Full text of Diaries of Henry Morgenthau, Jr. : Volume 612 : Part 1

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DIARY

Book 612

February 25 - - 28, 1943

-ABook Page
Attorney General

Salary of official or employee of United States

Government on leave with pay from private exployment:
General Counsel's opinion - 2/26/43

612

123

-B- Babcock, H. E. (Chairman of Board of Trustees, Cornell Univ.)
See Financing, Government: War Savings Bonds
(College Reunions)
Board of Economic Warfare

Minutes of meeting - 2/25/43
a) Discussion of merchant shipping service to other

76

American republica

-0Coast Guard

HMJr.to be provided with new "Lodestar" plane prior to
March 1 - 2/26/43

122

College Reunions
See Financing, Government: War Savings Bonds
Correspondence

Mrs. Forbush's mail report - 2/26/43

125

-DDeferments, Military
Lindow, Wesley: Six months' request - 2/27/43

220

-PFinancing, Government
Non-defense Expenditures:

Senator Nye's statement concerning purchase by Procurement

Division of railroad cars for hospital and medical
purposes refuted by Bell - 2/25/43
Meeting on February 25, 1943 - 2/27/43
a) Discussion of
1) Farm Credit Administration

69

188

2) National Resources Planning Board
3) Home Owners' Loan Corporation

Tax Anticipation Notes: Availability at all banks discussed
by HMJr and Heffelfinger - 2/25/43
Federal Reserve operations in Government securities 2/27/43

16

186

- F - (Continued)
Book Page
Financing, Government (Continued)
War Savings Bonds:

Reorganization:

Sproul-HMJr conversation - 2/25/43

612

18

a) Clarification of Treasury's now plan attempted
by HMJr

1) Reported to Buffington and Gamble by HMJr..
C. 8. Young-HMJr conversation - 2/25/43
a) Sproul explanation repeated by HMJr
1) Young and Sproul conversations repeated to
Bell, Graves, Gamble, Buffington, Odegard,

and Miss Elliott - 2/25/43
2) Clarifying telegram sent to presidents of
all Federal Reserve Banks

Promotional Activities: Amounts available - 2/25/43..
Conference; present: HMJr, Bell, Graves, Buffington,
Odegard, and Miss Elliott - 2/27/43
a) State Chairman and administrators - responses
from discussed (For list see page 168)
1) War Savings Staffs: Abolishment not
intended; clarification to States asked

for by Miss Elliott

College Reunions: Purchase of bonds to be substituted suggestion of H. E. Babcock, Chairman of Board of
Trustees, Cornell University - 2/25/43

25
29

42

50
67

155

164

39

-GGeneral Counsel

Opinion on salary of official or employee of United States
Government on leave with pay from private employment 2/26/43

123

J-

Justice, Department of

Salary of official or employee of United States Government
on leave with pay from private employment: General Counsel's
opinion - 2/26/43
-I--

Knutson, Harold (Congressman, Minnesota)
See Revenue Revision

-LLindow, Wesley

See Deferments, Military

123

-MBook Page
Merchant Shipping
See Board of Economic Varfare

Military Reports

British operations - 2/25/43, etc

612

111,112,154,
223,225

Morgenthau, Henry, Jr.

To be provided with new "Lodestar" plane prior to March 1 2/26/43

122

-NNon-defense Expenditures
See Financing, Government

North Africa
See Occupied Territories
Norway

HMJr's statement in regard to 3rd anniversary of invasion 107

2/25/43

Nye, Gerald P. (Senator, North Dakota)
See Financing, Government: Non-defense Expenditures

-0- Occupied Territories
North Africa: Developments in program discussed in White
149

memorandum - 2/27/43

-PPaul, Randolph
See Revenue Revision: Ruml Plan
Potomac Electric Power Company

Treasury to participate in hearings scheduled to consider
reduction in rate - 2/25/43

72

Procurement Division

For Senator Nye's discussion of purchase for War Department

of railroad cars for hospital and medical purposes, see

Financing, Government: Non-defense Expenditures

-RRevenue Revision

Forgiveness plan resembling that of Congressman Robertson's
reviewed in Paul memorandum - 2/27/43.

191

Ruml Plan: Copies of Paul speech in Brooklyn giving

Treasury point of view to be sent to Cabinet officers -

2/27/43

192,193

Broadcast by Sullivan, Congressman Knutson (member of
House Ways and Means Committee), and Senator Vandenberg

ranking Republican member of Senate Finance Committee) -

o

2/27/43

198

-8Salary of official or employee of United States Government
on leave with pay from private employment
General Counsel's opinion - 2/26/43

Book

Page

612

123

Shipping
See Board of Economic Warfare
Speeches by HMJr

In connection with captured German war film - 2/27/43
Sullivan, John L.
See Revenue Revision

-TTaxation
See Revenue Revision

-VVandenberg, Arthur H. (Senator, Michigan)
See Revenue Revision

-VWar Savings Bonds
See Financing, Government

216

1

February 25, 1943
9:33 a.m.
HMJr:

Hello.

Operator:

Donald Davis.

HMJr:

Right.

Donald

Davis:

Hello.

HMJr:

Hello, Mr. Davis.

D:

Yes.

HMJr:

Morgenthau.

D:

Good morning, Mr. Secretary.

HMJr:

How are you?

D:

Fine. I talked to Mr. Wilson last night,

and we were going over some very important

organizational matters here
HMJr:
D:

HMJr:
D:

Right.

and I must be very frank and state that
my previous obligation to him
Yes.

he is very desirous, in fact, insistent

upon my carrying it out until we get some of
this thing straightened out over here, and I'm
equally frank in saying that I feel that I
have the obligation to do it and should carry

on with him in the situation as it exists.

HMJr:

Well, now look, Mr. Davis, supposing I can
get you released of that obligation 80 that
you can decide what you want to do?

D:

Well, that would - to be perfectly frank, that

HMJr:

It would be?

D:

It would be, yes.

would be very embarrassing to me.

2

2

HMJr:

I see.

D:

Because I have - I have been thrown into this
picture here, and I know that he's depending

on it for at least awhile, and it would be - in
terms of his request to me and my commi tments

to him, it would be very embarraesing to have

that happen, Mr. Secretary. I regret exceedingly
to have to-say that.
HMJr:

D:

HMJr:

I see. Well, of course, the way I sort of feel
is as though O.P.M. 18 part of the Government
the way the Treasury 18.

Yes, that's true.
Sometimes it's hard to realize it, and I'm going
to say this - but then if you say that you don't
want it- but I would like to go to the President
and have him release you of any obligation, then
let you make up your own mind where he thinks

it would be most important to have you serve his
Government.

D:

HMJr:
D:

Well, that's perfectly true, and as - and I - all
I can say 18 that I'm here under orders.

Yes.

On the other hand, I would say that if there's
any - if there can be any consideration given to
personal preference

HMJr:
D:

HMJr:

Yes.

in terms of what I've undertaken here and
gotten into
Yes.

I would have to express to you.

D:

HMJr:
D:

Yes.

that I would have a personal preference

right at this time, even though being - being
very appreciative of the compliment paid, I
would have a personal preference to stay right
on here and see this thing through.

3

-3HMJr:

Yes.

D:

I would - I have to be perfectly honest in saying

HMJr:

Yes.

D:

But beyond that, of course, I have - I have nothing

that, sir.

to say.

HMJr:

Well, I wouldn't - I don't want anybody to come

D:

Well, I - that's why I'm 80 frank

HMJr:

You - you....

D:

..
and prompt
that manner.

HMJr:

You feel you would be coming under duress?

D:

No, I don't think - I don't think it's duress in

over here under duress, see?

in trying to report it to you in

anything the Commander-in-Chief tells you to do.

HMJr:
D:

HMJr:

Yeah.

But, on the other hand, if there is a place for
an expression of personal preference, why, this
is the place, and I'm - I'm trying to be perfectly

frank and honest in expressing it.
Well, let's - let's take another minute - supposing
I say - I said to the President that I want an
opportunity to talk to you, at least see whether
we see eye to eye.

D:

Yes, sir.

HMJr:

And then if we did and I still wanted you - that

D:

Well, wouldn't it - would it be proper to suggest

HMJr:

Yes, anything's proper.

D:

.... that you - that you talk it over with Mr.

I asked him for you, you see?

Wilson?

4

4-

HMJr:

I'd rather talk it over with Mr. Nelson.

D:

Or with Mr. Nelson, either one.

HMJr:

Well, I would do that in the first instance.

D:

Yes. Well, I - all I can do (laughs) in the -

HMJr:

Yeah.

D:

....18 to be - try and be perfectly frank with
you, and all I can say further is that whatever

in the position in which I find myself

my assignment might be I would give it all
that there is in me.

HMJr:
D:

So I've - I understand from your reputation.

But, on the other hand, I felt that our talk
yesterday was of the nature that I - I could
properly express a personal point of view to
you.

HMJr:

You - you (laughs) could even if you were over
here. Otherwise I wouldn't want you.

D:

Okay, sir. (Laughs)

HMJr:

But I would like to be in a position to talk

further with you to find out whether we might

hit it off.
D:

HMJr:

Yes, sir.
And the only way that I could do it would be to
talk with Nelson and then, depending how
Nelson talked, would be to go to the President.
As I say, it's a question of - what I think we
have over here is moderately important, and for
him to decide where you could serve your
country best.

D:

Well, I think that that's entirely - that's that's entirely up to you, sir, and that - my

only suggestion to make
HMJr:

Yes.

5

-5after having made my own personal statement

D:

HMJr:

Right.

D:

....is to suggest that you talk with Mr. Nelson

HMJr:

Well, I've only met Mr. Wilson once in my life.

D:

Yeah.

HMJr:

I happen to know Mr. Nelson very well.

D:

Yeah, yeah.

HMJr:

I don't, so I think I will call up Mr. Nelson.

D:

All right, sir.

HMJr:

And then, all I'm asking - and I'd like to be able

or Mr. Wilson.

D:

to sit down and talk with you, and then after we've
had our talk we may find, well, there's no use.
Yes, sir.

HMJr:

Do you see what I mean?

D:

Well, all I've attempted to do is I cleared it
with Mr. Wilson and got an expression of his ideas,
and I've been try.. - I tried to be frank with
expressing my personal inclination, and I won't
say desire

HMJr:
D:

HMJr:
D:

Yes.

....to you.
Well....
Beyond that point, I don't think I can go at the
present time.

HMJr:

Well, I'll have a - I appreciate your frankness
and I'm going to call up Mr. Nelson and see if
get anywhere.

D:

Thank you, 81

I

6

6

HMJr:

Thank you very much.

D:

You bet.

7

February 25, 1943
9:39 a.m.

HMJr:

Hello.

Operator:

Mr. Nelson.

HMJr:

Hello.

Donald

Nelson:

Hello. Good morning, sir.

HMJr:

How are you, Don?

N:

Fine, thank you.

HMJr:

Good. Well, you seem to be getting along

N:

HMJr:

N:

HMJr:

better.

Well, they're just getting me mad now.
(Laughs) Well, it seems to be working all
right

Well....
....and don't let the columnists get you down.

N:

They never will.

HMJr:

No.

N:

I - I just stopped - I was thinking the other
day while reading Dave Lawrence's cracks,
remembering when I was back out in civilian

life of reading
HMJr:
N:

Yes.

.... the same Dave Lawrence on you and others
around here, and

HMJr:

And believed it.

N:

(Laughs) No, I didn't believe it.

HMJr:

(Laughs)

N:

(Laughs) But I couldn't help but think that just what you fellows have gone through

8

-2HMJr:

Oh, yeah.

in ten years down here in this place.

N:

HMJr:

Yeah. Well, if - it would all be so much
easier if everybody helped each other.

Yeah, but they don't do it and they won do it,
I guess.

HMJr:

That's right. Well, I'm calling up for a

N:

All right, sir. What is it we can do for you?

HMJr:

N:

HMJr:

little help now.

Well, I've been looking around for somebody
who is connected with a concern that has
national sales organization, who could come in
and sort of head up this drive on Federal
securities
Yes.

and one of the men that's been recommended

the most highly is this Donald Davis, who was

an assistant to Eberstadt. Now I had a talk
with him yesterday, and he said that he had

sort of given his word to Wilson that until he

sort of reorganized the thing and found a
place for him that he would stay with him, do
you see, for awhile.
N:

Yes.

HMJr:

Now he called me up this morning and he said

Wilson wants to hold him. Well, whatever he'

doing couldn't have been BO important, because

as of yesterday he had no definite niche, you
see?
N:

Well, of course, that was only because of the
reorganization of duties following Eberstadt's
removal, you see?

HMJr:
N:

Yeah. Do you know Davis?

Oh, very well.

9

-3HMJr:

Do you think

N:

He's a very fine fellow.

HMJr:

Now evidently he doesn't want to ask Wilson even

for the right to - to talk with me, see? Now
what I'd like to have is - I don't know the man
well enough. I've had one talk with him, and
what I'd like to have is the right to sit down
and talk with him, you see?

All right. I'11 talk it over with him and

N:

Charlie this morning.

HMJr:

And see if we can't get together, and then so as
to put all my cards on the table, if I decide
that he's the fellow to head up my sale of

financial securities, you see - and if - if you
won't release him, and I - then I'd like to go -

I'd hate to do it, but I would - I would like to
go to the President and say, well, let him make
up his mind, see?

N:

No.

HMJr:

But I - I don't want to do that.

N:

Well....

because I don't think I

HMJr:
N:

There is - there is some doubt in my mind as to
whether he would be the - the ideal man to head

that sales organization. I think he's a very

good man.
HMJr:

Yes.

N:

I think he's an outstanding fellow

HMJr:

Yeah.

as a matter of fact.

N:

HMJr:

Yeah.

N:

I don't think of him in - as - I know him very

well. I know his work before he game here, and

know his work here.

10
4

HMJr:
N:

-

Well...
I don't think of him as the sales organizing
type.

HMJr:

No, but he's had this publicity experience.
They 're having a - they spend $9 million dollars
a year for advertising.

N:

Yes, he's had that.

HMJr:

He was in charge of advertising there for ten
years.

N:

HMJr:

Yes, I know that.
And - and he started in the radio business, and
he's had some banking experience. I don't want

to - you see, I don't want a banker. I don't

want an investment
N:

HMJr:
N:

HMJr:

No, I....
.... fellow, so
.... can - I'll never have one again as long as

I live.
(Laughs) So I - I want to go to commercial life
just the way I went to you. After all, you owe
me something anyway.

N:

HMJr:

No

You never gave me something in return for yourself.

N:

(Laughs)

HMJr:

See?

N:

Well, I'11 do whatever we can, and I'11 talk to

HMJr:

I - well, I'm - Don, I'm awfully serious about

N:

All right.

Charlie.

this

11

- 5- and

HMJr:
N:

I'll talk to Charlie right away and I'11 call
you back.

HMJr:

N:

he - he's one of 22,000 you've got over

there.

Well, he's not one of 22,000. He's one of, I'd
say, ten.

HMJr:

Well

N:

I mean I'd rank - he - he ranks right in with
the top ten we've got.

HMJr:

N:

HMJr:

But he - he hasn't got that position now. I mean
he didn't I have up till yesterday.
No, because - only because of the - of the
reorganization of the
Yeah.

N:

....of the work, you see.

HMJr:

Well, all I'm asking is I'd really like to have
a chance to sit down and talk with the fellow,
see?

N:

Okay. Well, I'11....

HMJr:

And then.

N:

HMJr:

talk to Charlie Wilson right away.
And he does feel under obligations but - well,
anyway, do as - see what you can do for me.

N:

I will. I'll call you back.

HMJr:

I thank you.

N:

All right, air.

12

February 25, 1943
10:24 a.m.

HMJr:

Donald

Hello.

Nelson:

Hello, Mr. Secretary. This is Don Nelson again.

HMJr:

Right.

N:

I talked O Charlie Wilson and there's no objection to your talking to Don Davis. Charlie

feels that he has to have some time because of
the way he's using Don Davis and plans to use
him, he'd have to have some time to - to replace
him. He feels that it would be bad for him at
the moment, because he just is under such pressure and hasn't anybody that can help him.

HMJr:

Yes.

N:

But there's certainly no objection to your talk-

HMJr:

ing to him.
There isn't?

N:

If you - if we can get time to replace him, that's

HMJr:

N:

the main thing we want.

Well, that's all I - I wanted to ask for. And, as
I say, after - I've only had a very short talk
with him and he's a very loyal fellow and he was
telling me he was under moral obligations and he
doesn't want to do anything.
Well, and - and he's really helping Charlie
tremendously at the moment, because Charlie is
just under tremendous pressure, naturally.

HMJr:

N:

HMJr:
N:

And if - after we've had several talks we might

not hit it off.

Well, I have an idea you won't, but then that's
You don't think we will?

No, I just don't think so. I mean that would be
my opinion, and I'm not - I'm being absolutely
honest with you.

13

-2HMJr:

Why, Don?

N:

Well, I don't - I doubt - it's hard to explain.
It's one of those intuitive things.

HMJr:

(Laughs) I see.

Now I think the man is fine. I think he's a
swell fellow, a grand fellow, but whether he'll
be pliable enough trework this thing out I don't

N:

know.

HMJr:

Pliable enough?

N:

Yes.

HMJr:

Well, you - you - you don't feel that he's the
kind - his backing is the kind of fellow?

Well, I mean I just think for that - I think

N:

he's - he's better equipped, better adapted
for a production and administrative job than he
18 for that organizing and selling campaign.

That's my only feeling about it. Now I'm - I

may be entirely wrong and it's a snap judgment,

I'll admit.

HMJr:
N:

HMJr:

Now you got another minute?

Yes, sir.
Well, there was another fellow suggested.
You'll think I'm concentrating on you. His
name 1s Robbins. You most likely never heard
of him.

N:

oh, yes, from General Foods.

HMJr:

That's right. He's - he's president of their

N:

sales organization.
Now he's a much - in my opinion, a much

better balanced man for that job. Robbins is

a - is a - is a fine fellow.

HMJr:

Yeah.

N:

He's more of the sales type.

14

-3 HMJr:

Well, I've had a sort of an advisory sales
committee headed up under Grant of General

Motors
Yes.

N:

HMJr:

N:

and he's been on this committee for three
or our monthe, and he'8 very keen about the
work that we're doing over here, and I think

he'd kind of like to do it.
Well, now let me - let me look into that. I

think we could - I'm sure we could spare Robbine
much better than Don Davis, and in my opinion

he would be a better type of man for that because I think he's more flexible, and if he
can't just get his way, he won't just back up
and stop.

HMJr:
N:

I see.

And that's the thing in Government I've found.
As you know, Mr. Secretary there are a lot of
people who feel, well, you ve just got to beat
everybody in the head and do it just one way.

HMJr:

Yes.

N:

Well, that won't work in Government.

HMJr:

Well, I've - after ten years I've learned 1t.
(Laughs)

N:

HMJr:
N:

(Laughs) Well, I - I've learned it myself.
Well, as I say, Robbins is another possibility.
Well, this boy, Robbins, I think very highly
of

HMJr:

Yeah

and I think - I think of him as being a

N:

very unusual sales type fellow.
HMJr:

Yeah.

15

-4N:

Robbine came down from General Foods and

HMJr:

Yeah.

N:

Everybody around here likes Robbins.

HMJr:

Yeah,

originally worked in our Priorities Section.

N:

HMJr:
N:

Likes him very much; he's very flexible; he's a
good administrator; he's got a lot of tenacity
He's got....
without - he's got tenacity without feeling
that if you don't go along with him, you're dead
wrong.

HMJr:
N:

HMJr:
N:

He's got a lot of drive.
I think 80.
Terrific drive.
I - I think very highly of Robbins, and while I'd
hate like the devil to lose Robbins, at the same
time it would be my opinion that he would be a
better man for you - not - not - and this - Don
Davis is the more able man in every way, but not

in the sales picture as I see it.
HMJr:

Yeah. Well, would you mind giving me another ring

N:

I'll be glad to do it.

HMJr:

Thank you 80 much.

N:

All right, sir.

HMJr:

Do - do you think you can do it today?

N:

Yes, I'11 do it today.

HMJr:

Thank you.

N:

Okay.

on Robbins?

16

February 25, 1943
11:02 a.m.
William

Heffelfinger: Yee, air.
HMJr:

Yesterday, Heffelfinger, when some of the
O.W.I. people were in they said that the

bank out at Falls Church - if you went
there and tried to get a tax anticipation
note, you couldn't get one.

H:

Uh huh.

HMJr:

Now I wonder how general that is? Don't the
banks have them on hand?

They don't have them on hand. They take
applications for them and send them to the

H:

HMJr:

Fed. They're only issued at the Fed. Banks.
Well, why - why don't they have them on
hand?

Well, because of the registration and things

H:

of that sort. The records are all kept at
the Feds.

HMJr:

Well...

H:

They're not kept here at the Treasury.

HMJr:

Tell Mr. Bell to talk to me about that

H:

I'll do that, sir.

