treasury
Approved:
Chairman of the Ohlum
War Production Board.
31
CHAPTER I,
ARY OFFICES
PART 101, SECRETARY'S ORDER PRESCRIBING
TYSICAL PROPERTIES OF
1-CENT PIECE.
HEREAS, the Act of December 18, 1942, (Public
No. 815, 77th Congress) provides in part as follows:
Sec. 1. " (a) There shall be included amon, the
coins of the United States one or more special
series of coins: Provided That the coinage,
issuance, and circulation of the coins provided
for by this section shall be subject in all
respects to the conditions, terms provisions,
limitations, and exceptions specified in sub-
sections (b) to (j) hereof.
(b) No denomination or series of coins
provided for by this section shall be coined
unless and until the Secretary of the Treasury
shall have issued an order th t shall (1) orescribe the particular denomination or series,
stating the pertinent physical properties, including content weight, dimensions, shape, and design:
Provided That in determining such physical properties the Secretary shall take into consideration
the use of such coins in coin-operated devices;
and (2) state that he has determined, after consultation with the appropriate officials charged
with the production of war material that the
coinage and circulation of the particular series
will operate to conserve strategic metals in
furtherence of the war effort.
(c) There shall be no coinage pursuant
to
the provisions of this section after December 31,
1946.
(d) The coinage provided for by this
section shall not be of other denominations than
1-cent piece and 3-cent piece and the amount of
coinage of each such denomination shall be prescribed by the Secretary of the Treasury.
(e) Each denomination of coins provided
for by this section shall constitute a series:
Provided, That if one denomination is coined in
more than one physical form or composition, the
=
--
307
pieces of each different physical form or composition shall constitute a separate series.
(f The coinage provided for by this
section shall be in pieces of such metallic, or
other or different content, weight, dimensions,
shape, limits of tolerance, and design (including
devices and le ends) as the Secretary of the
Treasury may by regulation prescribe for the particular denomination or series: Provided, That no
silver shall be used for the coinage provided for
by
section except as specified in subsection
(g) this
hereof.
For the coinage of any series, the
Secretary of the Treasury is hereby authorized to
allocate to the Director of the Mint, at such times
and in such amounts as the Secretary of the Treasury
deems necessary, any silver bullion in the monetary
stocks of the United States not then held for
redemption of any outstanding silver certificates.
Silver contained in any pieces coined under section
1 of this Act shall be accounted for by entries
in the fund established for the purchase of metal
for minor coinage: Provided, That the value of any
silver bullion accounted for in said fund shall not
be considered for the purpose of determining the
statutory limit of said fund: Provided further,
That the gain from the coinage of silver hereunder
shall be accounted for by entries in the minor
(g)
coinage profit fund. If any series is coined of
silver or in part of silver, the pieces of said
series shall nevertheless be deemed to be other
than silver coins, subsidiary silver coins, silver
coinage, or subsidiary silver coinage within the
meaning of the monetary laws of the United States.
" (h) The coinage provided for by this
section shall be minor coinage, and the provisions
of amended section 3528 of the Revised Statutes
(U.S.C., title 31, sec. 340) shall apply with
respect to any necessary purchases of metal or
other material for the coinage provided for by this
section: Provided, however That contracts for
said purchases may be entered into in accordance
with the provisions of title II of the First War
Powers Act, 1941 (55 Stat. 839; U.S.C., Supp. 1,
title 50, aop., sec. 611).
308
-3"(i) For the purpose of amended section
3529 of the Revised Statutes (U.S.C. title 31,
sec 341) the coinage provided for in this section
shall be in the same category as the minor coins
referred to in said section 3529.
(j) Except as provided in this Act, the
coinage provided for by this section shall be
subject in all respects to the monetary laws of
the United States, including, but not by way of
limitation, the laws pertaining to counterfeiting,
to legal tender, and to the distribution, exchange,
and redemption of coins and currency.