HMJr:
H:

HMJr:

H:

this afternoon, will you?
Okay, sir.

Because one of the people - they couldn't
understand why they can't just walk in and
get one like they can a bond.
Well, they handle them the same way F and G
Bonds are handled, you know. They have to

take the application for those and send to

the Fede.
HMJr:

Well, you talk to me - tell Bell

17

-2H:

I'11 have him - okay, sir.

HMJr:

Thank you.

H:

You bet.

18

February 25, 1943
11:18 a.m.
HMJr:

Hello.

Operator:

Mr. Sproul.

HMJr:

Hello.

Allen
Sproul:

Good morning, Mr. Secretary.

HMJr:

Hello, Allen, are you alone?

S:

Yeah.

HMJr:

Because I a.m.

S:

Yeah.

HMJr:

And I just wanted to have a little heart-toheart talk with you
Yeah.

S:

HMJr:

....and - because I - I think that you must
have misunderstood the - the underlying
motive of this telegram of mine, and that -

I'd like to get it settled once and for all
in my mind and yours also.

S:

HMJr:

Yeah.

Now what I got in mind -- let me say it over
again -- in this coming drive, I want the

fiscal agents to be the boss in their district,
so we get that straight, see?

S:

HMJr:

Uh huh.

There can't be any misunderstanding about that.

Hello?

S:

Yeah.

HMJr:

The only thing there seems to be a misunder-

standing on is this, I want both the Victory
that they've got.

Fund and the War Savings to give you everything
S:

Yes.

19

2-

HMJr:

Now in order to do that at the level, we've
got a lot of personalities, you see - and these
managers of the Victory Fund plus these State
chairmen, the thought that I had was that those -I don't know - half a dozen people -- under your
leadership would form a committee at just that

level

Uh huh.
HMJr:

and that they would be - assist you. Now if
we don't do something like that, too many feelings
are going to be hurt and too many of these prima
donnas are going to have their nose out of joint.

I wasn't thinking of it except at that level. I

wasn't thinking of it in the counties or half a
state or anything else, but just at that level,

and it would make my job much easier if we could
do it that way. Now from the telegram that we
got from you and Chicago -- I gather you must
have been talking with each other, because I got

more or less the same telegram -- but I - I can't
I've thought a lot about it, and it seems to me
it's on the plus side in taking care of these
people, and a lot of them, these State chairmen,
have done a lot of good. In other words, they
won't be called in - the thing that they feel is
that they won't be called in to assist the
Victory Fund Committee, they'11 be called in to

S:

assist you.
I see.

HMJr:

Do you see what I mean?

S:

Yeah.

HMJr:

Now that's the whole thing. Now I don't see why
that won't work, and - and they got a thing
called "face-saving" which is important where

you have a lot of people who have - who have done

S:

HMJr:

a lot of good work.
No, there's no question about
Now -- this is for you -- Dick Patterson came
down here the other night and raised unshirted
hell. He upset me; I was sick afterwards; and

( cont.)

20

-3--

HMJr:

(cont.)

what he wanted I refused to do pointblank, and
that was to make him co-chairman.

Oh, I see.

S:

HMJr:

And I said, no, I wouldn't do it. So I've
turned that down flat, and I don't - I can reword the telegram any WOY anybody wants it to

make it understood that there's only one boss in
the Federal Reserve District and that's the

fiscal agent. But you get the distinction of - of
having - calling it a committee at the top level.

Otherwise they feel that they've been called in
to assist the Victory Fund Committee. Now the
whole thing isn't terribly important, but it
does take care of certain faces - face-saving and I'd like it very much because it would help
me. Now I told you if anybody gets hard or tough,
I'll come and take care of him, and I've taken
care of Dick Patterson.

S:

Yeah.

HMJr:

He was very tough.

S:

Well, then the only - the - I agree with you it it really shouldn't make much difference so long
as it's understood where the responsibility and

the authority lies. The question I'11 have is
with people feeling that way that if - if you do
it one way they're being called on to assist the

Victory Fund Committee, and if you do it the other
way that they retain some authority, whether they,
in view of the past fifty and their current discussions - whether they won't continue this debate
and argument and division which I think is - is
just too bad for the Treasury's main objective.

HMJr:

Well, I can promise you it won't. Now I - I
settled the thing the other night with Dick
Patterson. I told him pointblank I wouldn't.

S:

Yeah.

HMJr:

You see?

S:

Yeah.

21

-4HMJr:

Then there'11 be no misunderstanding as to who

is boss and who represents me. But you get the

difference -- I'd like to go over it once more -the difference is one way, as I get it you have
it, you'd like them to come in to assist the
Victory Fund. I'm simply suggesting this committee of which these State chairmen will be a

member, the managers of the Victory Fund, and
yourself as chairman and bose.
S:

HMJr:
a:

HMJr:

Well, they - the one other aspect is the public
aspect of it - is having the two committees
already in existing - existence.
Well

.... the appointment of a third committee which
may be looked upon as a....

Well, call it an executive committee, if you want
to.

S:

Well, suppose..

HMJr:

The com. - supposing you call it an executive
committee?

S:

HMJr:

Well, even then the - the question of a division
of responsibility may continue to exist
No.

in the public mind even though we know just

S:

HMJr:

Well, I'll make it - in my public statement and
at the press conference, ['11 make it very, very
clear, because there isn't a shadow of doubt in
my mind

S:

HMJr:

S:

Yes.

and there won't be, and you know me well
enough after these years that when I say something no matter how tough the going goes, I

stick by it and stick by my people.
No question about it.

22

- 5.HMJr:
S:

HMJr:

S:

I mean I never let them down.

No question of that.
And there'11 be absolutely no question about
the authority.
Well, suppose I take. a look at this telegram
and see.

HMJr:

I've read your telegram very carefully.
No, I mean your telegram which - and see whether
there are any changes which could be made then

S:

which would make it clear juet how the land
lies even though we retain the committe form.

HMJr:

Retain the committee form but - but strengthen
the, thing that - that you're the bose.

S:

Yeah.

HMJr:

I'll do that.

S:

I thought I might try my hand at it and let you

have the result.

HMJr:

But leaving the committee thing?

S:

Yeah.

HMJr:

S:

HMJr:

Well, supposing you do that and get me off a
telegram as soon as you can, will you?

I'll do that, yes.
And I'm spending all of my time looking for

"Mr. X".

S:

I see.

HMJr:

I got a couple of very good people but it so

happens that both of them are with Donald
Nelson, and - which is an advantage that
they're here 80 they don't have to go through

the process of getting a board of directors to

give them the permission to come.
S:

Yeah.

23

-6HMJr:

S:

HMJr:

But he's wrestling about letting me have them.

But he's been very fair, and he said that he's
thinking it over. I've talked to him twice this
morning. They're top-notch fellows.
Well, I hope you can get one of them be. - and
I think myself that your job 18 just 28 important
as his and that he ought to let them go.

Well, he - he's being very nice about it. of
course, each person has his own probleme, but
as I - I said, "I don't want to go to the

President about it," - "oh, you won't have to do
that," you see?

S:

No.

HMJr:

Well, you take another hand - pointing up your

S:

HMJr:

authority as the fiscal agent, will you?

All right, I'11 do that.
And I'll take a - I'll - I'll take another look
at it.

S:

Right.

HMJr:

Because I want to get this organization thing
settled, and - and it - it would be helpful to
me. You understand my position. I mean you
understand why I want to do it?

S:

HMJr:

Yes, I do.

Yes. But I - I settled Dick Patterson the other
night, and he will stay settled. And, incidentially, he's been talking to the newspapers
yesterday, and I gave him the whole story, as
the result of which he's not going to run any-

and one of them came in to see me from P.M.
thing.

S:

Well, I'm sorry about him because I've got the
feeling that he tells me one thing and he tells
other people other things, and I just have lost
confidence.

HMJr:

Well, it's - it seems to be very much of a

personal issue, but I think you'll find that
(cont.)

24

-7HMJr:

cont. )
S:

HMJr:

once I give out the statement it's settled,
and you will have 1000% backing from this
office.

Well, I'm sure of that.
And he hasn't threatened to resign or anything
like that, you see?

S:

Yeah.

HMJr:

Well, take another look at it.

S:

All right, I'11 do that.

HMJr:

Thank you.

S:

Thank you.

25

February 25, 1943
11:30 a.m.

FINANCING

Present: Mr. Buffington
Mr. Gamble

Mrs. Klotz

H.M.JR: This is what I want you for: I just had
a long heart-to-heart talk with Allan Sproul. I said,
"Now Iook, Allan, get this thing straight. You are to
be the boss in this district. There is such a thing as

face-saving, and I want the State chairman of War Bonds
to be a member of the committee, plus the executive
manager, of which you are chairman, for this drive."
I don't know whether you have seen these long
telegrams or not.

I said, "I don't care about it going below that

level; I don't care about the county, or the State, or
anything else."

I think I have sold him.
He said, "Can you change your telegram 80 that it

would make it perfectly clear that I am to be the boss
during this drive?" So, I said that we would.
I would like you two fellows to get together and

take a look at that telegram again and see what we can

put into it which would make it clear that during this
drive
fiscal agent of the Treasury is to be the boss
in thethe
district.
MR. GAMBLE: I think that is perfectly reasonable.
He
is the only one who is recommending the change, isn't
he?

26

-2H.M.JR:
is the same. I told him so, and
he didn't
denyChicago
it.
BUFFINGTON: It can go in after "chairmen," and
say, MR.
"with
full authority."

MR. GAMBLE: I think you can go further than that
and say that you recognize the necessity of placing the
authority in some one person, and it is going to be the
president of the Federal Reserve Bank, because this drive

must not fail. There is no reason for not doing that.

MR. BUFFINGTON: If you are going to give them the

responsibility, you ought to give them the authority.
MR. GAMBLE: No hesitancy.

H.M.JR: Do you want to take that thing out of the
Farm Credit and say that I am going to follow the model the plan which I used in Farm Credit, where I had all
these lending agencies, and appointed these general

agents?
They
had full
authority
to act for the governor
of
the Farm
Credit
in the
district.
MR. BUFFINGTON: I think for these men, if you

just added after this word "chairmen," the words, "with

full authority for the April drive, that is all that is

necessary.

MR. GAMBLE: This wire says that on Monday you are

going to release substantially the following. That is
about what it says. When the wire goes out on Monday,
it can be directed to, say-H.M.JR: He asked if I could look at it, and he

is sending me down a suggestion. I thought if we could
have something - I am going to call Young. He is the

only one, isn't he, who is kicking about this?
MR. BUFFINGTON: I haven't seen those.

27

-3MR. GAMBLE: Obviously, they have talked.

H.M.JR: I have gotten the same telegrams. Obviously,
they have talked.
MR. BUFFINGTON: They are the greatest objectors to
the waste in the Government, and are the greatest users

of
the telephone. They criticize us for expenditures
down here.

H.M.JR: They have all this money from the interest
on the bonds, which they don't know what to do with. You
know the Federal Reserve is worried about their la rge
income, and they think Congress will take it away from
them. They have to spend it somehow.

I will call up Hap Young; and sometime after lunch

if you fellows - Bell will be back then.
You think it can be done?

MR. GAMBLE: Yes. The thing is, they have to be sold,

because I think this is just a temporary effort, and that

we are going to be confronted with the same problem in

May. They have to be sold that there is a definite value
in the War Savings organization throughout the country

that you want salvaged, and it is their business to
salvage it.

H.M.JR: I wish you could have heard mo. I said,

"Now, listen, these fellows are there, and let's call
it a spade." I said, "I don't want my State chairmen
of War Savings to feel that they are becoming--"
MR. BUFFINGTON: Less important?

H.M.JR: No, I said, "No, they are serving under

the Victory Fund; they are on the same level with the

Victory Fund." I said, "I want this committee."

He said, "You will have three committees."

28

4-

I said, "Call this the executive committee. In

other words, the State chairmen aren't going to report
to the manager of the Victory Fund in that way. Those
at the top level should be there as members of this

committee."

MR. GAMBLE: You aren't going to change the name

of the drive? You are not going to permit them to call

it the "Second Victory Fund Drive"?
H.M.JR: No.

MR. GAMBLE: You are going to call it the "Treasury

War Finance Committee"?

H.M.JR: Yes.

MR. GAMBLE: I think that is very important.
MR. BUFFINGTON: You have to designate it some way .

H.M.JR: I haven't had my publicity people in yet.
But the whole point they are finding out is, they want
to keep the - they want to keep this a Victory Fund
drive. I said that the State chairmen come here
(indicating) with the managers of the Victory Fund,
and on the top of that is the Federal Reserve.
MR. GAMBLE: Yes, and the boss. There is no

quarrel.

H.M.JR: Is there any quarrel?
MR. BUFFINGTON: We will look that wire over.

29

February 25, 1943
11:54 a.m.
HMJr:

Hello.

Operator:

C. S. Young in Chicago.

HMJr:

Right. Hello.

C. S.
Young:

Hello, Mr. Morgenthau.

HMJr:

How are you?

Y:

All right, sir.

HMJr:

Mr. Young, I got your telegram and I also have
one from Allen Sproul.

Y:

Oh, yes.

HMJr:

And after reading them, I said that I guess

you two fellows have had your heads together.

Y:

Well, we - we were thinking along the same

lines as to the April drive. We thought that

the - the first plan there was - was more work-

able.
HMJr:

Well, now I've had a long talk with - hello?

Y:

Yes.

HMJr:

With Allen, and I think I've made my point - my what
I got in mind clear to him, and he seemed hello?

Y:

Yes.

HMJr:

We've got a lot of clicks - clear to him, and
I'd like to go through the same thing with you.

Y:

All right.
Now what I have is this, for the April drive -

HMJr:

it would make my job much easier if instead of
asking these State chairmen to come under the
Victory Fund Commi ttee at the top, that

Y:

Uh huh.

30

-2HMJr:

Hello?

Y:

Yes.

HMJr:

that you as my fiscal agent with full
authority and all the backing that I can give
you as the boss in the district.

Y:
HMJr:

Uh huh.

would invite these State chairmen plus the
managers of the Victory Fund to sit with you

as a committee, of which you would be complete

boss.
Y:

Uh huh.

HMJr:

But only to do it at that level. It would not
go down any further, you see?

Y:

Oh, yes.

HMJr:

It would be just at that level.

Y:

Uh huh.

HMJr:

Now if we do it that way these State chairmen
of War Bonds who have done a very fine job -

it would be a "face-saving" thing for them.

Y:

Sure.

HMJr:

The other way they would be invited to come in

Y:

HMJr:
Y:

under the Victory Fund Committee
I see.

which they don't like and I don't blame them.
Uh huh. Well, I'd have no objection because it
isn't the - we don't care as to who the directive
will be issued to, whether it would be to them
or to us, and that the - we could work that out

all right.

HMJr:

No, the - no, the directive would go to you as
the boas for me in the district.

31

-3Y:

The only thing that I was worried about, Mr.

Secretary, was that the - if we re going having these committees at the district level,

and I thought that might just be more confusing

HMJr:

No.

speaking to the public.

Y:

HMJr:

No, just at the top level.

Y:

Uh huh.

HMJr:

Now what I - and Allen said he - he kind of thought

that was all right if I could make it perfectly

clear that he was the boss.
Y:

Yes.

HMJr:

Now I'm taking another look at my telegram and I'm
going to see how we can strengthen that up, and I
will send that to you sometime this afternoon.

Y:

HMJr:

All right.
But he said if I made it perfectly clear that the

fiscal agent was the boss, why, he said - I gathered
that from what he said - that the committee idea

at the top would be all right.
Y:

Yes, I was just afraid of going down to the county
and township

HMJr:

No.

Y:

level that you'd have a lot of confusion and
the - it wouldn't do any good.
I didn't have that in mind.

HMJr:
Y:

Uh huh. Well, that - we can work that out, Mr.
Secretary.

HMJr:

Well, don't you think you could work that out?

Y:

Oh, yes, we can work that out.

32

HMJr:
Y:

I think 80.

I - yeah, we can do that, and - but it was
just these committees under the - the district
level and, of course, we can work 80 much
better if we - 1f we just have the State

Administrators and we can get along all right.
HMJr:

Well, that's all I had in mind.

Y:

Uh huh.

HMJr:

But what I had in mind was that you would invite
them in to sit with you and that they would not
be invited in to sit under the chairmen of the
Victory - I mean under the managers of the
Victory Fund, you see?

Y:

Yes, uh huh.

HMJr:

Now granted that there'll be three names - but

it's just that it - it makes it nicer. I mean

you put yourself in their place, you see?
Y:

Sure.

HMJr:

HMJr:

But don't you think that sounds all right?
Well, I - we can work that out all right.
Well, take - take another look at the telegram,
and if - if you had some thought as to how to
strengthen your authority along the lines I'm
talking,
I'd appreciate it if you'd send me a
wire.

Y:

All right.

HMJr:

Then I'11 take what you send me and what Allen
sends me plus what my own boys are working on,

Y:

and I'11 get you off something this afternoon.
Y:

All right.

HMJr:

See?

Y:

All right, and - and I'll look that over.

33

-5HMJr:
Y:

Yes - now this looks pretty good to you?
And the only thought that I had was that the we wanted the - for your sake, we wanted to do

an excellent job, and I didn't want a lot of

confusion and - as to who' 8 going to have the

place in the sun and all that, you know.
HMJr:
Y:

Well, do you think this would make confusion?

I - I don't think so. It would be a little,
all right.

but it wouldn't be - we can - we can handle that
HMJr:

But, on. the other hand, it would - it would,

you know, smooth over some personal feelings.

Y:

HMJr:
Y:

Oh, sure, I know - and I understand. They - we
have to - we have to take that into considera-

tion. I understand your viewpoint on that too.
And I think it's worthwhile doing.
And the - the only thing we want is just to be
sure that we can all work together and do the

good job.
HMJr:

Right. Well, if we can work out this one little
detail, I think the rest is going to flow all
right.

Y:

Well, that little - that will be all right.

HMJr:

Good.

Y:

And that'11 be all right, and I'll - and I'11

look that over and if you want a telegram from
me, why then, I'11 look it over - why, I'11
send it to you.
HMJr:

I wish you would.

Y:

All right.

HMJr:

Thank you.

Y:

All right.

34

February 25, 1943
2:10 p.m.
HMJr:

Hello.

Gen. Gordon

P. Saville: Hello.
HMJr:

Morgenthau speaking.

S:

Sir, this is General Saville.

HMJr:

Yes, General.

S:

I have - you may remember me. We went up to

the First
defenses.

Air Force together to look over air

HMJr:

At Glenn Martin.

S:

Yes, sir.

HMJr:

That's right.

S:

I have been detailed by the Chief of the Air
Staff to prepare a presentation for you

HMJr:

Right.

S:

....on this question that you asked about.
That's right.

HMJr:
S:

When would be convenient for you next week,

Mr. Morgenthau, for me to present that?
HMJr:

Next week?

S:

Yes, sir.

HMJr:

You won't be ready until then, what?

S:

No, sir. I want to - to try to assemble as

complete dope as I can, and I'm assembling that

now.

HMJr:

Well, now let's just take a look. Just a

moment,
please. You - they told you what what
I wanted?
S:

Yes, sir.

35

2-

HMJr:

Uh - oh, now wait a minute, I'm going out of
town. Can you do it - would - would you be
ready by Tuesday?

S:

HMJr:
S:

HMJr:

Yes, sir.

How long will it take, General?
Well, I would like to take about an hour and a

half, if I could.

Surely. And is it to be somewhere with the Air
Corps?

S:

Yes, sir. My hope was that I could get you over
to our air room where we present our summaries
and have all kinde of maps.

HMJr:

That's all right. Well, I could - I could go
there directly Tuesday morning.

S:

HMJr:

A11 right, sir.
I mean - is that too early?

S:

No, sir. That - that is fine.

HMJr:

That would be fine?

S:

Yes, sir.

HMJr:

Now supposing I got there, say, around nine
'clock?

S:

That would be fine.

HMJr:

And where - where would that be?

S:

Well, sir, I'll tell you, I think the best

thing, Mr. Morgenthau, would be for me to arrange to meet you, possibly at your home as I

did last time

HMJr:

Fine.

S:

.... before you left.

HMJr:

Fine.

36

-3S:

HMJr:
S:

HMJr:
S:

What hour would that be?

Eight-thirty?
Eight-thirty.
Eight-thirty.
Eight-thirty a.m.

HMJr:

All right.

S:

And your home address, sir, may I have that?

HMJr:

2434 Belmont Road.

S:

Belmont Road.

HMJr:
S:

HMJr:
S:

Now did - did you go there before?
Yes, sir.

You know, it's just off Massachusetts.
Yes, sir.

HMJr:

2434 - and that will be eight-thirty Tuesday morning. Now shall I have a car or will you have a
car?

S:

Either one, sir. You'll - you'll be wanting to go
back to the Treasury, and being much higher ranking
than I am, I think it would probably be easier for

HMJr:

you to get the car.
Well, I have a car.

S:

I will then be at your house at eight-thirty

HMJr:

Fine.

S:

planning to ride out here in your car.

HMJr:

Right.

S:

Then I'll let mine go.

37

4

HMJr:

Thank you.

S:

Thank you very much, sir.

HMJr:

Goodbye.

Goodbye.

38

February 25, 1943
Ted Gamble

Secretary Morgenthan

Please take care of this suggestion from Mr. H. E.
Baboook of Ithaca, New York, today. Mr. Baboook is
chairman of the Board of Trustees at Cornell University.

cc-Mr. Gamble
39

February 25, 1943
2:38 p.m.
Operator:

Go ahead.

HMJr:

Hello.

H. E.
Babcock:

Hello. Hello, Henry

HMJr:

Hello, Ed.

B:

It's awfully nice of you to talk to me.

HMJr:

That's my privilege.

B:

(Laughs) I hope I've got something for you.
I - I don't know. The - we were having a
75th reunion here at Cornell.

HMJr:

God, I didn't know you were that old.
Yes, sir, we are.

B:

HMJr:

No, I mean you.

B:

on - oh, no, I'm not that old. I was fifty-

four the other day, and I pitched manure and
shoveled gravel all day.

HMJr:

(Laughs) Well, that's pretty good.

B:

And as the committees got to working around,

they hit on a scheme of calling it off -of course, there' e nothing else to do -- and
calling off the reunions

HMJr:

Yes.

and then they hit on this idea of every-

B:

body who would normally go to a reunion in

the universities of the country -- and it's
big movement in June -- sending what they'd
ordinarily spend in bonds to their universi-

a

ties.

HMJr:

Well, that sounds good.

B:

Oh, it - now if that sounds good to you, all
we want you to do is to say so, and then I
ant to talk to Joe Eastman and have him
endorse it

40

-2HMJr:
B:

HMJr:

Yes.

keep the people off the roads and off the
trains
Yes,

and that - I think that we can put all these

B:

HMJr:
B:

alumni associations clear across the United
States to selling bonde for you.
I think that would be wonderful.

Well, now Vincent Callahan - do you know who

he 1s?
HMJr:

Yes, I do.

B:

Well, he has the story....

HMJr:

I see.

and if you care to give it your blessing,

B:

and it would be - the boys up here who originated
the idea would be awfully proud, and
HMJr:
B:

Yes.

furthermore, I think it would kick it along.

HMJr:

Well,
I'll - I'11 get in touch with him right
away.

B:

That's swell of you.

HMJr:

I'11 do it right away.

B:

How are you?

HMJr:

I'm all right.

B:

How's with the farm? Are you running the herd?

HMJr:

The farm - the farm is all right, still solvent.

B:

Yeah. (Laughs) Well, you always had it so.

HMJr:

And Mrs. Klotz is sitting here and sends you her
regards.

41

-3B:

Well, that's fine. Is - and Callahan will get in
touch with me, will he?

HMJr:

No, I think it will be Ted Gamble, a man by the

B:

Yeah, I see. But it will clear through Callahan.

HMJr:

That's right.

B:

Thanks ever so much.

HMJr:-

I'11 do it right away.

B:

Okay.

HMJr:

Thank you.

B:

Goodbye.

name of Gamble.

42

February 25, 1943
2:50 p.m.
FINANCING

Present: Mr. Bell

Mr. Graves

Mr. Gamble

Mr. Buffington
Mr. Odegard

Miss Elliott

H.M.JR: I made some progress this morning with

Chicago and New York.

I asked these fellows to fix me up a telegram.

Have you done it?

MR. GAMBLE: We haven't typed it out for you.

H.M.JR: I don't have the original.
MR. GAMBLE: I will read you the preceding sentence

to show where this goes in. "Details of the respective
tasks of each organisation at the State, county and

community level shall be worked out by the Treasury War

Finance Committee in your district on which you will
serve." Then add: "The Federal Reserve Bank president,
as responsible head of the April drive, shall have final

authority over and responsibility for these details."
H.M.JR: Where would this go?

MR. GAMBLE: Where we are describing what is going

to take place. That does two things. It not only places
the responsibility and the authority on them, but it also
makes clear that it will be his determination as to
what those details shall amount to. If be decides that
he doesn't want to do something at some community or

county level, that is his responsibility.

43

--2-

H.M.JR: We haven't said that before, that the
Federal Reserve Bank president is the responsible
head of the April drive?
MR. GAMBLE : Not that way.

MR. BUFFINGTON: Mr. Secretary, might I make a

suggestion? Earlier in that same wire, there is this

sentence, "Therefore, I have this day requested the
presidents of each of the twelve Federal Reserve Banks,
Treasury fiscal agents, to serve as chairmen of a United

States Treasury War Finance Gommittee--'

H.M.JR: Where is that?

MR. BUFFINGTON: That is earlier in that wire, the

seventh sentence down.

Then add: "With full authority to direct this
drive." It seems to me that that is the first place
where there is the question of direction. That is
where you want to give them the authority.

H.M.JR: I would put it in here earlier, "to serve
as chairmen of the United States War Finance Committee,
and then put it right there.
MR. BUFFINGTON: "With full authority and respon-

sibility."

H.M.JR: Yes.

MR. BUFFINGTON: That is all right. That is better

wording.
to

H.M.JR: "The twelve Federal Reserve Bank presidents
serve as chairmen of the United States Treasury War

Finance Committee, with full responsibility." What did

you say?

MR. BELL: Say, "and authority."

44

-3H.M.JR: I would say, "with full responsibility
and authority. I want to get "to me" in there.
MR. OD EGARD: Say, "acting fiscal agent."

H.M.JR: You could say, "as chairmen of the Treasury
War Finance Committee, and as my representative, will

have full responsibility and authority in their respective
districts," or something like that.

I mean, I am not saying - but that is the place to
put it, in my opinion.
I have five minutes to go, and then I would like to
have it within an hour - something to go out.
I talked to Sproul first, and then the other fellow.
They have been talking to each other. I told them so.

What they thought was that this War Finance Committee

went right down to the county. They wouldn't have time
to do that.

I told them, "No," but I said that in fairness to

the State chairman it wasn't right to invite him to come
and serve under the Victory Fund Committee in the district;
that the State chairman should be invited by the fiscal
agent to come and be a part of - if you want to call it
that - an executive committee, because they have 80 many

committees, and I didn't expect to organize the thing
below that level. But, the State chairman would be invited
by the fiscal agent to come in, and the administrator of
the Victory Fund would be invited to come in; and they
would meet around the table as a committee, he to be
chairman and the boss in the district.

They both said, "O.K.," if I would make clear the
both of them would be satisfied.

fact that they were the bosses in their districts - that
MR. BELL: Do they want that wire right away?

45

-4 H.M.JR: I said I would get it off tonight. I
want to settle it. I am getting sick of it. They

were both very nice.

MR. BELL: Yes, I talked to them. I told them
the same thing. I don't know how they could get cut
of that wire any indication that you intended to
organize down to the grass roots.

H.M.JR: I can see that, Dan. It says-MR. BELL:

that the Federal Reserve president
should act as chairman. How could he act as chairman

of a thousand committees?

MR. GAMBIE : It says that the details of doing
the work is the specific task of each organization.
H.M.JR: "Therefore, I have this day requested the
presidents of each of the twelve Federal Reserve Banks,
Treasury fiscal agents, to serve as chairmen of a United
States Treasury War Finance Committee, with full authority

as my representative in their respective districts, to

direct the April drive."

MR. GAMBLE: Say, "full authority and responsibility."
H.M.JR: "Full authority and responsibility as my
representative." Say, "representing the Secretary of
the Treasury," if you want to be formal.
MR. BELL: That is better.
H.M.JR: Say, "representative of the Secretary of

the Treasury," because that includes you.

MR. BELL: No, I think it is better - I don't mean
because it includes me, but I think it is better to
represent the Secretary of the Treasury. You are sort

of putting it on a formal basis, and it isn't when you

put in "my."

46

-5-

H.M.JR: If you just would - that ought not to be
too difficult.
MR. BUFFINGTON: I can write that up if you want it
done, or read it now as it should be.
H.M.JR: Read it once more.
MR. BUFFINGTON: "Therefore, I have this day requested
the presidents of each of the twelve Federal Reserve Banks,

Treasury fiscal agents, to serve as chairmen of a United
States Treasury War Finance Committee, with full authority
and responsibility as my representative--"
Say, "as the representative of the Secretary
of theH.M.JR:
Treasury.
MR. BUFFINGTON:

"to have full authority and

responsibility
in their respective districts to direct
this drive."
H.M.JR: Is that all right?
MR. GRAVES: Yes. It seems to be clear.
MISS ELLIOTT: Yes, sir.
H.M.JR: Ted?
MR. GAMBLE: Yes.

MR. BELL: Does this go to the presidents?

H.M.JR: I would say something like this, if you
could get off a telegram to the presidents of all twelve:
"After having your telegram, we would like to make the
following clarifying statement."
MR. BELL: Say, "In order to clarify the intention,

we have amended the telegram as follows.

MR. BUFFINGTON: Put in the lines that are involved,

and then put it in as quoted.

47

6-

H.M.JR: Get that off to them tonight.
Sproul is sending us another.

You might just read it over the phone to Eccles.
MISS ELLIOTT: May I ask a question here, Mr.
Secretary? Was there any confusion - any evidence of

confusion in the minds of State administrators that

these committees were to be organized down to the county
level?

MR. GRAVES: I think not in the minds of those who
were here. They now understand.

MR. BELL: In the replies there was none.
MR. GAMBLE: The replies from the administrators
were all very good.
MISS ELLIOTT: They weren't confused on this organiza-

tion in thinking there was to be this reorganization clear

down to the county level?
MR. GAMBLE: No.

MISS ELLIOTT: May I ask another question? Will
there be any confusion - these questions come into my
mind - were the people who worked for the Victory Fund
Committees paid, the volunteers who went out and worked
for them in this special drive in December?
MR. BUFFINGTON: No.

MISS ELLIOTT: They will not be paid in this drive?
MR. BELL: No.

MISS ELLIOTT: If we set up one-MR. BUFFINGTON: I think that some kind of a statement,
which was suggested,might be made March 1, but nobody is

expecting it definitely.

48

7-

MR. BELL: I understood that the organization said
that that question was out. I don't see why the Secretary
should make any statement on it.

H.M.JR: The answer to the question is that they

will not be paid - is that right?

MR. BELL: I understand they do not want pay, and
the question will not come up again.
H.M.JR: What else? Those are good questions.
MR. ODEGARD: I would like to raise one. We have

some farm advertisements that I think are very excellent.
They are made on the basis of an investigation and study

made by the Irwin-Wasey Advertising agency. They have

sent down a copy of their preparation, indicating the
basis upon which they proceed with this advertising
program. I would like to have you see that, if you would
care to take it home and read it. It was made 80 that

you could understand--

H.M.JR: I don't take any more work home, Peter.
MR. ODEGARD: If you have a chance to look at it

here-here?

H.M.JR: Can you put it up on one of those boards
MR. ODEGARD: No, it is a book. It was made

especially for you.

H.M.JR: I am not trying to say - Randolph Paul
has been waiting since Saturday to see me on things.
Sullivan has been waiting since last week.
MR. ODEGARD: This wouldn't involve seeing you,
Mr. Secretary.

H.M.JR: But, I have to read - I can't, I just
haven't the time. The day isn't long enough. f can't
do it any more.

49

-8MR. ODEGARD: The second question is whether we

should go ahead with the production of those ads for the

farm war bond program, or whether we should hold them
up.

H.M.JR: My answer to you is that I would hold
everything up, certainly until the middle of next week.
MR. BELL: I agree with that.

H.M.JR: Don't think I am not interested, but there
is no use of my saying I will take them home and then
not read the stuff.
MR. ODEGARD: By holding up, you mean that our
people, for example, who have been working on plans -

copy - looking forward to the April drive and to other

things - that you would have them just not go ahead

with those?

H.M.JR: I would have them mark time for another

week and make it up at the other end, that is all. Do

you agree with me?

MR. BELL: I do.
MR. ODEGARD: Of course, there are some things -

of course, you lose out. That is, deadlines are constantly coming up.

H.M.JR: I can't help it.
MR. ODEGARD: Once you get out of papers you have

difficulty getting back into them.

H.M.JR: I can't help it.

Secretary

50

EXPENSES OF LOANS

February 25, 1943
To Presidents, Federal Reserve Banks:
Boston, Mass.
New York, N. Y.

Philadelphia, Pa.
Cleveland, Ohio
Richmond, Va.

Atlanta, Ga.

Chicago, Ill.

St. Louis, Mo.
Minneapolis, Minn.
Kansas City, Mo.
Dallas, Texas

San Francisco, Calif.

Your wire replying to my wire of February twanty-second

received. In order to clarify as to where the authority
rests the second sentence within the quotation is amended

to read as follows Quote Therefore I have this day
requested the Presidents of each of the twelve Federal
Reserve Banks, Treasury Fiscal Agents, to serve as
chairmen of a United States Treasury War Finance Committee

and you will represent the Secretary of the Treasury with

full authority and responsibility in your district to
direct this drive Unquote
(Initialed) D.W.B.

H. Morgenthau, Jr.
Secretary of the Treasury
DVB:NLE

51

February 25, 1943
3:43 p.m.

HMJr:

Hello.

Donald

Nelson:
HMJr:

Hello, Mr. Secretary. I spoke.
It's Henry to you.

N:

Sir?

HMJr:

Henry.

N:

Yes, sir, Henry.

HMJr:

Right.

N:

I called you before lunch.

HMJr:

Yeah, they - I got the message, and they said
I couldn't reach you for awhile.

N:

Well, I - I had to go over to a luncheon with a a group of editors.

HMJr:

Right.

N:

But the - the suggestion has come back to me

that I think might appeal to you

HMJr:

Please.

N:

and that's Jim Bruc my - we might be able
to pry him loose to help you with that job.

HMJr:

Who?

N:

Jim Bruce. You know him of National Dairy.
No, I don't know him.

HMJr:
N:

Why, I thought you - you worked with him in
H.O.L.C. Don't you - you rem

HMJr:

Oh, from Baltimore?

N:

Well, his - his - from Baltimore, yes.
No. He's from Baltimore, isn't he?

HMJr:

52

-2 N:

That's right. He - his home is near Baltimore.

HMJr:

I didn't know he went with National Dairy.

N:

Yes, he's been with them now about two years, and

while there might be some difficulty prying him
loose, we might be able to pry him loose - help you
pry him loose. We think he's a crackerjack of a
man.

HMJr:

Yeah.

N:

Now either one of the other two men at the moment

would be awfully difficult to take out of this

organization.
HMJr:

Well, I don't know anything about Jim Bruce.

N:

Well, I thought you knew him.

HMJr:

Well, I may....

N:

I'm sure that your people do, because he's done a
lot of work with your organization. He was with
H.O.L.C. for awhile, and did a lot of work with

your organization.
HMJr:

Well, I remember the fellow, yeah, I do.

N:

He 8

HMJr:

I didn't know - I didn't associate him with National
Dairy. His - well, his - was it his brother married

Mellon's daughter
N:

That's right.

HMJr:

What?

N:

That's - I think that was it.

HMJr:

Yeah.

N:

His brother, Howard.

HMJr:

Yeah.

N:

Howard is down here, by the way, working in the in the War Department.

U

53

-3 HMJr:

Well, let - let's - let's not just talk about
Bruce first. (Laughs)

N:

Well, but - I mean these two men - we're right
in the midst of a - of getting this organization
back to functioning again, and it would juet be a
terrific handicap to take either one of these two
men
if there's somebody else that can do the job
as
well.

HMJr:

Yeah. Well, I - I - I hadn't thought of - I

mean Bruce, as far as I know, he's had no sales
experience.

N:

Oh, yes, I think you - I think you'll find he
has a lot of sales experience. I think you'll
find that he has sold just this type of thing.
I wish - I would appreciate it if you'd look
into it, merely because we think that he's a

crackerjack of a man.
HMJr:

Yeah.

N:

And either one of these other two men would would
cripple us badly any time during the next
month or two.

HMJr:

Well, is - is Robbins - I didn't gather from

Robbins that he was doing anything very important
over there.
N:

You see, what we've had to do is to reshuffle
some of the responsibilities

HMJr:

Yeah.

and we're thinking of building very strongly

N:

on him. As a matter of fact, I could tell you
what -- I wouldn't like to talk to you about it
over the phone -- just what organizational
change is expected to take place, and he's

HMJr:

important in it.
Yeah. Well, I!11 inquire about Bruce.

N:

Will you do that?

HMJr:

Yes.

(S)

54

4N:

Well - because I'm - I'm sure that you'll find him
a very capable fellow. In fact, I wouldn't
hesitate to take him. We haven't done it, but
-

because the company would be reluctant to do it,
but I think we can pry him loose.

HMJr:

Well, what - you don't know what position he holds
with the National Dairy?

N:

He's a vice president.

HMJr:

Vice president. I see. Okay. Well, you'll be
hearing from me again.

N:

HMJr:
N:

All right, sir.
I haven't let up yet.
All right, Mr. Secretary.

HMJr:

Thank you.

N:

Goodbye, Henry.

55

February 25, 1943
4:05 p.m.
Operator:

Go ahead.

HMJr:

Hello.

Clarence

Francis:

Hello, Mr. Secretary.

HMJr:

How are you?

F:

Well, I'm first-rate. I hope you are.

HMJr:

I'm fine.

F:

Good.

HMJr:

Mr. Francis, let me tell you a little problem

I've got. We've been looking around for somebody, a real ealesman, to help us on this
war financing

F:

Yeah.

HMJr:

.... and Mr. Robbins - your Mr. Robbins - was

one of the people who's been recommended very
highly.
F:

Uh huh.

HMJr:

I had Robbins over the other night to talk
with me, just informally, and I think he's
the kind of fellow that would be extremely
helpful to us - hello?

F:

Yes.

HMJr:

I've been talking with Don Nelson about him,
and naturally Nelson doesn't want to let him
go

F:

HMJr:

Uh huh.

although up to very recently, I don't think

that they've given Robbins very important work

down there.
F:

Not since the change.

56

-2HMJr:

Now I didn't tell Robbins I was going to call
you because I didn't think there was any use
in going any further until I had talked to you
because I understand you're paying him a salary
and you're still his boss.

F:

Yes, (laughs) that's right.

HMJr:

Now the thing that we've got here - we're trying we've had this Advertising Council who've worked

with us, you know?
F:

HMJr:

Yes.

And they've recommended very strongly that at
this stage on these Government drives that we

need a man who knows how to handle salesmen and

sales organization, and he's been on this little

informal group with Grant of General Motors
F:

Yeah.

HMJr:

and has come in here, and while I've never

offered the thing to Robbins, he looks at it
as a great challenge, which it is. It's one of
the greatest selling jobs in the world.
F:

HMJr:

Yes.

And we need professional salesmen to help us. out
and sales brains, you see?

F:

Yeah.

HMJr:

Now I've - the reason I'm calling you is that

I'd like you to think about it. I' d like, if

you would, to have a talk with Robbins.
F:

All right.

HMJr:

And, as I told Nelson, after all his department
and mine are both working for the same man al-

though sometimes the people kind of forget it.

F:

HMJr:

Yeah, yeah.

I mean that we're all working for the Commanderin-Chief.

57

-3F:

HMJr10

Correct.

Now I don't want to have to go to the President
and say - tell him - let's say he decides that
Robbins is the man and he should direct him to
go from one to the other, because I don't want
anybody to come unless they'd like to come, you
see what I mean?

F:

HMJr:

Yes, definitely.
I mean I - I want him to feel this is what he'd

rather do than - for the Government than anything

else and it's the best job he could get.

F:

Well, you can rely on Bill on that, if he said
that, why

HMJr:

Well, he hasn't said that.

F:

Yeah.

HMJr:

Because I - I haven't made him a definite offer

F:

and I wouldn't until I talked to you.
Yes, sir, I see.

HMJr:

But
he did say he considered it a great challenge,
and

F:

Well, now tell me something about this. Could he
be retained on the same basis? Have you any rules,

regulations,
or restrictions about dollar-a-year
men?

HMJr:

Uh....

F:

In this capacity.
As far as I know - that we haven't.

HMJr:
F:

Uh huh.

HMJr:

I - I don't know of any rules or regulations.

F:

Well,
didn't I - I presume you would make them. I just

4-

F:

Yes, I talked to
Secretary Wickard has. He has decreed that he'll

HMJr:

Well

F:

And it makes it very difficult, in my judgment,

HMJr:

58

have no dollar-a-year men.

HMJr:

F:

HMJr:

for him to get men.

Well, here's the point. I would much rather have
a man come down here and work for $8 or $9 thousand
dollars for us.
Yeah.

I quite frankly wouldn't take an investment banker
and have him come down here and keep his salary
from his firm.

F:

Yeah, yeah.

HMJr:

But what the hell good is the Treasury to General
Foods?