"Sec. 2. During the period when the coinage provided for by section 1 of this Act may be coined
the Secretary of the Treasury is hereby authorized
in his discretion to cause the coinage of any or
all of the other minor coins to be suspended for
the whole of said period or for any part or parts
thereof.' ;
and
WHEREAS, I have determined, after consultation with
the Chairman of the War Production Board, that the coinage
and circulation of the 1-cent piece hereinafter described,
will operate to conserve strategic metals in furtherance of
the war effort, and
WHEREAS, in determining the physical properties of
the 1-cent piece hereinafter described, I have taken into
consideration its use in coin-operated devices;
NOW THEREFORE, I, HENRY MORGENTHAU, JR., SECRETARY
OF THE TREASURY, do hereby order that until further notice,
or until December 31, 1946, whichever shall first occur, the
1-cent piece coined by the United States mints, shall have
the following physical properties:
309
-4It shall be composed of steel with the obverse
and reverse sides covered with a coating of
00025 inches of zinc.
1.
2. It shall weigh 41.5 grains.
3. It shall have a diameter of .750 inches.
4. It shall be in the shape of a disc.
5. It shall not vary in weight by more than 3
grains; it shall not vary in diameter by more
than .002 inches: and the zinc coating shall
not exceed .001 inches.
6.
It shall contain the same design, devices and
legends as those used since 1909, for the 1-cent
piece coined pursuant to amended section 3515 of
the Revised Statutes (U.S.C. title 31, sec. 317
After January 1, 1943 and during the period in
which the above described 1-cent piece is coined, the coina.e
of 1-cent pieces pursuant to the provisions of amended section
3515 of the Revised Statutes (U.S.C. title 31, sec. 317 shall
be suspended.
This Order may be modified or revoked at any time.
Secretary of the Treasury.
DEC 2 3 1942
310
TREASURY DEPARTMENT
M
INTER OFFICE COMMUNICATION
DATE DEC: 3 1942
TO
Secretary Morgenthau
FROM
Randolph Paul
Re: Harold Thomas
You have inquired as to the advisability of having Harold
Victory Fund activities.
Thomas do a few months' work in connection with War Bonds and
The files of Foreign Funds Control contain the following
information concerning Harold Thomas:
(1) He is a native-born citizen of the United States who
has been employed by the Centaur Company, a wholly
owned domestic subsidiary of Sterling Products,
Incorporated, of Delaware.
(2) The Centaur Company was formerly an independent com-
pany, and is engaged in the manufacture of proprietary
medicines in Atlanta, Georgia, with head offices at 80
Varick Street, New York City.
(3) The Sterling report indicates that the Centaur Company
was one of the 74 domestic subsidiaries of Sterling
which, because of the nature of its business and the
apparent absence of contact with the Germans or with
the export business, was not investigated.
(4) The report on Sterling Products gives no indication as
to the nature of Mr. Thomas' functions. His salary was
$30,000 per annum. In all probability he was taken over
by Sterling Products along with the rest of the management of the Centaur Company.
(5) No personnel questionnaire was requested of or filed by
Mr. Thomas. He is not listed among those Sterling
Products employees who took trips to Europe, and he
was not included among the persons whom it was recommended that Sterling release.
311
-2- -
We have conducted an intensive investigation of Sterling
Products in the United States. As you know, before the war
Sterling Products, which is entirely American owned, was
actively working with I. G. Farben in the South American field.
However, the domestic business of Sterling Products was handled
on an entirely separate basis and there is no evidence of any
German influence in the Sterling Products domestic subsidiaries,
such as the Centaur Company.
Our investigation gives Sterling a clean bill of health as
far as its present activities are concerned. We are presently
conducting an investigation of Sterling in Latin America, Nothing
has so far been developed in the Latin American investigation
which reflects on Sterling Products' present position.
Gaston, Graves, Pehle, and I discussed this matter, and
none of us seesany objection to using Thomas for the work contemplated.
BEY
312
December 23, 1942
My dear Eleanor:
We used to have a voluminous
correspondence with Alfred Bergman,
and I simply had to stop answering
his letters. If you do not mind,
I suggest that you do the same;
otherwise, you will find he will be
writing you several times a week.