F:

No.

HMJr:

What?

F:

No - yeah, I see your point.

HMJr:

I mean I wouldn't take a banker and have him come
down here and work for me and have the bank pay
him.

F:

Of course, there's one thing that you might that you might want to do and that's the way Joe
Eastman works, and that is if there is any

benefit in getting him on the payroll, as as Joe Eastman seems to think

HMJr:
F:

Yes.

fix him on the payroll but still permit the

company to pay him the difference.
HMJr:

I see.

59

-5F:

Do you see?

HMJr:

Well, that part - I went into it with him. I did

talk to him - I mean I never met a man who answered
my questions as frankly as he did.

F:

Yeah.

HMJr:

He's one of the frankest, most direct fellows I've

F:

Oh, yes.

HMJr:

And I like him.

F:

Yeah.

HMJr:

I asked him about it, and he said, well, he could

ever met.

but it would be a great sacrifice. He's got four
children in school and all the rest of that thing.
F:

Yes - he has some income.

HMJr:

And he told me he had some income.

F:

Yeah.

HMJr:

I would rather, all things being equal, have a man
come down here and - and sever his connections.

F:

HMJr:

Yes, I can see that.
I've reached the point - I mean I'm doing something
now which I've never done before, I'm taking the

man with the best training to do a highly technical
job for me.

F:

Yes.

HMJr:

Now in order to get it - well, I can't make my
rules too stiff. I might just as well be honest
about it.

F:

Now how long - how long a time.

HMJr:

I mean I wouldn't - hello?

60

-6now are you talking months or years or

F:

HMJr:

Well, if he comes I'd like to have him see me

through until my term, which is a little less
than two years now.

F:

Woo, woo, WOO ! Two years of it - is - would

be a positive stipulation. That may make
itthat
difficult.

HMJr:

Well....

F:

Or

HMJr:

Well, don't....

F:

Is that

HMJr:

Don't you think this, Mr. - if a man gets down

here, he's not going to be much good to me for
the first three months.
F:

No, but I was thinking, for instance, suppose we
foratthe
asaid
look
it balance of this year and then take

HMJr:

Well, that

F:

and see what the conditions are, and under
no conditions, of course, would he leave unless

he had somebody to carry on.
HMJr:

Well, that's fair.

F:

Huh?

HMJr:

That's fair.

F:

Yeah, I - I think a two-year commitment 18....

HMJr:

Well, that's fair - I mean ...

F:

Huh?

HMJr:

That - that's fair.
All right.

F:

61

-7HMJr:
F:

That's fair.
All right, and that's through - through 1943 and
then look. I'm just making a note on this, and

see - well, now all right, Mr. Secretary, let's
my associates here. I've got to see just what

do this. I'11 - I'll talk this over with - with
heir plans were because I know they had some

thoughts with this possible change over there --

with the Eberstadt situation -- that Bill might
find himself in a - well, relieved after sixty or

ninety days or something of that sort. You never
know which way the wind will turn. So let me

check it over with him. I'll talk with Bill, and

when - when would you like to hear from me?
HMJr:

I'd like to hear from you by forenoon tomorrow.

F:

Oh-oh ! All right, all right, we'll do it.

HMJr:

Forenoon tomorrow.

F:

I'll do it.

HMJr:

Now when you call, will you call me on District
2626?

F:

HMJr:

District 2626.
Yes, that goes right to my own telephone operator.

F:

I'll do that before noon tomorrow.

HMJr:

If you - and I didn't tell him I was calling you.

F:

I see.

HMJr:

Do you think I should? Maybe it would be nice.

Hello?
F:

HMJr:

Yee, let's do that.
Should I tell him I called you?

F:

Let's - let's do that....

HMJr:

Yes.

62

-8and are you going to get him now?

F:

HMJr:
F:

I - I can, or do you want to get him?
No. Why don't you tell him that and ask him if

he'll call me at my home about seven o'clock
tonight.

HMJr:

To call you at your home about seven tonight.

F:

Yeah.

HMJr:

I'll do that.

F:

Fine, and I'll call you before noon tomorrow sure.

HMJr:

If you please.

F:

Fine.

HMJr:

Thank you.

F:

Goodbye.

63

February 25, 1943
4:15 p.m.

HMJr:

Hello.

Operator:

Mr. Robbins.

HMJr:

Hello.

W. M.

HMJr:

Yes, good afternoon, air."
Good afternoon, Mr. Robbins. I've done something that I hope is not displeasing to you.
I 've just called up Mr. Clare Francis

R:

Yes.

Robbins:

and told him my little story and also told

HMJr:

him that I've been talking with Donald Nelson
and have got nowhere - hello?

R:

Yes.

HMJr:

And that I felt that after all he was paying you
your salary (laughs), and had something to say
about where you would work.

R:

HMJr:

That's correct.

Also, in the final analysis, Mr. Nelson also
works for the Commander-in-Chie the way I do,
and while - 80 in the final analysis I could go
to the President.

R:

Yes. (Laughe)

HMJr:

Well....

R:

HMJr:

I - I don't get the significance, Mr. Secretary,

of - you say you got nowhere with Mr. Nelson.
Well, I - I asked Nelson about you.

R:

Yes.

HMJr:

I mean I said we - we've been talking, nothing
definite,
over
here.but how would he feel about your coming

64

-2R:

Yes.

HMJr:

Well, suddenly you're very, very important.

R:

(Laughs)

HMJr:

See?
that. (Laughs) I hope you don't mind my saying

R:

(Laughs)

HMJr:

And they've got great things in store for you

R:

Uh huh.

now that I've put my finger on you.

HMJr:
R:

Oh, my!

HMJr:

And - and 80 he comes along and recommends some-

body else who we've checked here. He's just a

third or fourth-rater.

R:

HMJr:

Uh huh.

It's ridiculous and I'm angry - and I got angry
and I called up Mr. Francis while I was angry I mean because I didn't think it was fair that

they should recommend somebody else who - well, I

just wouldn't give him any job in the Treasury.

R:

Uh huh.

HMJr:

And

R:

You're entitled to - of course, I've - I've been
close enough to this, Mr. Secretary, to realize,
I think, and have an appreciation of what you're
entitled to.

HMJr:
R:

HMJr:

R:

Well, I'm entitled to the best.
My great doubt is whether I can fill that bill.
Well, now Mr. Francis would like you to call him
up tonight at his home at seven o'clock.

All right.

65

-3
HMJr:

And he said he - as far as the Jompany 18

concerned, he'd give me an answer by forenoon
tomorrow.

R:

HMJr:

Uh
huh. All right, sir. Well, now I - I will
call him
Yes.

and - well, then - then where do I stand?

R:

HMJr:

Well, then after he - after you've talked to
him he's going to call me tomorrow.

R:

I see.

HMJr:

Then I want to get together with you and really

R:

All right.

HMJr:

See?

R:

All right.

HMJr:
R:

HMJr:

talk business.

I mean we haven't really talked business yet.
No, we really haven't.

But there was no use in my doing that. I thought
I should ask Mr. Nelson, and he's given me the
run-around; and I talked to Mr. Francis and he's
talking business. He understands and he asked

me a lot of questions, all of which I answered.
R:

Uh huh, uh huh.

HMJr:

How long and all the rest of that.
That's right.

R:

HMJr:

And he said that from the company standpoint
what they'd say would be - they agreed it would

be the balance of this year, and then have a

fresh look at it the first of next year.

R:

Uh huh, uh huh.

66

4-

HMJr:

R:

HMJr:

Then he asked me about your salary and all of
that. We - we went into the whole business.

I see. Well - well, sir, I'll - I'11 call
Clare - Clare Francis

Yes.

and I can do it either now or later this

R:

evening. He suggested at his home at seven?
HMJr:

That's what he suggested.

R:

Well, then I'll do it that way.

HMJr:

R:

HMJr:

R:

And then I told him that we just had an informal
talk and hadn't arrived at anything, and - but
now that - I wanted to get more formal and that so he said to talk to you, and he thought it
would be nice if - I said I wanted to tell you
about it and he wanted me to talk to you.
Yes yes.

So - and I might say that Mr. Bell was extremely
well impressed after he had talked with you.
Yes, we had a nice visit together.

HMJr:

Right.

R:

A nice visit together, and I enjoyed very much
meeting him.

HMJr:
R:

HMJr:

Okay.

Well, then after - well, you will hear then
After I hear from Mr. Francis, then I'11 call
you.

R:

All right.

HMJr:

Right.

R:

Thank you very much.

HMJr:

Right.

R:

Goodbye.

67

February 25, 1943

To:

Secretary Morgenthau

From:

Mr. Thompson

Referring to your request for information
on the amount of funds available for promotional
activities in connection with the sale of Govern-

ment securities:

After allowing for continuance of present
activities of the War Savings Staff and the
Victory Fund Committees at approximately their
current levels, it appears that $3,000,000 can
be made available for promotional activities

incident to the April drive.

Up to $1,500,000 of this amount could be

used for printing within statutory limitations.
Otherwise the $3,000,000 could be expended as

you might direct, for radio, motion pictures,
newspaper advertising, etc.

The $3,000,000 has been computed from existing

allotments as follows:

Total

.

War Savings Staff
Victory Fund Committees

$2,000,000
1,000,000
$3,000,000

TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION

DATE February 25, 1943
TO

FROM

Dr. Harry White
Secretary Morgenthau

Effective this date, I would like you to take supervision over
and assume full responsibility for Treasury's participation in all

economic and financial matters (except matters pertaining to depository
facilities, transfers of funds, and war expenditures) in connection
with the operations of the Army and Navy and the civilian affairs in
the foreign areas in which our anued forces are operating or are likely

to operate. This will, of course, include general liaison with the

State Department, Army and Navy, and other departments or agencies and
representatives of foreign governments on these matters.

In the above connection, you will, of course, keep Under Secretary
Bell advised with respect to All matters affecting gold, coins, coinage,
currency, or rates of exchange. You will also consult with Mr. Paul
or Mr. Luxford and Mr. Pehle in all matters which come within the jurisdiction of the Foreign Funds Control.

69

TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE

FEB 25 1943
TO

FROM

Secretary Morgenthau

Mr. D. W. Bell

You will recall that at a recent meeting of

Senator Byrd's Committee on the reduction of nondefense expenditures Senator Nye criticized a
procurement transaction of the War Department

involving the purchase of a number of railroad
cars equipped for hospital or medical purposes,
and indicated that it was his understanding that the
Procurement Division of the Treasury Department
required the Surgeon General's office to purchase
cars from a particular company, even though such
cars were higher priced and involved higher operating
costs.

Senator Nye was apparently confused, inasmuch

as we cannot find that the Procurement Division was
ever involved in any such transaction as he described.
I have written letters to Senators Nye and Byrd,
copies of which are attached, and I believe that

this is all we need do about the matter.

DWB
Enclosures

2 carbon copies

70

FEB 25 1943
My dear Senator:

My attention has been called to a matter discussed
briefly during a recent meeting of the Committee on the
reduction of non-defense expenditures held February 10,
1943.

Although as stenographic reaord of the meeting
was made, my information is to the general effect that
you described a transaction involving the purchase,
by the office of the Surgeon General of the War
Department, of a member of Failread cara equipped for
hospital or medical purposes, and suggested that the
Committee might well look 1000 this particular transas-

sion. You seen to be under the impression that the

Precurement Division of the treasury Department insisted

that the Burgeen General's office deal with a particular

company and purchase a particular type of equipment,
even though another available type which had lever
operating conte, could have boes procured at a lever
price.

I have checked into this matter very carefully,
and as unable " find that the Procurement Division of
this Department participated in any degree in the

transaction to which you refer. I - confident that

further investigation will demonstrate that the matter

was handled entirely in the War Department and that the
Precerement Division of the Treasury Department was not
involved.

Sincerely yours,

151 ow Beee
Unior Secretary of the Treasury.

Non. Gerald P. Eye
United States Senate

Washington, a a.

2-22-43
WTH:mlb 2-24-43

71

FEB 25 1943

My dear Senters

I - enclosing a copy of a letter I have
just sent to Senator Hye. Its contents are
self-explanatory, and the letter is sent you

in order to correct any mistaken impression
with which you may have been left as a result
of Senator Hye's remarks at the meeting of

your Committee on February 10.

Sincerely yours,

/SID.W Bree
Under Secretary of the Treasury.

Hom. Harry Flood Byrd
United States Senate
Washington, D. c.

Enclosure.
JJO'C.Jr/Lsw
2-28-48

72

Mrs. Klotz
(

Will you give the Secretary
the attached, please, aa a
suggestion for press

conference? a for

FROM: MR. SCHWARZ

73

TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE 2-25-43
TO

FROM

Secretary Morgenthau

Mr. Schwarz is

The Treasury's Procurement Division is planning

to ask to be allowed to intervene in the electric rate
hearings scheduled to be opened next week by the local

Public Utilities Commission and to contend that the
costs to consumers in the District of Columbia area
are unreasonably high. As the purchasing agent for

electricity for practically all Federal activities
in the District, the Procurement Division last year
was billed for approximately $4,000,000 by the Potomac

Electric Power Company and its affiliates. Further
discussion should be reserved until a petition for

intervention is filed.

74

TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE

Secretary Morgenthau

TO

FROM

February 25, 1943

Frances McCathran
CONTROVERSIAL ISSUES BEFORE CONGRESS

1. Tax: Ruml Plan - Plan to force Congressional vote on the
Ruml plan by discharging the stalemated House Ways and

Means Committee of further responsibility in drafting
pay-as-you-go legislation was indicated to be gathering
force on Capitol Hill yesterday. Republican representatives
especially appeared to be strongly in support of the move.

In the House Ways and Means Subcommittee, too, Republican
members, Knutson and Reed urged that one of two actions be

pursued immediately: (1) The Ruml Plan or something similar

be submitted for the full committee's approval; or (2)
Knutson's plan of working out pay-as-you-go legislation now
and deciding what to do about 1942 taxes later, be adopted.
2. Manpower - As rumors persist of labor and manpower shakeups, WMC McNutt again was rebuffed in Congress yesterday
when the House Appropriations Committee slashed his request

for $2,454,000 from the Deficiency Appropriations Bill.

He needed the money, McNutt told the committee, for the
U.S. Employment Service whose wages, below the Federal
wage scale, are causing large numbers of the employees to

leave. If this agency fails in its program of transfering

workers from nonessential jobs to war work, he will know
"where

the reason is" McNutt added. But Congressman

Taber resented the statement as a "threat". The Department
of Labor also was refused $337,000 in the Appropriations
Bill. In subcommittee hearings Secretary Perkins, who said
the funds would be used for improvements in plants which
she thought would be a cure for absenteeism, was told by
Representative Johnson of "deep-seated feeling" that she was
"not very much disturbed or even concerned" about "the
shocking situation of absenteeism in the various industries".
The Labor Secretary also felt called upon to assure the
Committee that she had never "encouraged strikes" but instead believed "methods must be developed" to prevent them.

National Resources Planning Board - The Deficiency

75

Appropriations Bill was also a disappointment to the NRPB.
Extra funds for this agency were postponed until Congress
could decide whether to continue the life of the board
next year, even though the House has already voted down
its regular funds.

4. The Farm Issue - Reiterating the policy of incentive payments instead of raising farm parity, Secretary Wickard
yesterday asked for "a clear mandate from Congress immediately" for his Food-For-Freedom production program.

Representative Dirksen, however, said that. what the nation
needs is a "good tough food Czar" who will "slug it out
with social reformers" like McNutt and Farm Security Administrator C. B. Baldwin. There was no evidence to indicate
that Wickard would do the job, he added.

5. McKellar Bill - Bitter debate for almost 2 hours between

Senators Hatch and Wheeler in the Senate Judiciary Commit-

tee delayed until Monday final vote on the McKellar Bill,
requiring, with certain exceptions, Senate confirmation of
Federal appointments receiving $4,500 or over. Hatch said
the bill would be "completely distructive of the merit
system" and "the greatest setback of the civil service which
has transpired in many years". But Senator Wheeler claimed
that in the last few years the Civil Service System had
"practically been destroyed" anyway.

76

AGENDA

FOR THE BOARD OF ECONOMIC WARFARE NESTING

TO BE HELD / 25. 1943 AT 10:00 A.M
201. SEXATE OFFICE BIILDING

Discussion of "Report to the Board of Economic Marfare
Regarding Merchant Shipping Services to the Other
American Republics". (Copy attached.)

2/23/43

copy 3

SECRET
Report to the Board of Economic Warefare
Regarding Merchant Shipping Services
To the Other American Republics

At the meeting of the Board of Economic Warfare of
January 14, 1943 a subcommittee was appointed to report
on the export shipping situation to the other American
republics, with particular reference to the programming

of materials for projects in which the United States is
especially interested in relation to the purely civilian
requirements of the other American republics.
At the meeting, Mr. Lewis W. Douglas, Deputy War

Shipping Administrator, stated that the present target

tonnages of merchant shipping for the other American
republics represented the maximum tonnage which could be

expected unloss ships were to be diverted from military
theatres. The representatives of the War and Navy Departmonts indicated that no such diversions were possible. It
thus appeared that only by a decision on the highest policy
level could any additional tonnage be made available for
the other American republics, and the subcommittee was, by

implication at least, influenced by this factor in the

range of its possible conclusions.
Aspects of the Shipping Problem

There appear to be three chief aspects to the ship-

ping problem:

(1) The recommended minimum programs of shipping

to each republic with commodity and project
breakdowns - the targot programs within the

limits of available shipping.

(2) Administrativo mochanisms for insuring that
the available vossels are loaded in accordance
with the programs.

(3) The goaring of production in the United States
to match the export shipping programs - which
involves the backlog problem.
This

77

-2This report of the subcommittee will undertake to
consider only the first problem - the expression of our
export and shipping policy towards the other American
republics in concrete terms through the target programs.
The other two aspects are obviously of an administrative
character, and while difficult, flow out from the broader

policy decisions involved in the first point.
History of the Target Programs

In May 1942 the Board of Economic Warfare considered

a report on merchant shipping policy with respect to the
other American republics which outlined the broad factors
to be considered in determining such policy. During the
month of June there were prepared the first target programsfor the east and west coasts of South America - and the
Priorities and Allocations Advisory Committee to the Combined Shipping Adjustment Board on June 9 and June 26

accepted these targets as goals for ship allocations.
Target programs for the Caribbean countries were delayed
in preparation, as the problems were of quite a different
nature and the naval routing considerations during the
summor of 1942 made determinations much more difficult. It
was not until December 1942 that complete target programs for onch of the American republics were announced,

by the War Shipping Administration. These target tonnages,

which are still in effect, are indicated in Table 1.
The only factors taken into consideration early last
summer in preparing the proposed target tonnages were the
civilian requirements of the countries in question, in-

cluding coal requirements. The discussion at the meeting
of the Priorities and Allocations Advisory Committee to
the Combined Shipping Adjustment Board on June 9, 1942
specifically pointed out that no Lend-Lease or Pan American
Airways cargoes were included. Since that period there
has occurred, in the case of a number of the American republics an extremely large increase in special demands for
Lond-Lease

program
in the
Amazon
and
elsowhere,
mont, shipping, the including
rubber
tonnages
Valley
for military
equip-

coppor and other mining developments put forward by the
Office of Imports of the Board of Economic Warfare and
the Metals Reserve Company, the air transportation program of
the Defense Supplies Corporation, other strategic materials

projects

78

3-

projects such as quartz crystal and mica projects, and
requests of the Potroloum Administrator for War for impressive quantities of materials for the maintenance and
extension of petroleum operations in the several petroleum
producing and refining countries. In Central America the
War Department has requested considerable tonnages for

materials and equipment for the carrying out of the pioneer
road project.
Moreover, in certain of the other American republics
projects of local interest long under discussion and in
preparation have developed to the point where largo quantities of finished products are being turned out for shipment to the countries in question.

The original targets took into consideration virtually

none of these special domands, although some have moved be-

cause reductions have been found possible in a number of

civilian supply items.
Since preparing the original targets, some modifications have been made by agreement among the War Shipping

Administration, the Board of Economic Warfare, and the
State Department. The original Brazil program was broken
down into 70,000 long tons of coal and 28,000 long tons

of general cargo. Beginning in January of this year, the
breakdown was altered to 50,000 tons of coal and 48,000
tons of general cargo. Thus within the original target

total savings in coal consumption have made possible a
measure of reliof for the exceedingly great demands made
upon the general cargo tonnage by the Brazilian lend-lease,

Brazilian steel mill, Itabira, Rubber Reserve, and several
other programs.

Similarly, some other more minor adjustments have been

made in the targets for other republics and in the case of
a number of the smaller countries the total, target has been
altered slightly from time to time.
Statistics of Shipping to the Other American Republics
There are attached Tables 2,3,4, and 5 based on the data
of the War Shipping Administration indicating tonnage shipped
during 1942 and January 1943 to the several American republics.
In analyzing these figures there are A number of points which
should be kept in mind:

Shipments

-4Shipments to the land-locked countries of Paraguay
and Bolivia do not appear separately but are included with
those to Argentina or Uruguay and Chilo respectively.
In addition, shipments to El Salvador through Puerto Barrios
may appear in the Guatomala statistics, and shipments to
the Canal Zone and to the Republic of Panama are hopclossly
confused. Cortain other transshipments involving two countries
may occur in a limited number of instances, as the War Ship-

ping Administration statistics indicate the port of discharge
rathor than necessarily the final destination.
It will be noted that those figures indicato that in
general the level of target programs has not been attained
in connection with Brazil, Peru, Ecundor, Colombia, Costa
Rica, Nicaragua, El Salvndor and Venezuola. It should bo
notod that complete shipping programs for the last five
countrios mentioned were not finally doternined until
December 1942. The statistics do not permit an adequato
appraisal of the situation with respect to Bolivia, Paraguay and Panana.

On the other hand, the statistics for December, and
the proliminary partial figures for January indicato a
great improvement in the situation of Poru, Colombia,
Costa Rica, Nicaragua, El Salvador and Vonozucla. In
Decomber, the last month for which complete figuros are
available, the target programs were mot or exceeded in
practically all of the countries except the East Const
of South America. Prelininary information indicates that
the shipping tonnages are boing rathor well maintained
in February as woll. Colombin, which hns been a very
difficult problom, will again in February receive considerably more than its target tonnage, thus making up
further for somo of the vory low months in the late fall

of 1942.

In appraising these results a number of factors should

be kept in mind:

(1) The extremely difficult and changonble situations
with respect to submarino warfare, naval routings

and convoys in the Caribbean and East Coast trades.

(2) The failure of Brazil to keep its vossels in
efficient operation. In the last six months
only one Brazilian vessel a month has cleared
United States ports. This situation appears to
be improving, as the War Shipping Administration is placing into service the thirteen
Brazilian

79
5

Brazilian vessels which it has chartered, and
Brazil is placing into operation approximately
twenty-two vessels which it has committed to
the United States trade. These developments
will render more probable the attainment of
the 98,000 ton target in coming months.
(3) The failure of Bome other American republics
to make the most efficient use of their
vessels. Attempts are being made to improve
the situation by charter and by agreement.

(4) At the end of the year the port of Buenaventura,
Columbia, was badly congested following railway
washouts which, along with routing problems in
the Caribbean, complicated the delivery of goods
to Colombia.

Shipping Requirements - The Case of Brazil
There are attached (Appendix A) the breakdowns of the
target programs submitted for the month of March to the War
Shipping Administration by the Board of Economic Warfare and

the Department of State for each of the American republica.
Perhaps the most difficult problem, and certainly one which

illustrates all of the policy considerations involved, 18
that of Brazil.

The Brazil program PB submitted for March is mede up

roughly 88 follows:
Coal

Civilian requirements
Rubber Reserve program
Itabire
National Steel Mill
Other projects
Lend-Lease

Tinplate for British
meet-pack

Total-

50,000
20,100
10,000
4,000
2,400
1,400
7,600
2,500

98,000

The target tonnage for coal hes been reduced from

70,000 tons per month to the present figure of 50,000
tons. Shipments in the last six months have averaged 39,800
tons. At the level of 50,000 tone, the principal consumers
are the Lloyd Bresileiro for bunkering, the go8 companies,
the Brazilien Nevy end important Brezilien railwrye.
It

-6It is the firm conviction of the requirements officers

in the Board of Economic Werfare end the Department of State

thet the civilian requirements have plready been sleshed
below the minimum desiroble level which should be considered
25,000 tons.

The Rubber Reserve figure is below that deemed CAsential by the Rubber Reserve Company for the mere carrying

out of their present program and the necessities for supplying the large number of workers being moved to the
Amezon in accordance with the recent agreement with the
Brezilion Government. There is attached (Appendix B) a

separate memorendum prepared by the Rubber Reserve Company.

The Rubber Reserve requirements mey be summerized 88 follows:
February

March

April
May

Junc

July

17,863
15,548
14,000
13,250
11,600
3,900

*If tenkege will be reedy by July, June
shipments of petroleum products CPN be
mode in bulk.

The 4,000 ton retc for Itabirs 18 not sufficient to

take up meterials being delivered for shipment in PCBoard. A figure of et least 6,000 tons for the next three
months would be required for the purpose, and a figure of
5,000 or 6,000 tone P month thereefter.
The tonnage requirements of the Netional Steel Mill
project, to which the Brezilien Government attachra no. 1
priority, PS indicated in en Executive Decree of the
President of Brezil, will overego slightly over 5,000 tone
e month for the next two years if cerrird out 8 8 plenned.
While certain of the projects included in the "Other
projects" cetegory are being completed, other projects still

cordence with the program determination of the War Production

in the mill, including lerge quentities of meteriele for the
Centrel Reilway of Brezil, will more then make up for their
disappeerence.
Although

80

Although the Lend Lease shipments in March contain

an exceptionelly hervy item of meterials for the airplane
engine factory direct military equipment has been entered
et P very low figure, end to dete less then 10% of the
total Lend-Leese program has been delivered, The Government of Brezil attaches no. 1 priority to Lend-Lepse milltary shipments, P 6 well 88 of the Netional Steel Mill,
No requirements Are listed for the Prn American Airwaye
since errengements have been mede for the Army to transport
the 1100 tons of cargo for this purpose.

It is obvious that ell of the listed requirements of

Brazil can not be scheduled PB planned within the existing
target shipping progrem even if that target 18 met.
Policy Considerations

1. The United States feels that materials for ep-

sential import progrems must receive edequate consideration

in the distribution of shipping space.
2. Military necessities of the other American

republics must move.

3. Civilian requirements of the other American republics must move in amounts sufficient to maintain public
health and order, and to permit at leest D minimum level
of economic activity. The meintenance of such 8 level of
economic activity, and resulting political end social
stability mey be of the greatest importance to the prosecution of the war, to our own military plans, and to the
production of essential stretegic moterirle.
4. Certain projects of somewhot less direct wor
significance may enjoy P local position of overwhelming
importance.

5. At least rn important part of the total tonnege

to be moved must be cerried in vessele of the country in
question. The terget tonnages include tonnegee of ell
flags. The Wer Shipping Administration hre been removing
its own vessels 88 local tonnager come into the trede
end conversely attempting to make up the gepe 8.8 local
vessels have been sunk or heve failed to operete efficiently.
6.

-86. The target tonneges for South America at leest
were announced some time ago. At thet time they came 88
a distinct shock to the countries in question, end in eddition these countries have come to feel that their EBsential civilirn requirements would be handled within the
terget figures. Although it he's elways been made clear
that the exigencies of wer might force reductions in the
tergets end in performence, the encroechment of United
States end other projects, end military supplier, not
only effects A reel. reduction in the emount evailable
for civilian requirements, but raises psychological end
politicel questions.
7. Where the targets are alreedy tight, the foilure
to perform reises edditional problems of priority of
Reverel types of corgors, it is clcar that United States
project meterials can not in ell CPBCB be accorded first
priority, end the wishes of the Governments of the other
American republica must be given every precticable consideration.

The Case of Brazil Agein

Returning to the CPBA of Brezil, we find that projects
not originelly given much or any consideration - nemely,
the Rubber Reserve, Itebire, Steel Mill end Lend-Lense
programs - have in March been tentatively ellotted P total
of 24,000 tone or more then e querter of Brezil'e total
terget tonnage.

Celculated requirements for these four programs for
March ere even greater - about 34,000 tons. Moreover,
there is no marked bunching of requiremente except in the
OF BP of Rubber Reserve which hps special non-rrcurrent

requirements everaging to over 11,000 tone in February,

March, April end May.

It mey be leid down 88 definite that the Government

of Brezil regards P 8 of first priority the shipment of
Lend-Leese end Steel Mill meteriale. President Verge
has ordered Lloyd Bresileiro if necessary to drop ell
other cergoes in order to cesure that theer are cerried.
The Itebire project WPA initisted by the United
States and Greet Britein to essure 8 supply of high-grade
iron ore - fspecially for Great Britzin. Brezil's interest

has by these efforts been aroused and a lerge amount of

Brazilien capital has been invested in the project.

The

-9-

The Rubber Reserve program is similarly primarily
as the continuing tonnages of cargo are for the maintenance
of Brazilian workers in the Amazon, including the 50,000
now being transported to that area by arrangement between

of United States interest but is also of concern to Brazil
the two Governments.

Other Countries

No attempt will be made in this report to analyze in
detail each country program. There is attached, however,
Table 6 indicating the distinguishable tonnages included in
the March 1943 programs. A great deal of reservations must
be adopted in using this table, as it includes projects
both of interest to the United States and to the countries
in question, and, moreover, the line of demarcation between
a project of interest to the United States and one of
interest to another republic is almost impossible to define.
Beyond this, the figures probably understate what might
probably be considered to be project tonnages, since a
considerable amount of the coal and other supplies listed
for civilian consumption are for the maintenance of railway operations, public utilities, and other enterprises,
a portion of the activity of which is directly related to
the projects.
Analysis of this table and of the general program
indicates that in many of the republics the targets appear
to be fully workable. This is probably the case in all of
the republics except the South American ropublics, and in
any event, minor adjustments have been and can be made from
time to time in the small targot figures applying to the
Caribbean republics.

Among the South American countries project tonnages

loom large in the casos of Poru, Bolivia and Chile. Moreover, if the requirements being submitted by the Petroleum
Administrator for War for the second quartor are accepted,
the programs for Venezuela and Ecuador will bo thrown out

of balance, and the situation of Poru furthor impaired.
In the

-10-

In the caso of Chilo, spocial arrangements have boon

made whoroby the Corporación do Fomonto oporatos ships out-

sido of tho targot figuro, and this has relieved in part
at loast tho prossure of the projects. The Corporacion's
tonnago is only temporary, however, and discussions now in

progress looking toward the maintonance of this oxtra tonnago
in the trado should bo pressed to a satisfactory conclusion.

Tho difficult situation of Colombia has alroady boon
montioned, and the groatly improved dolivorios in January
and February citod. Tho problom of Colombia appoars to be
largoly ono of carrying out the targot program rathor than
one relating to the amount of the targot itsolf.
Conclusions:

As a result of its invostigation and analysis, tho

subcommittoo presents the following rocommondations and
commonts:
1.

Tho subcommittoo boliovos that, within the
over-all limitations on shipping which have boon
imposod by tho oxigoncios of war, the actual porformanco in shipping to most of the Amorican
republics is sufficient to maintain thoir civilian
oconomios at reasonable wartimo lovels and also

provido sufficiont spaco for tho projocts prosontly sponsored by the various governmental
agencios. Tho special caso of Brazil is takon

up indopondontly.

The subcommittoo furthor boliovos that the
prosont systom of consultation botwoon the War
Shipping Administration, tho Board of Economic
Warfaro and the Department of Stato for laying
down dotailod shipping programs within tho targots
appoars to bo working satisfactorily. It rocommonds that such consultation bo oxtondod to dis-

cussions of such modifications in tho targots

thomsolvos as may appoar dosirablo from timo to
timo.
Somo

81

-11-

Somo of the members of the subcommittee

have suggested an immediate discussion of the

cases of the targets for Bolivia and Peru.
Some of the members of the subcommittee have
pointed out that, although the treatment accorded these American republics appears in

absolute terms thus to be satisfactory, there
is no basis for comparison of this treatment
with that accorded in'shipping services to
other areas.

2.

Especially in the cases of those South
American countries where the target tonnages

are tight the failure to meet the target tonnages
will result in serious strains unless priorities
are so arranged that the project material takes
a place definitely subordinate to direct civilian
requirements,

Similarly, in the cases of the same South
American republics there is absolutely no room
for expansion of project tonnages at the expense
of the civilian requirements even if the target
tonnages are met.

As a corollary, the Rubber Reserve Company,

the Petroleum Administrator for War, the Board of

Economic Warfare, and any other agencies which

may propose projects should do so in full realization of the tightness of the shipping situation,
and should not sponsor any additional projects or
any increase in the present projects unless these
can be shown to bo absolutely essential to the
war effort and, if of large magnitude, to warrant
divorsion of shipping tonnage from other areas.
Specifically, it is recommended that the second
quarter tonnage requirements put forward by the
Petroleum Administrator for War for Venezuola,
Ecuador, Peru and other potroleum producing or refining countries be studiod within such critoria.

3.

A more detailed recommendation is made for

the case of Brazil. No entirely satisfactory prograin for Brazil can be worked out within the 98,000
ton target limitation if all of the requests of the
Rubber Resorvo Company and the other projects are
carried out. The only leoway in the situation
appears to lio in the possibility of reducing tomporarily coal shipments in spite of the strong
protests of the Brazilian Government, and deferring
temporarily a part of the Itabira and stool mill
shipments,

- 12 -

shipments, with a view to increasing coal,
Itabira, steel mill and civilian requirements
shipments in June and July as the rubber
program drops off from its spring bulge.
The subcommittee, after reviewing all of the factors,
recommends the following tentative revisions in the March
shipping program for Brazil with the indicated adjustments
to be made in April and May. These recommendations are
based upon the following premises:

a. That a rubber program must be carried out.
b. That lend-lease shipments can not be reduced.
C. That no one of the other programs can be
eliminated entirely.
Recommended Program for Brazil
Goal

43,000 tons (tentative)

The Government of Brazil and the Embassy at Rio

have stated emphatically that no reduction below
50,000 tons can be countenanced although deliveries
in the past have fallen short of this figure. The
Brazilian Maritime Commission has indicated that

bunker stocks are very low and that failure to allocate more coal to the shipping companies may shortly
result in a curtailment of coastal as well as international services. Nevertheless, it might be possible
during March to get along with shipments at a lower
figure if the position of each consumer is stated

carefully and shipments are made only to consumers
whose stocks permit no delay. Some relief may be
expected from increased shipments of conl from south-

ern Brazil to principal consumers.

In April and May this figure may be increased to
45,600 tons if lend-lense shipments decline to 5000
tons a month as suggosted below.

In Juno or July, when the Rubber Reserve movement

has subsided, it should be possible to step the figure
up
to 50,000
98,000
tons. tons within the full target tonnage of
Rubber

82

- 13 Rubber Reserve

17,000 tons (tentative)

In view of the importance of rubber, the subcommittee was loath to recommend any reduction, but the
subcommittee believes that the tonnage of rubber to
be obtained from the Amazon Basin should be carefully
considered in relation to the 75,000 tons of shipping
space required in the noxt four months to move the
materials nooded for the furtherance of the program.
Representatives of the Rubbor Roservo Company failed
to present to the subcommittoo a justification for
the airport construction and the air transport programs
on the grounds that such program is an intogral and
insoparable part of the entire rubbor program. If
this portion of the program were eliminated it would
result in a saving of about 25% of the shipments
planned for the first four months.

It is suggested that the Board consider carefully
the essentiality of this portion of the rubbor program.
and the effects of its climination, a mattor concerning-which the subcommittee was unable to obtain information. It is also suggested that the Board recommend
that every possible step be taken by the Rubber Reserve
Company to the end that petroleum products may be
moved in bulk rather than in drums as is being done
now. (See memorandum of Rubber Reserve Company

attached as Appendix B.)
The subcommittee recommends that the total of
60,000 tons be allocated to coal and the Rubber
Reserve program, and requests the Board to determine

whether the air transport program is essential or
whether the tonnage involved (about 4,000 a month)
should be devoted to coal.
Civilian Requirements

20,000 tons

In view of the obvious importance of this item

and the cuts that have already been made, no comments

are required. At this level each commodity will have
to be given the same careful study as indicated in
the case of the coal requirements. As lend-lease and
rubber requirements permit, this item should be given
priority in increases, and an effort should be made
to step it up to 25,000 tons by June or July.
2,500 tons
Tinplate for British Meat Pack
Itabira

- 14 Itabira

3,000 tons

The engineers have indicated to the Export-Import
Bank that an average of at least 4,000 tons is necessary to insure the carrying out of this program, but
that they of necessity will accept 3,000 tons a month
for a few months, provided that when some relief is
possible in June or July, the figure is stepped up
to make up for this deficiency.
Steel Mill
3,500 tons

In view of the economic and political importance
attached to this project by the Brazilian Government
and the favorable treatment given United States projects in those recommondations, a cut of more than
30% would not seem practical. This is another project
which must be stopped up to make up for this deficiency.
Other Projects

1,400 tons

Scc program for March attached.
Lond-Loaso

7,600 tons

4,100 tons of this total represents shipmonts for
the airplano onging factory which has obvious military

and political value. It is to be hoped that total

lond-lease shipments can be limited to 5,000 tons in
succcoding months, and it is recommonded that Army
and Navy representatives give this thoir closest

consideration.

It is recommended that, in view of the Export Control
Docentralization Program now in force in Brazil and other
countrios and in view of the obvious and appropriate
interest of the Government of Brazil in this whole matter,
this recommendation not be accepted as final, but as a
tentative suggestion to be placed before Brazil which may
wish
to maketoother
of interest
it. modifications in the various projects
The subcommittee believes that the greatest possible

flexibility should be maintained in the entire system of
fixing shipping and export programs, and consequently it
does not wish to attempt to set the pattern of exports to
Brazil many months in advance. Novertheless, it suggests
that

83

- 15 that in June or July when the Rubber Reserve program has
dropped off, the distribution of cargoes within the target
tonnage might be somewhat as follows:
Civilian Requirements

Tinplate for British
Meat Pack

Itabira
Steel Mill

Other Projects
Lend Lease

Total -

50,000 tons
4,000
25,000
2,500
4,500
5,000
2,000
5,000

N

Rubber Reserve

II

Coal

98,000

Priorities
The subcommittee understands that the April program
being prepared by the Department of State and the Board

of Economic Warfare will indicate a priority to be applied
if only 80% of the target tonnage is supplied. In the
meantime, the subcommittee recommends that if shipping is
not available to move the target tonnage to Brazil in
March, B priority be given to the following:
Coal

Rubber Reserve

Itabira
Steel Mill

Lend-Lease

3,000 tons
3,000

1,000 II
1,000 II
2,000 II

Neither this recommendation nor the 80% tabulations
being prepared by the Department of State and the Board
of Economic Warfare for April should in any way be considered to lossen the urgency and necessity of meeting

the full program.

Smoker
616

st

to

start

ni

84

TABLE 1
DRY CARGO TARGET SHIPPING TOMNAGES FOR EACH OF THE OTHER
AMERICAN REPUBLICS

TOTAL
TARGET

Argentina

Bolivia
Brazil
Chile

Colombia

Coste Rica
Cuba

Dominican

Republic

Ecuador
Guatemala

Haiti

Hondures

Nicaragua

Republic of

40,000
4,500
98,000
10,000
9,200
2,400
60,000
2,100

Peru

El Salvedor

Uruguay

Venezuela

15,000

--

50,000 (1)
---20,000
--

2,053
3,800
1,700
2,500
1,300
9,000

---

500

---

Panama

Paraguay

COAL

7,000
1,600
16,000
12,000

NEWSPRINT

6,500
120

3,000
408
437
95

700
35

130
120
10

----

--

8,000 (2)
--

10
40

245
12

400
100
800
190

(1) The coal target for Brazil Was 70,000 until January
1943 when it W.A.B decreased to 50,000.

(2) The original estimate of coal requirements for Uruguey
was 14,000 tons per month, which Was reduced to 8,000
toms because of the receipt of coal from countries
other then the United States end because of the use

of substitute fuels.

TABLE 2

UNITED STATES EXPORTS TO OTHER AMERICAN REPUBLICS
JANUARY-DECEMBER 1942

(Dry Cargo in Long Tons)
Country

Argentina 1

Jan.

101,216

Bolivia 2

Feb.

Mar.

Apr.

70,219

79,285

68,458

May

55,230

Juno

July

Aug.

Sept.

Oct.

Nov.

49,105

45,753

33,557

17,387

15,381

26,765

Doc.

26,799

12 mo.avo. 6 mo.ave.
Jan.-Doc. July-Dec.