Affectionately,
(Signed) Henry
Mrs. Franklin D. Roosevelt,
The White House.
By Mess. Bundy 3:35 12/23
(Note attached saying
to Sorenson & Lehman
not sent to Secy of Treasy
313
Mrs flotz
Miss Chauncey
Mrs. McHugh
Mr. McHugh
Only 3 enclosures read here.
Copy of 1tr to GDV. Lehman and ltr to Col.
Sorensen not attached. hm
MRS. FORBUSH
ROOM 470
314
THE WHITE HOUSE
WASHINGTON
December 18, 1942.
Dear Henry:
Mr. Bergman does not seem to
be much affected by the Treasury not
hiers ?
considering his services. Here he is
back with more and I am just sending
this over for you to show your people
in case it has a germ of idea which
might be useful.
Affectionately,
M.R.
WAR DEPARTMENT
HEADQUARTERS. SERVICES OF SUPPLY
WASHINGTON, D. c.
December 17, 1942
SPPRW
PERSONAL
Mrs. Franklin D. Roosevelt,
The White House,
Washington, D. C.
Dear Mrs. Roosevelt:
I am enclosing herewith a recent report on conversation
with Dr. Somary on the North African Campaign and immediate help
necessary, as well as his report on inflation possibility, together
with the report taken from the Newer Zurichen newspaper of July 14,
1942, submitted to me by Dr. Jeidels, another expert on Germany,
and extract from the PM of December 16, 1942.
As you know, Dr. Somary is considered one of the greatest
inflation experts in the world, along with Dr. Schacht of Germany.
I believe that his background and experience is probably one of the
best in the world today, and I hope that we will take advantage of
what, he has said in order to prevent a catastrophe in this country
through inflation, which seems to be now well on the way.
As you see from the report of July 14 from the Newer
Zurichen newspaper, the Germens in spite of three years of war have
able to stabilize cost of living to a much better extent than
we been have. They have only done it by facing possibilities and by taking
adventage of their past experience.
also enclosing a copy of a letter I wrote recently
I Lohman, am Federal Director of Foreign Relief, with information the last
to Governor subject from Dr. Somary who was with Lord Beveridge in his
on this equal status as e distributor of food. Here again only be
war experience on an can be invaluable to us as these matters cen
learned through years of experience.
also including a letter to Col. Sorensen, Asst. Chief
of Air Staff, I Am A-2, on bombing targets. These are also some industrial-
ists on my staff.
Out of the 60 experts, comprising leading have industrialists, Nobel Prizes,
bankers, etc. of Europe, some of whom has.
we scientists, are able to answer nearly Every Problem The Government
This includes information on manpower, food, armaments, as
VICTORY
well as every other subject of war.
Sincerely,
BUY
ALFRED BERGMAN
December 17, 1942
SPPRW
MEMORANDUM FROM: Mr. Alfred Bergman
Chief, Industrial Information Unit,
Conservation Branch, Production Division.
SUBJECT:
North African Campeign and Inflation
1. I have just had the pleasure of lunching with Dr.
Felix Somary at the Army-Navy Club. He informs me, from his
information, that the most important time of the war up until
now is the present moment.
2. The question of holding Tunisia is absolutely vital
and it should be held at any price. All possible aviation should
be rushed there from England or anywhere else as the next three
or four weeks will decide whether it is to be a long or short war.
Every effort should be made by the Americans to hold and take more
territory, and more reserves and planes should be sent there until
the British cen come up, by all possible means.
3. Dr. Somary feels that General Rommel has made a rather
clever retreat, from Dr. Somary's limited information on this
subject; Hitler is going to try to hold Tunisia at all costs
because if Tunisia is lost, invasion of Italy will be quite
possible.
4. He suggests that we send all possible ermanent to the
French forces that might be available at this time.
5. INFLATION POSSIBILITY. Dr. Somary and Dr. Schacht
are considered the two outstanding experts of Europe on financial
matters. Dr. Somary informs me that he considers inflation very
near, and certainly if the war goes on for another six months.
Dr. Schacht in his autobiography mentions Dr. Somary
the one man from whom he learned 8 great deal on financial
as metters and infletion. Dr. Somary, besides being an international
banker of great renown, was Professor of Political Economy at the
Zurich University.
6. Dr. Somary states that the only way out is the
following:
All members of the Army and Navy, all workmen, farmers, cash
else should receive two-thirds of their pay Although in
and and one-third everyone in bonds, payable at the end of the war. to stop
this might not be a popular measure, it is the only way
spending and prevent the rise of prices which means a catastrophe
of inflation.
2
The soldiers returning from the war will need this
money saved to re-establish themselves, AS well as the workmen
who are making big salaries et this time but who will be reduced
later. The hardship on the armed forces should not be too great
and may prevent a great deal of trouble when they return.
7. A spending tax would be even more unpopular, and if
it came at this time it would be too late to prevent infletion,
and would necessitate an enormoya organization.
Why play with when WT have Elects
3
Cost of Living Index at 20- Year Peak, Going Higher
Despite Controls, the
Top Not Yet in Sight, Especially on Food, Clothing
COST OF LIVING IN THE UNITED STATES
929-100
By Lzo J. MARGOLIN
The of living today is at its highest
20 years and it's going
SUNDRIES
based on the findings of the Na-
Industrial and the
DO
Labor Dept.
the higher
Their figures differ slightly, but the trend
W
ceiling In sight, particularly in food
and
From September to date,
increased
To
CLOTHING
two
graph.
the
that
what
pay
boys
quality
quantity
Price
the
living
of
breaking
and
The
through
the
tremendous
FOOD
money it profits
the
sums
the
1929
On the Way Up
1932
1931
1933
1934
1935
327
1938
1939
These wavy lines simply say that the Cost of Living between 1929 and 1912
heavy
Here's how the whole cost of living pic
ture looks in figures, which have
dollars but per
arbitrary
black
line
through
goes
the
this
of
top
Note
page.
the
1940
wang
1941
until
higher
Europe
program
and inflation reality and
more
of
found
to
take
the
country's
pur-
food,
clothing
ceiling
ing
designed to siphon off
1939.
very
thing
which
the
of
7.9
and
the
in
was
the
Strangely enough, the Increase taxes
rest
the
While
Inc.
the
in
are
power.
cost
index
the
points
in
raised
the
in
last
The tobacco tax raised the cost of
New
Although
jump
York
indus-
housing
wo-tentla
It
of
a
1941. spiralled
the
sent
Board,
and
the
how
and
up
all the lines sharply upward in 1941.
1939
9m
1930
cost
point.
points
5%
Price Rises Caused by Shortages Can Be Stopped
the
for
only
but
fraction
September,
1942
the up risc.
Today the Conference Board charts
by
that the purchasing value of the dol
decreased from 107 6 cents to 99.7
Costs Boosted
Here are some of the Index jumps
from November, 1941, to November, 1942
Detroit
Up 8.4
Eric, Pa.
Up 11.5
Los Angeles
Up 8.4
Oakland Calif
Up 11.4
Portland Ore.
Up 9.6
Toledo, O
Up 10.8
San Francisco
Up 12.4
Seattle
Up 9.8
Up 9.4
N.Y.
Shortages and high prices go hand in
hand Only rationing can restore the balbetween supply and demand when
tions
The situation in footwear shows there
will be enough shoes for all next year if
at
substantial
worsteds and denial COBexisting low level.
present
Clothing presents diffic
that
Consider rayon, cotton and worl separately.
emergency arises if it should
next summer.
labor and machines in the industry are being
there more than nough wool, to satisfy
male civilian demand. He also thinks that
quotas for blended fabrics are hurting the
Against this is the considered opinion of
the International Ladies Carment Workers
Union that there sensible need for
worked to capacity. Civilian cotton needs
curtailed 30 per cent in 1942. Further
inroads may be expected in 1943, inroads
rationing of wool clothing.
greatly dependent on if factors.
keeping the stock pile inviolate and antici-
Wool are dependent on imports of
It predicates its seasoning on the need for
pation of increased Government buying during 1943.
argues that the wool manufacturers
tary
for
economist for the Amalgamated Cloth-
ing (men's wear) holds
industry.