53,552

27,607

-

-

-

-

Brazil

-

5,536

669

2,353

4,744

879

7,538
3,611

Republic of
-

-

-

-

-

7,402

4,482

4,581

3,701
1,831

60,560

72,082

173,790

85,520

86,348

593

3,845

2,117
6,587

930

735

8,649
2,585
4,621

8,424

3,188

2,167

597

4,746

3,974
3,989
6,099
2,694

925

1,775

3,874

3,771

956

604

658

476

4,161
2,508
5,175
1,582
2,791
4,283

5,289

8,364

5,311

11,185

10,653

10,305

403

717

3,108

467

590

8,027
25,029

15,682
27,761

1,038
5,010
22,641

10,280
23,281

12,095

25,778
7,726

Venezuela

36,419

15,919

1,

5,527

692

20,633

15,902

8,561

64,731
17,040

763

784

17,677

2

-

23,550

3,628
1,453

17,755

Uruguay

TOTAL

-

12,669

E1 Salvador

-

Peru

-

Paraguay 5

-

Panama

4,988
1,022

85,055

19,334

1,968
79,733

3,477

8,418
-

5,533

3,804
4,292

6,331
4,583
2,032
4,062

60,217

18,428

-

236

4,795

49,213
8,532

15,073

-

984

7,226
6,255

89,463
25,645

4,771

1,920

-

3,106

2,669

65,225

13,709

2,914

3,293
5,021
2,385
2,866
1,309

-

1,968

6,060

-

Nicaragua

80,745

-

Honduras

2,411
8,093

988

-

Quatomala

Haiti

4,134
3,457
6,757

2,463

81,231
13,852
6,346
1,405
51,179

-

4,751
2,239
5,696
1,912
6,055
1,911

Republic
Ecuador

43,036
21,168

-

7,130
3,731
5,730
2,564
5,772
1,624

Dominican

10,560
6,703
69,496

80,034
23,976
13,535
11,987
65,238

-

81,554

25,336

-

108,412

Cuba

78,695

20,020
7,404
2,922
105,381

-

6,700

62,070

-

11,026

Costa Rica

76,086
31,118
7,982
3,673
78,069

-

Colombia

17,654
8,717
7,417

2

114,825

38,709

-

135,508

Chile 3

4,456

3,515

10,510

11,251

442

330

435

757

377

10,054
11,421

14,413
18,448

14,378

13,413

14,721

10,205

5,469

8,078

10,627

7,976

8,647

494,887 373,310 357,125 344,859 307,056 313,798 244,052 243,064 229,200 238,253 254,564 415,241 346,855 270,729

Includes Paraguay

Included in Chile
Includes Bolivia
From January-October, shipments to Republic of Panama and Canal Zone are not shown
separately.

5 Included in Argontina

Source: War Shipping Admini stration.

5

Source:

8

U. S. Department of Commerce based on War Shipping Administration statistics;

(1) Included in Chile

(2) Less than one Long Ton

(3) Shipments to Republic of Panama & Canal Zone are not shown separately (4) Included in Argontina
41,036

49,577

30,740

32,745

15,073

31,015

27,185

33,731

24,171

41,954

60,118

41,737

104,393

31,056

4,432

2,764

1,726

719

1,891

2,283

2,755

7,756

4,751

10,635

6,275

4,620

7,073

2,023

2,184

2,145

4,728

1,631

3,070

297

2,716

677

1,558

728

1,946

2,804

1,870

3,736

74

154

44

47

102

108

10

1,377

1,827

4,833

1,267

718

(4)

(4)

(4)

28

2

1

9

-

(2)

Venezuela
Uruguay

E1 Salvador

302

527

616

1,288

1,539

1,565

5,700

2,063

1,508

55

197

167

90

170

378

467

693

167

Peru

Paraguay

Republic of Panama (3)
212

156

176

409

157

122

17

48

233

105

17

51

12

12

51

25

36

706

441

1,124

1,231

1,829

34

(2)

15

68

221

280

309

84

178

235

487

31

355

149

167

522

146

4,645

3,644

8,537

7,030

3,873

2,893

104

386.23 337

297

25

58

183

698

1,020

2,053

112

450

1,253

3,454

4,182

8,709

3,092

4,256

8,394

8,854

9,242

2,869

-

-

(1)

6,409

9,815

518,876

18

58

102

(2)

3

--

Nicaragua

124

172

141

189

494

70

295

1,021

466

653

100

145

50

"

79

124

221

198

369

Quatemals

189

426

426

338

303

Ecuador

130

241

426

212

Dominican Republic

121

26

3

5

6

Honduras

Haiti

-

-

4,134

2,604

641

906

3,309

2,840

2,545

4,414

Cuba

57

109

22

568

702

504

1,517

Costa Rica

31

286

837

837

1,355

1,532

1,528

1,960

Colombia

1,415

2,793

459

3,328

3,769

3,682

6,362

7,621

4,793

Chile

15,560

3,723

9,505

9,107

7,345

5,349

5,559

9,997

7,684

20,305

(1)

(1)

541

756

196

1,406

306

867

509

837

451

11,401

2,061

1,990

7,292

9,834

8,378

5,062

10,374

20,508

9,552

25,455

October

September

July

June

May

April

November

224

5

December

6 months average

Total

August

93
8

March

12 months average
(Long Tons)
(INCLUDING TINPLATE)
UNITED STATES IRON AND STEEL EXPORTS TO OTHER AMERICAN REPUBLICS, JANUARY-DECEMBER 1942

TABLE

February

January

Brazil

Bolivia
Argentina

TABLE 4

UNITED STATES COAL EXPORTS TO OTHER AMERICAN REPUBLICS, JANUARY-DECEMBER 1942

(Includes Anthracite, Bituminous, Coal and Coke Briquets, and Coke)
(Long Tone)

Republic

-

18

Equador
Quatemala

5

--

123

13,945

7,633

38

119

6

2

Honduras

--

-

14

-

16,330

-

--

7

--

14,320

--

11

20

Haiti

8,442

9,215

--

-

4

-

--

1,031

9,549

(1)

--(1)

--(1)
43,535
17,294

35,995

-

31,630
2,520

-

-

--

42,746

-

191

73,888

9,189

9,411

-

-

-

January-

July-

December

December

16,677

7,035

33,025
3,709

41,444
5,294

-

16,694

11

-

--

36

-

14

21,930
6

3

16

28

99

--

44

December

18

9

3

10

8

Dominican

14,645

1

11,816

11,499

Cuba

-

November

8

-

6

6

-

---

-

-

October

2

-

72,310

22,450
11,762

42,225

5

-

25

-

-

1

Costa Rica

14,029
10,158

42,607

19,986
--

11,646

13,481

6

2

-

Colombia

30

98

September

1

2,918

1,773
2,324

10,798

22,059

August

6 months
average

1

6,537

Child

17,767
5,688
44,086

-

July

5

Bolivia
Brazil

39,810

June

May

1

-

Argentina

April

March

February

January

12 months
average

7

5

--

Nicaragua
Republic

1

of
001

Panama

-

(3)

Paraguay
90

35

Venezuela
TOTAL
(1)
(2)
(3)

30

8

6,700

10,156

29,105

64,737

5

E1 Salvadr
Uruguay

5,462

8,094

89

-

52

10

80,525

49,143

64,956

59,831

6,203

18,152

124,772

Included in Chile
Included in Argentina
Shipments to Republic of Panama and Camal Zone are not shown separately

Source: U.S. Department of Commerce based on War Shipping Administration statistics.

-

-

-22

18

4

34

30

247,766

(2)

1

Peru

(2)

(2)

52,326

113,809

41,719

135

126,637

4,563

4,970

87,944

86,516

86

TABLE 5
UNITED STATES EXPORTS TO CERTAIN AMERICAN REPUBLICS

January 1943

Preliminary.
(Dry Cargo in Long Tons)
Argentina

26,354

Brazil

85,720

Chile

10,120

Colombia

9,445*

Ecuador

500

Peru

14,175

Uruguay

16,309

In addition 8,287 tons were shipped to Panama

for transshipment to the north coast of Colombia.

Source: War Shipping Administration

TABLE 6
DISTINGUISHABLE PROJECT TONNAGES IN MARCH 1943
PROGRAM

(long tons)
Argentina

Bolivia
Brazil

Chile 2
Colombia

Costa Rica
Cuba

Dominican Republic

Ecuador
Guatemala

Haiti

Honduras

Nicaragua
Panama

Paraguay
Peru

E1 Salvador
Uruguay
Venezuela

1

2

3

Total Target

Project

40,000
4,500
98,000
10,000
9,200
2,400
60,000
2,000
2,055
3,800
1,700
2,500
1,300
9,000

1/
1870
27900
4200

500

7,000
1,600
16,000
12,000

735
235

Percentage
42
28

42
8

14

3

540
360
490
210

27
17
13

12

not shown
not shown
390

4

not shown
3690

53

not shown
not shown
1949

16

Argentina is a special case.

Figures are not indicative since the Corporación de
Fomento
has been operating extra ships and its tonnage
is not included.

Not
significant - especially as the target is a minimum
usually greatly exceeded.

87

APPENDIX B
RUBBER RESERVE COMPANY

Washington, D.C.
RUBBER PROGRAM TONNAGE REQUIREMENTS

February through July, 1943

Listrd below are the tonnage requirements of the Amezon
Rubber Program for the months Februery through June, 1943, broken
down by categories.
June

July

1,000

1,000

1,000

4,500

4,750

5,000

200

1,500

1,500

1,500

1,500

1,500

2,860

1,000

1,000

600

100

2,000

2,500

2,500

2,500

100

2,100

2,000

2,000

1,000

1,000

15,548

14,000

13,250

11,600

3,900

February

Merch

April

Floating Equipment

800

2,100

1,500

500

Marine parte &
supplies

900

600

1,000

4,388

Drummed petroleum 3,988

River Transportetion
Coal - River
3,000
Trensportetion
Construction

3,015

May

equipment

Drummed petroleum 1,500

Construction equip-

ment

Tappers' supplies, 2,100
etc.

Held over from
January

Total

1,960

17,863

(4,400)*

*If tankage will be reedy by July, June shipments of petroleum
products can be mede in bulk.

6 XICH399A

0.0 w

STARMOO

MARCOST SERVIS

di
voted
inform its 107

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.
% mas

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241.8

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TIVIA

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11

of bin nd 935 AJORDOTT

88

The above figures have been estimated on the basis of informa-

tion currently available on anticipated shipments of supplies, equipment
and fuel. This information is not always complete, and any rapid changes

in the priority or production situation might alter requirements for
shipping space in particular months.

It is expected that requirements for dry cargo space will decrease materially after July, due principally to the fact that petroleum
products will be moving in bulk after that date rather than in drums AB

at present. Dry cargo space requirements for the Amazon rubber program
are therefore expected to average less than 10,000 ton's a month for the

whole of 1943. The seasonality of ruober tapping, and the necessity that
the basic preparatory equipment be in the Valley by May 1, in time for
the opening of the 1943 tapping season, results in a bulking of shipments

in the first half of the year.

Estimates for shipments of fleating equipment, construction
equipment, marine parts and supplies and miscellaneous rubber tapping
supplies have been prepared after a review of the time at which outstanding
orders for the same will be completed and ready for shipment to Brazil.
Delivery dates of the rather small balances of supplies and equipment
needed but still unordered have also been estimated and their weighte
included in arriving at the tonnage requirements of the program. Under
present production conditions, it is not possible to determine accurately
the delivery dates on some orders. The dates used in preparing the
above table represent the judgment of buyers familiar with the various
mark ts.

Fuel consumption of the coal-burning steamers which will soon
be operating on the Amazon and its tributarios has been determined from
examination of former operating records. The best information as to the
dates on which they will arrive in Belemand begin operating on the River
indicates that not less than 3,000 tons of coal must move in February,
and that at least 1,500 tons must move. each month thereafter. The shipmont of 3,000 tone in February will result in the establishment of Aonto
smell reserve sufficient for approximately one month's operation.
Similar calculations have been made for the many diescl and
gasoline-burning vessels and items of construction equipment which are

now or shortly will be in operation in the Valley. Proper allowance has
been made for the fact that there will be some time-leg between the arrival of construction equipment in Belem, and the date on which it will
require fuel, and also for the fact that fuel must be moved to up-river
points in anticipation of operations both of rivor craft and construction
equipment.

Examination of the nbove table will disclose that heavy shipments of floating equipment And construction equipment begin to taper

off in April, and that by June 7.500 tons out of an 11,000 ton total is
represented by drummed petroleum products Included in presently scheduled
shipments are sizeable tonnages of knocked-down oil tanks and tank farms.
Fuel barges have already been shipped to the Valley for use in transport-

ing bulk fuel from Belem to up-river bulk storage points. Depending upon
the speed with which these can be erected, delivery to Belem of gasoline,
kerosene and diesel oil can be made in bulk, thus reducing requirements
for dry cargo space.

At the moment it appears that shipment in drume must be made

through May. It may be possible to ship in bulk a sizeable portion of
petroleum requirements in June, and certainly after July all except lubes
and greases will go in bulk. The reduction in dry cargo space thus ef-

fected will undoubtedly be great enough 80 that the average monthly requirements of the rubber program during 1943 will not exceed 10,000 tone.

It has been requested that an estimate be made of the effect
of reducing the tonnage allotment for the rubber program by 3,000 to
5,000 tons a month. Three thousand tons a month, during the next four
or five months, represents so large a portion of the basic preparatory
equipment that is being sent to the Amazon at the present time that its
loss might completely stifle the Amazon rubber program. Unless this
equipment is on hand in the Valley by May 1, in time for the opening of
the 1943 tapping season, a very large share of the rubber expected to
be secured in that area in 1943 can be written off as lost to the war
effort.
The importance of the Amazon rubber program as compared with

other sources of crude rubber in this Hemisphere is illustrated by the
fact that 78% of all tree rubber expected to be imported from Latin America
in 1943 will come from the Amazon area. It does not seem at all likely,
moreover, that a diversion of effort from the Amazon to some nearer area
of potential rubber development would even begin to offset the large
tonnages which would be lost by slighting the Amazon program at this
time.

34
Roard of Economic Warfare
ograe Supply Brench

89

Appendix A.

February 1, 1943

SHIPPING PROGRAM

SECRET

Bolivia
March 1943

Long Tons

Naval Stores
Rubber and Rubber Products

10
5

Textiles (except jute bags)

25

Cotton Yarn
Cotton Piece Goods

5

15

Rayon Yarn
Jute Bags

5

5

Lumber

400

Wood Manufactures
Newsprint

120

Paper and Paper Products

200

5

Lubricants (oils and greases)

300

Paraffin

175

Hindow Glass & Glass Products
Refractory Brick
Watson Gench (Tungsten Mine)
on and Steel

100
50
50

1,200

Civilian

200

Projects

1,000

1. Bolivian International Mining

5

2. Arramoyo de Minus

135

3. Patino Minas

700

4. Watson Geach

160

Tinplate

90

Copper and Copper Products (Including Coins)
Machinery and Vehicles (Including Parts and accessories)

General Civilian

Llectrical

20

Industrial

150
100

Automobiles and Trucks

250

Projects (all types of machinery)
2. Patino Minou

690

520

Agricultural

1. Bolivian Internat'l Mining

100

170

10
50

3. Villazon-Attacha Railroad
(one locomotive)

110

150

Chomicals and Drugs

Medicinals & Pharmacouticals

5

Soda Ash

30

Other Industrial Chomicals (including copper sulphate)

45

Paints, Pigments, and Varnishos

15

Dynamite and Explosivos (including blasting caps)

25

Soap

10

Other Chomicals

10

Antofagasto Railroad

250

plivian Power Company
an Amorican Airways
Miscollaneous

250
150
110

TOTAL

4,500

90

Board of Economic Warfare
Program Supply Branch
SHIPPING PROGRAM

Brazil
March 1943

Long tons
500

Naval Stores
Rosin

300

Turpentine (natural)

200

2,000
3,000
50,000

Wood pulp

Newsprint
Coal

100

Lubricants (oils and greases)

Artificial turpentine

250
400

Window glass and glass products
Refractory brick

200

1,200

Sulphur

12,000

Iron and steel
Civilian

5,435

Projects

6,565

1. National Steel Mill

2. Goodyear Tire and Rubber Company

3. Electro-Chimica of Brazil
4. Firestone Rubber Co.

5. Itabira
6. General Electric

a. SP151, Plant Expansion, Rio
de Janeiro
b. SP/237, Lamp factory, Rio de
Janeiro

C. SP#307, Transformer Factory,
Rio de Janeiro
7. Sorocabana Railroad

2,000
45

100
60

4,000

10

100

50

200

2,500

Tinplate

40

Copper and copper wire (Sorocabana Railroad)
Brass and other copper alloys

300
500

Lead

Zinc in bars and rods
Machinery and Vehicles (including parts and accessories)
Civilian
80
Electrical
100
Industrial
200
Agricultural
300
Automobiles and Trucks
Projects (all machinery and vehicles)

1. Industries Klobin
2. National Steel Mill

250

3. Electro-Chimica
4. Sao Paulo Telephone Co.
5. Sorocabana Railroad

150

400

1,825
680

1,145

400

15

120

6. General Electric

SP #142 Bela Horizonte
SP #151 Plant expansion, Rio
de Janeiro
SP #237 Lamp factory, Rio de
Janeiro

SP #307 Transformer plant, Rio
de Janeiro
Chemicals and Drugs
Coal Tar Dyes

75

10

75

50

3,735
110

Phenol

45

Medicinals and Pharmaceuticals

75

Load arsenate

75

Cellulose acetato

75

90

Board of Economic Warfare
Program Supply Branch
SHIPPING PROGRAM

Brazil
March 1943

Long tons
500

Naval Stores
Rosin

300

Turpentine (natural)

200

2,000
3,000
50,000

Wood pulp

Newsprint
Coal

100

Lubricants (oils and greases)

Artificial turpentine

250
400

Window glass and glass products
Refractory brick

200

1,200
12,000

Sulphur

Iron and steel
Civilian
Projects

1. National Steel Mill

2. Goodyear Tire and Rubber Company

3. Electro-Chimica of Brazil

4. Firestone Rubber Co.

5. Itabira
6. General Electric

a. SP151, Plant Expansion, Rio
de Janeiro
b. SP/237, Lamp factory, Rio de
Janeiro
C. SP#307, Transformer Factory,
Rio de Janeiro
7. Sorocabana Railroad

5,435
6,565

2,000
45

100
60

4,000

10

100

50

200

2,500

Tinplate

40

Copper and copper wire (Sorocabana Railroad)
Brass and other copper alloys

300
500

Lead

Zinc in bars and rods
Machinery and Vehicles (including parts and accessories)
Civilian
80
Electrical

Industrial

100

Agricultural

200

Automobiles and Trucks

Projects (all machinery and vehicles)
1. Industries Klobin
2. National Steel Mill
3. Electro-Chimica
4. Sao Paulo Telephone Co.
5. Sorocabana Railroad

400

1,825
680

300

1,145
250
400
150
15

120

6. General Electric

SP #142 Bela Horizonte

75

SP /151 Plant expansion, Rio
de Janeiro
SP #237 Lamp factory, Rio de
Janeiro

10

75

SP #307 Transformer plant, Rio

de Janeiro
Chemicals and Drugs
Coal Tar Dyes

50

3,735
110

Phenol

45

Medicinals and Pharmaceuticals

75

Lead arsona

75

Cellulose acetato

75

-2 20

Chemical specialtics (other plastics materials)

60

Formaldchyde
Sodium sulphate

75

1,000
1,500

Soda ash

Caustic soda
Zinc oxido
Carbon black
Titanium oxido

200
75
75

250

Paints, pigmonts and varnishes

Superphosphato (fortilizer)

-

100

Other fortilizers

165

Miscellaneous

100

Quartz-mica program (ontire unshipped balance of program)
Rubber Reservo (North Brazil only)
Lend-Lease Materials

7,600

4,100

Brazilian Airplane Engino Factory
Rails
Machinory

10,000

3,500
600

2,800

Brazilian Military Commission
Brazilian Naval Commission
Braziliun Aeronautical Commission

500

total

98,000

* Give preference to photographic material, scientific and professional instruments,
tanning extracts, and precision instruments.

Board of Economic Warfare
Program Supply Branch

91
SHIPPING PROGRAI

Chile

(

March, 1943
Long tono

Textiles (except jute bags)

160

Cotton Yarn
Cotton Piece Goods
Woolen Piece Goods

50
75

10

Rayon Yarn

25

Jute Bags
Food Pulp
Newsprint

50

500

400
200

Paper and Paper Manufactures

Lubricants (oils and greases)

250

Paraffin

150

Asbestos

220

Asphalt and Tar

50

Iron and Steel (except Tinplate)

4,775

Civilian

1,000

Projects

3,775

1. Chilean State Railway

e

* 2,155

2. Braden Copper
3. Andes Copper

760

4. Chilean Exploration
5. Bethlehem Chilo Iron Minos

500

300

60

500

Tinplate

Central Heating and Rofrigerating
Equipment

25

Nonforrous Metals

250

Machinory and Vehicles (including parts
and accessories)
Civilian
Electrical

890

490
350

Industrial )

Agricultural

50

Automobiles

90
)

Trucks

400

Projects

Chilean Trading Corp.
Household and Office Machinery

400
25

1,000

Chemicals and Drugs

5

Medicinals and Pharmaceuticnls
Calcium Carbido

100

Ammonia and Ammonia Compounds

300

Pignonts, Paints, and Varnishes
Other Chomicals

100
495
25

Photographic Equipment and Materials

X-Ray Films
Hiscollaneous

5

n-Amorican Airways

500
25

** Total

10,000

485 additional tons of iron and stool for the Chiloan Stato Railways to be
shipped on vossels chartered for the use of Corporacion do Fomonto do In Produccion
Tonnage requirements of Corporacion do Fomonto du 1: Produccion are not included

in this total because of special shipping arrangements alroady ando.