Cotton: There is plenty of raw cotton, but
wool to satisfy combined civilian and milifor
lothing since the de-
mand been for all wool garments,
planning can avoid
measure to be instituted long before an
40,000,000 for the military.
Next year, the industry feels confident it
retailers are afraid to stock
intelligent
Rayon: Heavy war demands,
pairs for civilian use and
it from the business angle, he
problem. But here, despite often con-
with chemical and other material
might make rationing advisable some time
90,000,000
another
in the mills are greatly relieved
for buying should suffice
ing shortages.
pairs
40,000,000
South
Board restrictions on pro-
planning can avert serious cloth.
850,000,000
from
imports
build
up
there be no ared of rationin
complete
But
that
stock up; doesn't buy that extra unneeded
pair of shoes in fear of possible shortages.
This year, the Industry will manufacture
The
of
abnormal. Here is the situation as it exists
There is no crisis in footwear. There
will not be one If the consumer doesn't
safety allow the pres-
large
Austra
public
need
today in shoes and clothing and the outlook
Rationing is regarded a protect
Economists whole business to a
being filled live steam and an
the
peacetime.
there
rather than desires.
Up 10.5
on
But style does not mean the lavish varia-
supplies become short or demand becomes
The public buys in terms of need
places:
Syracuse,
Me
siderable style.
for the next year.
A survey shows that sound psychology
The cost of living is especially volatik
those cities bulging with war contracts
Baitimore
America for health
and comfort and cod
By Sano-Buying,
Planning
or Prompt Rationing
By LUTHER CONANT, J.
But have large current commercial
stocks and a Government stockpile, said to
be large, although exact figures are military secret.
One economist believes that the time
dip into that stockpile. He says
that
hand
have decreased production by refusing to
utilize fully their quotas on blended fabrics,
The report concluded:
hardly seems possible that anything
short of prohibition of the manufacture
fabrics made entirely of wool would
some assistance in increasing fabric
1943
pound
TOMORROW The Shortages and Rationing.
GERMAN PRICE POLICY IN WAR
CREATIVE
Propered Industrial ornation Unit
Airred Berman Chief
Price development in this war shows remarkable stability for
Germany. The Federal Statistical Office's index for wholessale prices
shows an increase for the 1939 average to April 1943 of from 106.9 to
113.8, or 6.5%. In the same period the Cost of Living Index rose a
little more, i.e., from 126.2 to 136.6, or 8.2%. The periodical
"Economy and Statistics" ("wirtschaft and Statistik") of May 5, 1942
contrasts this with some enemy, neutral and allied countries B8 follows:
Rise in Frice Index in Percent, Liar, 1942 Against Aug. 1939
Great Britain, February 1948)
Prices
Prices
Cost of
Living
6.1
56.4
92.1
65.8
67.3
63.6
4.9
18.8
48.5
40.8
55.7
6.8
28.4
37.5
39.6
46.4
Wholesale
Germany
Great Britain
Switzerland
Sweden
Hungary
U.S.A.
Food
-
-
The stability in Germany is partly due to the elimination of foreign
imports with high international prices, and partly to the introduction of
total price control at an early date and in . rigorous manner. In spite
of all scepticism with regard to price and cont-of-living statistics and
of the reservations one must in such times oppose to their validity,
particularly in view of the "invisible" price rise where inferior quality
is sold at undiminished prices, the German price policy deserves to be
called B success. This success seems the more remarkable if one considers
the over-growing "discrepancy", particularly in the sector of civilian
a
consumption, "between the monetary and the commodity side of the economy*,
as 19 is called in German official utterances.
One of the reasons for the success of the Government in its effort
to neutralize the effect of monetary expension on the price level, is
that the normal discipline of the population has been backed up by the
whole energy end rigor of R totaliterian administration of private as
well as public effairs. Another explanation is offered by the early and
rigid wage-oeiling ("Lohnstop") unforced LD drestic panner which rendered
it much ecsier to hanage the "wage-sorex" when it went into action in the
course of time. The policy of stability has elso had a strong support b
the creation of at "second monetary instrument" in form of ration cards for
food and practically every actionidy for civilian consumption. This
"seeond noney" sterilized the purchasing power of the regular money of-
fectively. Lastly, one should not underrate what it neans that, ha BO
many other institutions of G wur economy, prico control and wage control
had long been well practiced instruments alroady before the war, and did
not need to be hastily improvised when the war broke out.
Psychologically, the motives for German price control and policy in
past pesce- and recent certainly been influenced by the
recollection of inflation during and after the last wer. The NationalSocialist Government hns systemstically kept this recollection alive end
at the safte time has promised that it would not happen again: Price
policy and currency policy are all along presented as inseparable, and the
new Price Commissioner Dr. Pischboock, appointed at the end of 1941, has
emphasized that recently in speeches and writings. The object of price
policy, he said in an address in Danzig in May which has fundamental
significance, is to maintain confidence that in coming years, with money
3-
321
saved and withheld from being spent BOX, one will be able to buy et presons
OF even lower prices; in thin senne price policy BRIST be the basis of war
finanon.
Within this fairly ntable price structure, however, some remarkable
developments are taking place. If one regerds the crice structure as e
whole within the total WAT economy, one corer across three sectors where
actual urice olicy acto according to different principles and with different results. There in (1) the meator of industrial production in which,
with the drostic curteilment of consumers foods output, artensent pro-
duction is the determining Snotor. There is (2) agriculturel production
and with it, na subject to similar nocessition, production of some vital
rew materials like nonl and iron. And there is (3) the Consumers Sector.
Characteristic of the Artiament Sector is that here the numerous factors
tending towards price increase, rs the use of new FAW materials and of less
skilled labor, higher transportation cost, etc. can be largely compensated
by rationalized industrial methods. Here, the Government, prnotically the
sole customer, can diotate pricon to BY Frest extent. This pressure on
prices has become heavier since the introduction at the end of 1941 of the
now nethod of "fixod uniforn" rices and of "group" prices which the N.E.Z.
has described in No. 464, March 22, 1942 under the title "The rixed Price
in German Mar Equipment". By abendoning the original method of individuel
prices according to individual costs and replacing it by uniform rices 08-
tablished after the standard of E "good the Government is
(
reported to have achieved A price reduction in the erment industry of
10% on the everage.
Quite different developments took place in agricultural commodities
and other primary produce. Here the economic low of declining productivity
-
makes itself felt, while retionalizing methods ns in industry have only
limited application ER compared with the tendency of rising costs for
the unit of production. Here the Government has been compelled to
abandon the ricid rice stop" and to let the "price-incentive" operate.
Such rise in Agricultural prices hus, however, only in exceptional cases
been borne by the consumer. The principul exceptions wore an increase in
retail price for milk by 2 7 lonnig B liter end 20 I fennig for B 'pound of
butter alreed in Karch 1940. In most CR388, however, the increase were
either absorbed by the form marketing groups or pold by the Government,
which meant by the community of taxpayers.
The "Federnl Farmers Corporation" (Reichanzehrstend) hea provided
from the stert the establishment of Compensation Hoards (ausgleichukussen)
to take up regional And seasonel price differentintion without allowing it
to effect retail consumer prices. Equalization in generally effected within the special sectors, the grain soctor, the milk and fat sector, etc.;
but in other anses quite erbitrarily groups of Apriculturel producers with
good earning cannoity are called upon to compensate loss fevorably situnted
lines; for instence, the brewery sector and to cooperate in R price
improvement for the growers of rye, the largest group in the gruin sector,
and Glone in 1940 - Inter aggreguto figuren are not available - not much
less than 3100 million were. in this nanner alifted within the farmers
community.