-

Board of Economic Warfare
Program Supply Branch

92
SHIPPING PROGRAM

Colombia

March, 1943

Long tons
30

Milk - powdered and condensed

4

Ran tobacco

15

Hops

275

Textile3

Prepared cotton or fibre yurn

40

Cotton and wool thread
Cotton cloth

75

Cotton duck
Tool yarn
Rayon yarn

35

40

35

50
4

Cork

437

Newsprint

30

Cigarette paper
Kraft paper

200
190

Cardboard paper

70

Other paper manufactures

150

Lubricating oils and grenses

350

Paraffin

30

White cement

25

indow glass

25

Glass bottles (beverage and pharmaceutical)
Sanitary and porcelain ware

25

100

Refractory brick materials (fire brick, etc.)

30

Asbestos

25

Sulphur

2,900

Iron and Steel

2,365

*Civilian
Projects

1. S.P. 219 Tropical Oil Co.

535

120

2. S.P. 286 Compania Minora
Choco Pacifico

3. S.P. 194 & 243 Intern'1
Petro. Co.
Hardward, miscollaneous
Ferro-alloys

15

400
240
50

1,500

Tinplate

90

Nonferrous metal and menufactures
Muchinery and Vehicles (Including parts
and accessories)
Civilian

735
600

Electrical

75

250

Industrial

200

Agricultural

75

Automobiles and Trucks

135

Projects (all types of machinery)

50

1. S.P. 114 Colombin Sugar Co.

30

2. S.P. 219 Tropical Oil Co.

3. S.P. 286 Choco Pacifico
4. S.P. 194 is 243 Inter.Petro.Co.

5

50

Chemicals and Drugs

30

Coal tar dyed
Medicinals & pharmacouticals
Copper sulphate

150**
50

10

Plastic materials

.

1,130

93

February 1, 1943

Board of Economic Marfare
A ogram Supply Branch
50

Aluminum sulphate
Chlorine

25) Water purification
30)

Calcium carbide
Coustic soda

200

Soda ash

100

Paints, pignonts, and varnishes
Acmonium sulphate

Potash salts

Costa Rica

March 1943

50

Long tono

75

100
50

Sorp

90

555
20

Foodstuffs
450

Miscelluneous
Pan American Airways

SHIPPING PROGRAM

100

Explosives
Other chemicals

only

20

65

Total

9,200

Lard

5

Sulphuric acid

Evaporated milk

475

Theat flour

40

Sepolina

5

10

Yeast

Textiles (cotton textiles)

95
20

(levsprint

45

Trapping paper

50

Other paper products

65

Gasoline and fuel oil

550

ubricating oils

425

Cenent

Iron and Steel

25

Agricultural hand tools
Other civilian

215
185

Projects
25

1. S.P. 86 Cia Nacional de Fureza
y Lus

2. S.P. 137 United Fruit Co.

160

(Abaca)

15

255

Nonferrous metals and alloys and forra-alloys
Machinery and Vehicles (including parts and accessories)
125

Civilian
25

Electrical
Industrial

25

50

Agricultural (no tractors)

Automobile and truck parts and

25

accessories
130

Projects (all types of anchinery)
1. S.P. 86 Cis Nacional de

20

Foreza y Luz

2. S.P. 137 United Fruit Co.

110

(Abaca)

Chemicals and Drugs

Medicinala and pharmaceuticular
Copper sulphate

Industrial acida
Paints, pignonto and varnishos
Fertilizers

150

-

100

20
20

7

preference to office supplies, photographic supplies, transmission belting,
rubber articles, and brushes, tires and tubes.

20

1

medicines, apo-therapeutics.

Soybean oil
Neval Stores

2

- Give preference to extracts, alkaloids, serums, vaccines, vitamins, quinine,

5

Give preference to railway materials, to orders of Caje do Credito Agrario and
to Forrocarril do Pacifico for material for improvenent of part of Businventura,

120

Other chemicals
incellaneous

30

an American Airways
TOTAL

2,400

BORIY: of Economic Warfare
Program Supply Branch

February 1, 1943

94

SHIPPING PROGRAM
Cuba

March 1943
Long tons
22,000

Foodstuffs

2,000
10,000
6,000
4,000

Lard
Rice

Flour
Other

200

Navul Stores

50

Rubber and Rubber products

200

Seed potatoes

350

Textiles (except jute bags)

1,400
1,600

Juto bags
Lumber

200

Crates and cooporate
Other wood products

100
500

Wood pulp

700

Nowsprint

200

Srapping paper

500

Paper board and cardboard
Jthor paper products

200

20,000

Cool and coko
Potroleum products

690

400

Lubricating oil

200

Veselino

Poroffin

80

Other

10

100

Cenent (White)
Window glass

50

350

Glass bottles

100

Refractory brick
Sodium chlorido (ordinary salt)

400

4,000

Iron and Steel (except tin plato)

700

Tin plate

75

Alloys, forrous and nonforrous
Machinery and Vehicles (incl. parts & accessories)
Electrical
Industrial
Agricultural

525
75

300
75

75

Automobilos & Trucks
Chemicals and drugs

2,200
80

Medicinals and pharmacouticals

70

Disinfoctants and insecticidos

80

Hydrochloric acid

200

Soda Ash

400

Caustic Boda
Calcium carbido

150
300

Chomical salts

Fortilizers

(a) Aumonium sulphate
(b) Superphosphate

(c) Potassium chlorate

800
200
400
200
120

Other chemicals and drugs

1,500
1,960

#Miscellanoous
Pan American Airways

#+ Total

60,000

Ship according to ratings
Excludes Nicaro Nickol because of spocial shipping arrangements.
Should additional tonnago become available, proference should be given to sugar

bags (juto or cotton) and to foodstuffs.

95

Board of Economic Tarfare
Program Supply Branch
SHIPPING GRAM

Dominican Republic
March, 1943

Canned Milk
Tallow
Flour

10
50

100

Rubber products

10

Seeds

15

Textiles

25

Bagging (jute and cotton)

25

Newsprint

35

Trapping paper

50

Paper bags
Cardboard
Other paper

15

Lubricating oils and greases

15

5

20

Kerosene

50

(ther petroleum products

10

300

Cemont

Window #less and glass products

50

Asphalt

50

Iron and steal

450

Civilian (including hardware)

250

Projects
S.P.R. Sugar Co.

200
75

Porcella, Vincini Co.

55

Cuban-Dominicon Sales Corp.

50

James Brown

20

Tinolate

20

Nonferrous ores, metals, and alloys
Enchinery and vehicles (including parts and

15

165

accessories)

Civilian

Agricultural
Trucks and parts

Projects (all types of machinery)
Porcella, Vincini Co.

25
15

\

Electrical
Industrial

75
15

20

90
20

Cuban, Dominican Sales Corp.

60

James Brown

10

185

Chemical and Drugs

Civilian

160

Sulphuric Acid

20

Soda Ash

10

Caustic soda

40

Paints,pigments,and varnishes

30

Soap

All others

25
35

25

Projects (All chemicals and drugs)
Cuban Dominican Sales Corp.
Miscelleneous

25

160

Civilian

Projects
S.P.R. Sugar Co.
Cuban Dominican Sales Corp.
James Brown

Pen American Airways

95
65

25
30
10

100

Total

2,000

Should editional tonnage be available, goods my be lorded freely

without reference to the above breakdown.

Boing 02 Ecoboric

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REMOULTER

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furch with with

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and you
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10021

96

Board of Economic Warfare
Program Supply Branch
SHIPPING PROGRAM

Ecuador

March, 1943
Long tons

Foodstuffs (exclude flour)

70

Cereal grains products
Other food products

35
35

Naval Stores

120

Textiles and Textile manufactures

25

Newsprint

130

Paper and paper manufactures

25

Lubricants (oils and greases)

35

Paraffin
Window glass and glass products
Refractory brick (for La Cemento Nacional)
Asohalt and roofing
Iron and steel

100
25
10
10

860

Civilian (includes agricultural hand
imolements)

Projects
1. Cotopaxi Exploration Co.

2. Intern'1 Petroleum

550
310

150
160

Bathroom fixtures

35

Copper and Aluminum products

10

Machinery and Vehicles (including
parts and accessories)
Civilian

Electrical
Industrial
Agricultural

Automobiles & Trucks
Projects
Cotopaxi Exploration Co.

Intern'1 Petroloum

285

255
15

100
25

115
30

10
20

Chemicals and drugs

Medicinals and Pharmaceuticals
Insecticides and Fungicidos

200
10

10

Coustic Soda

20

Soda Ash

15

Other Industrial Chemicals
Pigments, paints and varnishes

40

75

Explosives

20

Other Chemicals (including soon)

10

Hiscollaneous
Pen American

105
10

2,055

BOWLY or

affarcy

date from
SPECIMEN
Cross

scorpe program
DATE 2000 Transport
DAY
mag

.

Bullot YOUR

population (9778 ang
<04

area PATCH (LOL STURR

nopet DRY

with
Blojacco

++ Carobing 06.

N°
no

tue
OBLES style

Ingradivis
i

&

2X in

-

DDC

a

IMAGENTI
TOTAL

SING

1999

convers 2009
2001 YOU
CARDS

97

Board of Economic Warfare
Program Supply Branch
SHIPPING PROGRAM

Guatemala

March, 1943

Long tons

Foodstuffs
Wheat Flour

775
650

Other

125

Rubber products (truck tires, etc. )

5

Hops and malt

35

Textiles
Cotton yarn

119
16

Wool yarn

1

Rayon yarn

2

All other

100

Jute Bags and bagging

85

Newsprint

120

Paper manufacturers

42

Coal and coke

10

Lubricants (oils and grease)

140

Paraffin

35

Lime

290

Glass and class products
Iron and Steel

65

705

Civilian (Incl. 25 tons of hand tools)

.445

Inter R.R. of Central America

260

Copper, brass, bronze, items
Machinery and Vehicles (Incl.parts and accessories)

3

171

Electrical
Industrial

16

120

R.R. equipment

100

Agricultural

25

Auto & trucks

10

(parts and accessories only)
770

Chemicals and Drugs

Medicinels & photmaceuticals

10

Copper sulphate

700

Soda ash or caustic-Soda

30

Paints, pigments, varnishes

10

Other chemicals

20

Matches

10

Pan-American

230

Miscellaneous

190

Total

3,800

98
February 1, 1943

Board of Economic Warfare
ogram Supply Branch

SHIPPING PROGRAM

Haiti

March - 1943
Long Tons

Foodstuffs (excluding flour)

100

Flour

400

Cotton piece goods
Other Textiles

130
20

Jute bags
Newsprint

47
10

Trapping paper
Other paper

10

10

Petroleum products (in packages)
Fuel oils

40

25

Lubricating oils

10

Other

5

450

Cement

Government

250

Civilian

100

Projects

100

Shada*

90

La Plant acion Dauphin

10

Clay Products

5

Glass and class products

15
-

Iron and teel

145

Civilian

85

Projects

60

Shada

30

La Plant acion Dauphin

30

45

Machinery and Vehicles (including parts and accessories)
Civilian

30

Industrial
Electrical
Agricultural

10
5
5

Trucks and parts

10

Projects (all types of machinery)

15

168

Chemicals and Drugs
Shada

15

Civilian

153

Copper Sulphate

23

Paints and Pigments

10

Fertilizers

8

Ammonia sulphate

Other chemicals and drugs

1

Soap

7

Potash salts

100
12

Riscellaneous
Pan-American Airways
ADA

- Haitian American Development Corporation

85

20

TOTAL 1,700

99
February 1, 1943

Board of Economic Warfare
program supply Brench
SHIPPING PROGRAM

Honduras

March - 1943
Long Tons

500

Foodstuffs
Flour
Wheat

other Foods

100
200
200
10

Rubber and rubber products (tires, etc.)

80

Textiles

20

Bags

100

Lumber, includ. railroad tires

10

Newsprint

80

Paper products
Motor Fuels

50
25

Lubricants (oils and greases)

15

Paraffin

200

Cement

170

Lime

25

Glass and glass products
Iron and Steel
Tela Reilroad

Civilian
Machinery, Vehicles (incl. parts and accessories)
Electrical
Industrial

Agricultural

Auto and trucks

300

200
100
55

8

25

12
10

725

Chemicals and Drugs
10

Medicinals and pharmaceuticals

600

Copper sulphate
Calcium Carbide

10

Pigments, paints, etc

50

Superphosphate

25

Dynamite and explosives
Other Chemicals

4

26

5

Matches

5

Pan American

100

Miscellaneous
TOTAL

2,500

100

Board of Economic Warfare
Program Supply Branch

February 1,1943

SHIPPING PROGRAM

Nicaragua

March - 1943

Long Tons
Flour
Leather

350
3

Rubber products

5

Tobacco

10

Textiles

100

Bagging (cotton or jute)

10

Newsprint

40

Paper manufactures

30

Gasoline and fuel oil

50

Lubricents
Glass ware and china ware
Iron and Steel

25
15

225

Ferro-alloys and nonferrous metals and alloys
Machinery and Vehicles (including parts and accessories)

Electrical
Industrial
Agricultural

40

Automobiles and trucks

20

20

150

20
70

Chemicals and Drugs

177

Medicinals and pharmaceuticals
Calcium carbide

12
50

Cyanide

25

Soda ash or caustic soda

30

Paints, pigments and varnishes

10

Dynamite

25

Soap

10

Other chemicals

15

Miscelleneous
Pan American Airways

65

25

TOTAL

1,300

February 2, 1943

Board of Economic Werfere

101

Program Supply Branch

SHIPPING PROGRAM
Panama

March 1943
Long Tons
3,200

Foodstuffs

Preserved meats (ham and bacon, etc.)

60

Lard

100

Freporated milk

180

Other dairy product (margarine, butter,
powdered milk, cheese, eris, etc.)

200

Polled Oate

130

Theat flour
Dried vegetables

1,000
150

Onions

130

Potatoes

250

Canned soupe, tomato sauce, crackers

fruit juices

570

Others (apples, joms, spices, vegetables

oils, fresh vegetables)

260

Malt

150

Leather manufactures
Rubber products
Tobacco manufactures
Textiles

30
20
90

175

Cotton textiles
Other textile materials

95
80

Lumber

600

Good products
Newsprint

50

245

Fraft paper
Paper manufectures

90

500

Other papers

170

Lubriecting oils

300

1,000

Cement
Lime

200

Glass bottles
Other glass products
Iron and steel
Civilian

300
90

000

360

220
United Fruit Co. Abace Project
Inchinery and vehicles (including parts and accearories)
140
Civilian
20
Flectrical
Industrial
Agriculture1

290

10
70

Trucks and automobiles

40

150

Projects (all types of machinery)
Abaon Project
Chemicals and Drugs

150

Medicinals and pharmaceuticals
Copper sulphate

620
10

150

Sode Ash

10

Caustic soda

20

Paints, pigments and vernishes

45

Ammonium sulphate

60

Mixed fertilizers

Soap

Other chemicals
Other row materials
l'iscelleneous
Pen American Airways

No whiskey to be shipped.

On additional tonnage, Eive preference to foodstuffs.

140
30

155
160

250
20

TOTAL

9,000

102
February 1, 1943

Board of Economic %erfare
Program Supply Franch

SHIPPING PROGRAM

Paraguay

Larch - 1943

Long Tons

Textiles
Cotton manufactures

10
5

Vegetable fibers and manufactures

5

Newsprint
Paper manufacturer
Tobacco manufactures

12

Lubricating oils and greases

15

30
5

Paraffin

5

Glass and Clese products
Yon-metallic minerals

15
10

Iron and steel (exclusive of tinplate)

133

Tinplete

175

Machinery and vehicles (partn and

25

accessories

5

10
5

Auto and trucks

5

Flectrical
Industrial
Agricultural
Chemicals

40

Miscellaneous

25

TOTAL

500

103
Board of Economic Narfare
rogram Supply Branch
SHIPPING PROGRAM
Peru

March, 1943
Long tons

Fats and oils (lard, margarine

cooking oils, etc.)

30

Other food stuffs (excluding rice
and flour)

100
40

Rubber and rubber products

40

Textiles

Cotton duck

5

Cotton piece goods
Houl manufactures
Rayon and rayon yarn

5
2

28

1400

Lumber

200

Civilian

900

Corro de Pasco
Other nines

300
25*

flood Pulp

400

ewsprint

125

Paper and paper manufactures

40

Paraffin

50

Lubricants (oils and greases)

10

Window glass and other glass products

75

Refractory brick and materials
Iron and Steel
Civilian
Projects
1. A. F. Wiese
2. Cerro de Pasco
3. American Smelting

1800
400

1400
10

500
100

4. International Potroleum

450

5. Vanadium Corp.
6. Comp. Minera Pacaurco

150

7. Central Railroad of Peru

40

150
25

Bathroom fixtures

200

Timplate

50

Couper, aluminum, and other nonferrous motals
Machinory and vehicles (including parts and accessories)
Civilian
50
Electrical
100
Industrinl
150
Agricultural
100
Automobile (parts only)
200
Trucks

Projects (all machinery, vehicles & parts)
1. Goodyear
2. Vanadium Corp.
3. Com. Minera Pr.caurco

4. Corro do Pasco
5. Other minus

6. Control Railroad
7. Internation Potro.

Chemicals and Drugs

Modicinals and pharmaceuticals

Insecticidos (for agriculture)
Dyes

Soda Ash

Caustic Soda

Paints, pigmonts, and varnishes

1540
600

940
250
50
10

120
110

.

200

200
550
10
50

30

125
90
40

104

Board of Economic Warfare
Program Supply Branch
SHIPPING PROGRAM

E1 Salvador
March, 1943

Long tons

Foodstuffs

Dairy products

740

Wheat

1

Flour

540

Malt & other grains

170

Baby foods

21

Yeast

3

Spices

3

Hides, skins, and leather

2

Stearins
Linseed Oil

5

6

Rubber manufactures, tires, etc.

3

Seeds

7

Textiles
Cotton piece goods
Sewing threads

1

125

88
10
12

Bagging

Other textiles

15

100

Newsprint

Cigarette paper
Other paper products

2

20

Coal and coke
Lubricants

50

Paraffin

25

5

36

Cement

10

Lime
5

Porcelain sanitary supplies

6

Sulphur

200

Iron & steel
Nonferrous metals, alloys and ores
Machinery and Vehicles (including parts

3

65

and accessories)

10

Electrical
Industrial

Coffee Mill
Domestic sewing machines

17
2

Railway

2

Textile

25
4

20

Agricultural

10

Automobiles and trucks

93

Chemicals and grugs
Analine dyes

2

5

Medicinals and pharmaceuticals
Bicarbonate of soda
Sulphuric acid

1

1
1

Calcium carbide
Sodium cyanide
Caustic soda

20
20

Fertilizer

Superphospate

Other chemicals

40
5

B

Matches

80

Miscellaneous
Pan American Airways

5

Total

1,600

105

February 2, 1943

Board of Economic Warfare
Program Supply Branch
SHIPPING PROGRAM

Uruguay

March - 1943
Long Tons
25

Hucose

10

otato starch
Rosin

Turpentine
Danning Materials
Packing and gaskets
Seeds (vegetables)

220

200
20
25
2

laval Stores

20
10

Tobacco

107

Textiles

Cotton yarn

Cotton cards and camelback for times

25
50

30

Rayon

Vegetable fibers for brushes

2

350

Wood pulp

Wood manufactures (wood in-steps for shoes

2

800

Newsprint

8,000

Coal

300

Lubricant (oils and grenses)

20

Paraffin

20

Vaseline

25

Refractory materials

10

Abrosives
5

Carbon and gruphite electrodes

3

Graphite

5

Fluorospar

1,800

Iron and steel (excluding tinplate but including 25 tons of hand tools)

2,000

Tinplate

50

Ferro-alloys

100

Copper, in all forms

10

Bross and bronze manufactures

2

Land solder
Lend manufactures

5

30

Tin (sheets or ingots)

50

Zinc

1

Babbitt metal

3

Antimony

475

Chemicals and Drugs
Naphthalone

Coal tar dyes
Medicinals and pharmaceuticnls
Insecticides
Lead arsonate
Arsenic

150
200
50

590
2

20
50
5

Other

Industrial
Agricultural
Automobiles and Trucks

75

5

Machinery and Vehicles (including parts and necessories)
Electrical
20
Storage batteries and accessories
55

150

almonans

-

Long tons Lore Tons

Cresylic acid

50

Boiler compound

3

Acetic acid

15

Citrio acid

2

Formio acid

7

Tetrachloroethylene & Trichloroethylone

5

Acetone

3

Formaldehyde

3

Carbon Tetrachloride

20

Synthetic rosins (plastics)

30
3

5
8

5

Pigments, paints & varnishes

Lithopone

15
5

Caustic potash
Sodium sulphide
Sodium sulphite
Sodium bisulphite
Sodium hydrosulphite
Rare gases (greon, orgon)
Barium peroxide

50

5

Bichromates

5

Calcium chloride
Calcium sulphide

2

50
30

Paint thinners & solvents

5

Paints & varnishes for leather

2

Zinc oxide

10

Sodium chlorate or potassium chlorate

10

Essences in general

1

Manganese dioxide

2

2

Dental materials

5

Dynamite

Ink (printing)
Asphalt, felt (roofing)

20
25

Miscellaneous

430

Materials for packing houses

250

Paper

Spices
Chemicals
Machinery
TOTAL

16,000

106
Board of Economic Warfare
Program Supply Branch
SHIPPING PROGRAM

Venezuela

March, 1943
Long Tons

Milk, powdered, evaporated, condensed

300

Crushed oats

30

1,350

Flour
Halt

200

Tanned leather

40

Rubber and rubber products
Neval stores

20

115

Seeds, seed potatoos, and other seeds

150

Textiles
Sewing thread
Shoemakers' thread
Cotton duck

262
20
2

70

Cotton fabrics

140

Bayon yern

30

Wood pulp

330

Newsprint

250

Cardboard in pulp
Saterproof paper
Paper cartons
Toilet paper
Other paper products
Coke (carbon coke)

137
7

33

10

150
40

Lubricants (oils and greases)

100

ParaffinPortland cement

190

1,000

White cement

100

Glass and glass manufactures

50

Refractory brick end materials

140

Abrasives

5

Graphite electrodes
Iron and steel
Civilian

30

2,500
1,320
1,180

Projects

1. SP 288 Int. Gen. Electric, La Guaria Power
plant

30

2. SP 158 Texas Petro. Co.
3. SP 172 Amiatio Petro. Co. -Caribbean Petro.
"

"

"

SP 173

50
90

-Venez.Oil Concess.
Ltd.