These cases where one producer group WIN compensated by another have
become very nunerous in 1942. Frice ndvincen were thus granted for
potatoes, hogs and oilaneda, but here the Government itnelf pe1c the dif-
forenan to avoid e rise in living costs. hen pricen thin spring were
revised to livestock growers for beef cettle and sheep, the Government
paid for it indirectly by abolishing the slaughter tax. Distribution of
such price adjustments is in the hands of the Reichannehretand, a kind
of A.A.A. on Nazi principles. The magazine "Deutsche Volkswirt" (German
Boonomist), in en article of March 6, 1942, estimates this kind of price
adjustment not reaching the consumer at about $300 million last year, and
it certainly will not be less than $400 million this year 1942.
In spito of much considerable fiscal subsidy for food producers, farm
interests have appealed recently to the Government to close the "price
scissor" which is the German expression for perity prices. Dr. Hermann
Reischle, head of the Naxi Perty's Agricultural Sector, has advocated in
speechen and in newspapers irzediate notion against what he calls the
"cartel system of frozen industriel pricea". The Government, however, has
not ROGEDED to such requests for adjustment of form to industriel prices
now, and refers agriculture to post-war developments.
The Government is equally negative on an increase of the price of coal
and steel demanded by heavy industry. Ageinet the irrefutable arguments that
less productive sources of ruw material have to be tapped, that the foreign
labor largely used in the heevy industries is inefficient and expensive,
and that costs have risen for many reasons, the Government sets the possibility
for integreted enterprise, which prevails in this industry, to make up in
the leter processing stages for sacrifice in the earlier stages. All the
Government has done is to raise the price of conl for export to neighboring,
occupied or neutrel countries, and allows aoal mines to benefit therefrom.
The third sector, the consumers camunity, has edopted under the new
Price Commissioner 6 policy of "ecompensating price reductions" which is
based on the following logic. Certain goods, since the beginning of the
war and for various reasons, have gone up in price; the standard cost of
living, however, must not be allowed to rise, because way finance is
edicated on the absorution of purchasing power by seving, and money
thus saved MUST be able to roly on stable value of the money, which
joens unimpaired purchasing power for n later date and therefore stable
prices on the average; therefore, if some prices rise, prices of other
commodities and services have to be reduced. There has been a good deal
of discussion about it; 10 is being argued that the price is not really
prejudicial in times of searcity of goods, 1 production meaning higher
costs and prices for the moment, that higher prices effectively deter
berand which is undesirable at present, etc. but the irion Commissioner
orgues that higher prices ROAD shifting of purchasing power from consumer
to producer and not absorption of purchasing power, and he insists that
increased prices must be compensated by reduction of others.
Prectically the problem has not yet been nolved. Some prices of
consumer goods have been reduced like beer, electrical lemps and similar
commodition with more of . psychological then a material effect, because
most of these goods are scares or not available at all. It is therefore
now under contemplation to reduce house rents, . mensure which would DO
doubt have BOTTO effect on the cost of living, but it raises other questions
and objections which up to now seen to find rather strong support.
11/2/48
December 23, 1942
325
HIGH-LIGHTS OF THE WAR NEWS
(11:00 A. M.)
The Far East
1.
Netherlands East Indies - British planes operating
from the Bay of Bengal, bombed the northwest tip of
Sumatra in the Netherlands East Indies (660 miles
from Singapore) and damaged the fueling base of Sabang.
The R.A.F. softening up objectives for ground forces,
again bombed Akyab: then swept over regions along the
Myittha River.
3.
A few Jap aircraft again retaliated by bombing Calcutta.
4. British revealed weeks ago that it now has a powerful
fleet in the Indian Ocean.
2.
Russia
1. The Don Offensive - Continuing their seven-day offensive, the Reds recaptured more than 400 towns and,
driving across the Rostov-Vorenezh-Moscow railroad,
broke through the German lines into a wide expanse
more favorable to large scale operations. The advance
seems to be a two-pronged affair with one column pushing southwest from Vorenezh (300 miles northwest of
Stalingrad), and another thrusting south from Boguchar
the rail line to Rostov.
were taken,
according
to the communique.
along supplies
Many prisoners
Soviet and
2.
Red armies also continued to make headway on the
Stalingrad and Central fronts, despite Nazi counter-
attacks.
North Africa
1. Tunisia - Rainy weather even reduced air activity in
Tunisia. However, after 6 weeks of daily raids on
Bizerte, Tunis, Gabes, Sfax, etc., the score now stands
96 Axis planes and 55 Allied planes destroyed. In
central Tunisia French forces driving toward the
eastern coast have beaten off a German counterattack
presumably at Pichon.
2.
Libya - British Eighth Army is ap roaching Buerat
E1 Hsun, 50 miles west of Sirte, and the bulk of the
Afrika Corps has passed Misurata, only 115 miles from
Tripoli, according to Radio Morocco (now a usually
accurate source). Indications are that Axis may be
preparing for a stand in Tripoli.
326
3. Allied naval and air forces in a series of ferocious
attacks on the Axis Tunisia-Sicily supply lines sank
at least 6 ships.
The Pacific Area
1. New Guinea - Allies were within a mile of closing
their pincers on the Japs in the Buna area. Progress
has been slow because of intricate and well prepared
defense positions of the enemy. Allies are within 2
2.
3.
miles of the coast in the Sanananda area.
The Solomons - Aerial offensives against the Japs on
New Georgia Island are assuming seige proportions.
American air forces are in control of the air in every
Pacific zone - the Aleutians, the Solomons, and New
Guinea.
4.
The almost complete disappearance of the Jap Air Force
in the south Pacific is amazing the Allies,
Europe
1.
In line with R.A.F. raids on Duisberg on Sunday,
Munich on Monday, and American raids on Romilly, France
on Sunday, the R. A. F. swarmed over northwest Germany,
France and the low countries last night damaging railroad lines. However, the flight was largely a training
and operational exercise, the British said.
2.
Reports from France (released from Madrid) revealed
that General Weygand is now a prisoner of the Germans
in East Prussia after an attempt to escape to Algiers.
-2-
327
NOT TO BE RD-TRANSMITTED
COPY NO.
13
BRITISH LOST SECRET
U.S. SECRET
OPTRI- No. 443
Information received up to 7 A.M., 23rd December , 1942.
1. NAVAL
One of H.M. Submires damaged to 4,000 ton ship
by gunfire off south CORSL of FRANCE. The 23,700 ton transport reported torpedoed in OPTEL No. 47.0 sunk in tow. Another transport (16,300 tons) was
torpedoed on 22nd but has arrived in POOGIE.
2. MILITARY
RUSSIA. On 21st there FILE heavy local fighting in TOROPETS
area. In Middle DON aroa fighting continued with undiminished vigour, Germans
being on defensive
3. AIR OPERATIONS
ReSTERN FRONT. 22nd. Hollway and other objectives in N.I. GERMANY
and Lov Countries attacked by 25 Aircraft (2 missing). 9 enemy aircraft flew
over oust and south east cosst. : destroyed. Some houses damaged. Few
essualties. 22nd/23rd. Aircraft despatched - RUHR 4, convoy off HOLLAND 12,
Intruders 21, Leafleta 4. 1 aircraft missing. First reports indicated that
ship in convoy not on fire and another hit.
FRENCH NORTH AFRICA. 20th/21st. 3 enemy bombers shot down over
BONE. On 21st 2 more vero destroyed near FIBASA. 21st. U.S. Warhawka attacked
H.T. about 50 milea T.S.F. of SOUSSE and destroyed & tank and 13 vehicles.
21st/22nd. ellingtons dropped 1/4 tons of bomba on TOHIO and L COCLETTE docks.
2 ships probably sunk.
LIBYA. 21st. Kittyhawks destroyed 7 Aircraft on Hun landing
ground 130 niles L.S.F. of SIRTE. On 20th ap proximately 7 enony aircraft attacked MARBL. ARCH, BENINA and shipping off TOLMETA. Some damage LBS crused
REDITERRANSAIL 21st/22nd. Albacores torpodoed TO chip nd sunk:
one of 2 escort vessels off SICILY.
INDIA. 21st/22nd 3 enem/ I Ireraft bombed CALCUTTA.