"
"

"
"

to

"

SP 174
SP 175

*

280

-Colon Devel. Co.

20

-Petro. Utensiles
10

Co.

700

4. SP 240 Socony
Small Tools
Tinplate
Copper manufactures
Copper alloys
Lead and manufactures

20

200
120
4

45

Machinery and Vehicles (including parts

1,944

and accessories)

1,245

Civilian

Electrical
Industrial
Textile
Transmission belting

100
310
50
10

Mining equipment
Telephone and telegraph

58

Railways

50

Water filters
General Industrial

42

15

85

-2-

Agricultural
Automobile (parts only)

100

Trucks

200

535

699

Projects

1. 105 Alfrcdo Sevard & Co.
Coustic Sod: end Chlorine

2.

plent

32

#276 Industria Lactia

72

Powder milk plant

3. #268 Int. Con. 100.
4.
5.

120

Power plant expension
75
158 Texas Potro Co.
172 Asictic Petro-Coribboon
Pet.

20
"

"

173

-Voncz. Oil

Commissions Ltd.

65

174 Asiatic Potro. -Colon Dev.
Co.

10
"

"

#175

-Petro.

Utensiles Co.
240 Socony

5

300

Printing"Apporatus and l'atorial

30

Chomicals and Drugs

1,180

Medicinels and pht.rmncouticuls,

(Including absorbent cotton)

30

Disinfectants

15

Copper sulphate
Acotic Coid

12

10

Murictic acid

10

Sulphurio acid

110

Cr.lcium carbide
Sodium salts

220

Sodo nsh

235

Caustic sode

150

50

Anhydrous Ammonic

12

Chlorine

10

Prints, pigments, and vernishes

100

Ammonium sulphate

30

Potessium sclts

13

Dynamite, caps, and fuces

60

Tooth pasto
Other chemicols

4

100

Instrumonts for arts and trades
Clinical and laboratory apparatus

40
40

Crown ccps
Katchos

25

107

Miscellaneous
Pan-American AirwLys

630
70

TOTAL

Allocato additional shipping to foodstuffs and projoct matorial.

12,000

February 25. -43.
Royal Norwegian Embassy
WASHINGTON. D.C.

Hon. Henry Morgenthau, Jr.

Secretary of the Treasury

Washington, D.C.

Dear Mr. Morgenthau:

May I in this way thank you for
the statement you have made in regard to the 3rd

Anniversary of the invasion of Norway.
As soon a8 the special publi-

cation is off the press I shall be delighted to send
you some copies of it.

Faithfully yours

Hair, dear
Hana Olav

Counselor of Embassy.

HO/ba

108

February 22, 1943.

Dear Mr. Olav:

I refer to your letter of February 16 in

which you suggested that I send you a brief statement on the subject of Norwegian participation in
the cause of the United Nations which might be

incorporated in a booklet for distribution by the

Royal Norwegian Information Service.

Such a statement is enclosed and I am happy

indeed to be offered the opportunity of making It.
Sincerely,
(Signed) H. Morgenthau, Jr.

Secretary of the Treasury.

Mr. Hans Olav,
Counsellor, Royal Norwegian Embassy,
Washington, D. C.

File to Thompson

Photo file in Diary

109

Statement of Henry Morgenthau, Jr., , Secretary of the Treasury,
for the use of the Royal Norwegian Information Service.

The saga of Norwegian courage under the Nasi yoke

during the past three years has been a source of inspiration

for all of us engaged in the global struggle against the
Axis. Facing tremendous odds, the people of Norway have

shown by their organised resistance how dearly they cherish
the freedom that temporarily has been taken from them.

The people of the United States are proud to have as
allies, too, the brave young men of Norway who have escaped

from their imprisoned homeland in order to carry on the

fight for deliverance from the outside. The gallant manner
in which they are shouldering their full share of the burden
in their own Merchant Marine, Navy and Air Force stire us to
do everything humanly possible to hasten the day of that deliverance.

Royal Norwegian Embassy
WASHINGTON D.C.

February 16, 1943

Hom. Henry Horgenthau, Jr.
Washington, D. C.
Dear MT. Morgenthau:

On April 9th, 1943, it will be three years since the Germans launched their surprize
attack on Norway, and in this connection the Royal Norwegian Information Service plans
to issue EL booklet containing statements by a number of representative Americans regarding the Norwegian war effort.

Ever since the invasion the Norwegians have been fighting the enemy on two fronts
within the country and from abroad. Among Norwegians these have come to bo known AS

the "home front" and the "outer" or "extornal front."

King Haakon and the Royal Norwegian Government, now situated in London, have been direct-

ing the fight from abroad under an express mandate given them by the last free Norwegian
parliament. Fighting today on Norway's external front, and side-by-side with American,
British and other Allies, are the Norwogian Merchant marine, the Royal Norwegian Navy
and the Royal Norwegian Air Force. At stations in England and Scotland the Royal Norogian Army is ready for the call to action. Both the Navy, Air Force and Army have
been completely reorganized, re-equipped and retrained during these three years, and to
large extent the recruits for those services have been drawn from the young men who

a

mainly through their own resourcefulness have succeeded in escaping from occupied Norway

On the home front more than 98% of the people have consistently stood firm in their op-

position to the Germans and to Quisling, despite privation and terror. Both as individuals and as members of groups or organizations the Norwegians have remained loyal to
the ideals of democracy and freedom. You have doubtlessly read of the courageous
fights that have been and are being made against the Nazis by the Church of Norway, by

organized labor, by athletic organizations, by the school teachers, doctors, lawyers,
publishers and virtually all other professions, and even by the children.

We should greatly appreciate receiving from you a brief, preferably informal statement
of about 100-200 words regarding Norway's fight (or any phase of it that has been of
particular interest to you) for inclusion in our projected booklet. Besides being made
available for general distribution, this publication will be spread among mombers of
the Norwegian fighting forces and of the merchant marine. An effort will also be made
to send some copies into occupied Norway.

The United States Office of War Information has expressed interest in this plan and
has requested use of the statements received for radio broadcasts to occupied Norway.
Would you kindly let mo know whether it will be possible for you to cooperate in

is project? If so, it will be necessary that your statement reaches us not later

than March 1st.

Thank you for your kind attention.

Yours very truly,

Hans Olav

Hans Olav, Counsellor

111

NOT TO BE RE-TRANSMITTED
COPY

BRITISH MOST SECRET
U.S. SECRET

OPTEL No. 64

Information received up to 7 A.M., 25th February, 1949
1. NAVAL

Russian varships have sunk an enomy 8,000 ton transport in the BARENTS
Area.

2. MILITARY

TUNISIA. No further report yet received.
RUSSIA. Russian thrusts towards OREL from the South have been supple-

mented by pressure from the North. Along the Northern flank of the salient in the
DONETS Bend German counterattacks combined possibly with thaw conditions appear to

have checked Russian progress. Russian attacks along the River MIUS Front north of
TAGANROG are meeting strong German resistance.
3. AIR OPERATIONS

WESTERN FRONT. 24th/25th. 119 aircraft were sent out - WILHELMSHAVEN

115 (1 crashed), RUHR Area 4. The attack on FILHELMSHAVEN was made through thick
cloud.

TUNISIA. 22nd/23rd. Wellingtons bombed BIZERTA, one is missing. 23rd

166 Bomber and over 400 Fighter sorties were flown in support of ground forces in
the KASSERINE Pass area. During anti-shipping operations 5 barges carrying lorries

were sunk and others damaged. Enemy casualties 4, 2, 3. Allied 8, nil, 5.
SICILY. 22nd/23rd. 27 bombers attacked PALERMO and shipping in the

Harbour. 23rd. About 25 tons of bombs were dropped at MESSINA. The train ferry
terminus was hit and elsewhere considerable damage was claimed.

MEDITERRENEAN. 22nd. Escorted U.S. Mitchells sank & large ship between

SICILY and TUNISIA. 24th/25th. A large ship in en escorted convoy is reported to
have been torpedoed and sunk off SICILY by a Wellington.
LATE NEWS.

TUNISIA. 23rd. Centre. Enemy withdrawing KASSERINE GAP. At 6 p.m.

Valley two miles northwest of Pass reported clear, 300 Italians captured. North.
Light enemy attack in West OUSSELTIA Valley successfully held.

112
NOT TO BE RE-TRANSMITTED
13
COPY NO.

BRITISH MOST SECRET
U.S. SECRET

OPTEL No. 70

Following is supplementary resume of operational events covering the
period 18th - 25th February, 1943.
1. NAVAL

One of H.M. Cruisers on passage to ICELAND (c) sustained considerable
damage from weather on 19th. Photographic reconnaissance confirms the presence of
most of the German heavy ships in BALTIC or German North Sea ports. GNEISENAU at
GYDNIA and the uncompleted 8" cruiser SEYDLITZ at BREMEN seem to have been dis-

mantled. Photographs of building yards suggest that the rate of U-boat building

remains fairly constant.

MEDITERRANEAN. Convoys of 9 and 6 ships have arrived at TRIPOLI
(L) and MALTA respectively during the week. Reports received during week of 9
enemy ships torpedoed by H.K. Submarines. By and of January 110 ships in all had
been transferred to Italian ports from South of France since enemy occupation.
Some have already been identified in service to TUNISIA.
SUBMARINE WARFARE. Week Ending 24th. Two attrcks on convoys took

place in Mid-Atlantic. 27 attacks on U-Boats by surface and 4 by aircraft during
same period of which 6 by surface craft and 3 by aircraft are considered promising.
SHIPPING CASUALTIES. During the week 20th-26th inclusive 19 ships

were reported to have been torpedoed. Four British (1 a tanker), 4 Norwegian
(Two tankers) 3 U.S. ships, and one Panamanian tanker were torpedood in attacks

on an outward bound convoy in the NORTH ATLANTIC. One U.S. ship and a Panamanian

tanker (still afloat) also in convoy, were torpedoed in N.F. Approaches, a British
ship was torpedoed N.F. of the Azores, a British tanker S. of Madeira, a Brezilian
ship N.E. of BRAZIL, A British ship E. of CAPE AGHULAS and a U.S. ship, which was
towed into port. In the MEDITERRANEAN, in addition, a British ship was damaged by
aircraft in ALGIERS Harbour.
TRADE. Imports in convoy into UNITED KINGDOM week ending 20th

431,000 tons, of which 163,000 oil. Of 300 ships totalling about 900,000 tons in
FRENCH MEDITER ANEAN ports on German occupation reported that only about 50,000

tons will remain under French control exclusively for Corsican trade. Except for
ships required by Germans for Spanish trado, all others are being sent to Italian

ports where they will be divided between Gormans and Italians.
2. MILITARY

TUNISIA. 8th Army. The general line of Eighth Army is now within

miles of MARETH. Maintenance of our forward forces through TRIPOLI port is

6

sufficient for present scale of operations and numbers troops involved. The 8th

Army came under command of General Alexander in'TUNISIA on 20th. General Filson
succeeded meral,Alexander as Commander in Chief Middle East on 16th.

First Army. One of reasons for withdrawal by enemy forces
KASSERINE area is threat to MARETH positions by 8th Army. French Forces in

Central Sector are tired and their maintenance is very stretched but remain in
good heart. U.S. and British forces engaged in fighting last week have been
mixed and intention is to reorganize under normal separate national and formation
commands as soon as possible. Large part of losses during U.S. withdrawel.
made good.

FAR EAST. BURMA.

North of DONBAIK Japanese counter-atta

supported by mortar fire has forced our troops to withdraw slightly. RATHEDAUNG
front no change. Small anemy forces have been active in KALADAN VALLEY.

FRANCE Four more divisions (S.S. Totenkopf, 327, 333, and 319
Infantry Divisions have loft, reducing Gorman divisions FRANCE and Low Countries
to 30. First 3 already identifica RUSSIA, 4th may be in GERMANY on route
there

11311

-2-

3. AIR OPERATIONS.

WESTERN FRONT. DAY. Chief events U.S. Fortress attack
VILHELISHAVEN and R.A.F. Ventura attack DUNKIRK docks with primary objective
German armed raider.

NIGHT. Out of 1160 Sorties, 20 aircraft los. Four main
attacks BREMEN, WILHELMSHAVEN, NURBEBURG and COLOGNE. 222 sea mines laid, 3

aircraft missing. Coastal Command aircraft attacked 2 convoys off DUTCH COAST,

3 ships totalling about 3,500 tons hit.

NORTH AFRICA. Air operations chiefly in support of our troops
during operations in KASSERINE PASS area. Bombing attacks were made on MARETH
line combined with heavy bombing of GABES area.

MEDITERRANEAN. Particularly successful weak against enemy

shipping by R.A.F. and F.A.A. aircraft from MALTA and R.A.F. and U.S. medium
bombers from NORTH AFRICA, 14 ships either sunk or seriously damaged, including

one cruiser damaged, two escort vessels probably sunk and one 10,000 ton tanker
sunk. Numerous attacks by day and night on industry, docks, airfields and railwaya
in SICILY and on mainland.

RUSSIA. Air operations over whole front seem to have been
restricted by weather but considerable activity maintained in Caucasus where
Russians probably have air superiority over TAMAN bridgehoud and have repeatedly

attacked coastal towns. Germans making considerable use transport aircraft this

area for evacuation superfluous personnel and wounded.
4. EXTRACTS FROM PHOTOGRAPHIC AND INTELLIGENCE REPORTS ON RESULTS OF AIR ATTACKS
ON ENEMY TERRITORY IN EUROPE.

MILAN. 14th/15th February. Extensive materi 1 damage to
centre of town and factories. Heavy casualties increased by panic. One station

hit causing interruption railway services, goods station also hit. Two hotels

near main station, one with light A/A battery on roof, completely demolished.
ISOTTA, BIANCHI, CAPRONI and BROWN BOVERI factories reported damaged.

SPEZIA. Photographs confirm damage to buildings on quay

and in anti-submarine base.

TOURS. Photographs confirm damage to engine sheds and adjacent

building, rolling stock and railway workshops.
5. HOME SECURITY.

Estimated civilian casualties week ending 24th - Killed 13,
seriously wounded 14.

114

February 26, 1943

9:48 a.m.
HMJr:

Clarence

Hello.

Francis:

Mr. Secretary. Good morning.

HMJr:

Hello, Mr. Francis.

Say, we had a - I had a talk with Bill last

F:

night and gave him the green light.
HMJr:

Wonderful.

Now the - the thing that I just wanted to clear
is - in your mind - I'm sure you understand it,
and that is that we never tell anybody to do a

F:

thing.

HMJr:

I understand.

F:

We leave it entirely for his own final decision.

HMJr:

I understand.

F:

But 80 far as we' re concerned, he's got the green

HMJr:

light for 1943 on the basis that you and I talked.
Well, did you get the impression this is something he wants to do?

F:

Oh, yes, yes. He is - he's quite - well,

apparently since your talk with him the other
night

HMJr:
F:

HMJr:
F:

Yes.

...his mind has been turning on organization
Yes.

....size of - of the task, the kind and type of

men...
HMJr:

Right.

F:

.... the availability of the men.

HMJr:

Yes.

115

-2can he get the men....

F:

HMJr:
F:

HMJr:

Yes.

what will be the attitude of the public and
others on having a man not skilled in finance
Yes.

heading it

F:

HMJr:

Yes.

and he's got many things of those, all of which

F:

seem very sound questions and which have to be met
HMJr:

Yes.

which can be met.

F:

HMJr:
F:

Yes.

But I thought his approach to it was very sound,
and I suppose we talked for a half an hour and and developed different points.

HMJr:

Good.

F:

So my guess is -- and I don't want to anticipate

him any
HMJr:
F:

No.

is that he will want to talk with you. I
to settle
come
and think that it would hewants
just be advisable
and talk
with back

to - to him,

and have us sit down over the different problems
of organization to see whether he can enlist help

of various people, not just ourselves, in getting
the right kind of people

HMJr:
F:

Fine.

for it, and that's what I think he's going to
want, and I think he's going to - I think without

any question he will indicate to you very definite
interest, but he was most sincere in your - for

your welfare, the Government's welfare, to be very
sure that every point has been looked at and before any announcement is made or anything really
done.

116

-3HMJr:

Have you any doubt in your mind he can do the
job?

F:

No, sir.

HMJr:

No.

F:

No, as I visualize the job, it's - it's the setting of a national organization right down to
the grass roots.

HMJr:

That's right.

F:

And we've all done that. He's come right up
through it.

HMJr:

And he can have your help and advice.

oh, definitely. You see, when Bill - when Bill
came out of college some eighteen or nineteen
years ago, he came right with me in the sales
company.
HMJr:

I see.

F:

And he's come right on up through.

HMJr:

Fine.

F:

And today he is president of our sales company

HMJr:

I see.

F:

HMJr:
F:

and he does roll it

right along. I'm plugging for him here
while he's away. We ve all got to take
I see.

extra things while he's down there. But

he knows it.
HMJr:

Well, I - I appreciate it, and I'm going to ask

him to come right over.
F:

Fine. If we can be of any help, let us know.

HMJr:

Well, you - you can, and I'm going to - I'm
going to take you up on that.

117

F:

All right.

HMJr:

Thank you.

F:

Thank you.

118

February 26, 1943

10:33 a.m.
HMJr:

Marriner

Marriner?

Eccles:

Yes, Henry.

HMJr:

Good morning.

E:

How are you this morning?

HMJr:

I'm fine. Marriner, how would you and your

twelve presidents like to come over and have

lunch with me Monday?

Well, that would be fine. Let's see - we were

E:

going to come over anyway and meet with Dan at
two 80 we might just as well come at one.

HMJr:

Come at one and have lunch with us, and then we
can

E:

HMJr:
E:

HMJr:
E:

HMJr:

That'11 be - I think that would be fine.
meet after - now will there be twelve?
No, there'11 be eleven. Bill Day isn't coming.
There'll be eleven, and...
And unless he's sending an alternate and I
haven't heard yet, so that
Oh.

there're - I think you can just count on

E:

eleven.
HMJr:

E:

And should there be anybody besides yourself
from the Fed.?

Well, I - that - that, of course, is entirely up
to you, but what we've been doing

HMJr:
E:

Yes.

in connection with this drive is - I mean
in connection with the - with this Victory
Fund organization, of course, we've considered
that that was really - I was the liaison between
the Board and the - and the banks.

119

-2HMJr:

Well, that suits me.

E:

So that I - I don't think it's necessary. We -

HMJr:

in the meetings before over there, the Board
have felt satisfied to have me represent them.
Well, then let's - see, because we don't have as
good accommodations as you do, see what I mean?

E:

HMJr:
E:

Well

I mean for feeding.
Well, why don't you come over here then?

HMJr:

No, no, no....

E:

(Laughe)

HMJr:

....I meant if I had to have the whole Board, I

meant.
E:

Yes. No, well, I don't think that's necessary.

HMJr:

Well

E:

HMJr:
E:

HMJr:

They didn't expect to meet at - in the afternoon
so....
I mean I - I don't want to be rude to anybody.

No no, well, I'm - I'm sure they'11 understand.
It'11 be perfectly
Well, then I'11 look forward to you and the
eleven, and - and there'11 be Bell and - and I -

I think that's enough, isn't it?

E:

HMJr:

Well, that's quite a crowd.
Oh, no, no, we can take care of that nicely.

E:

Can you?

HMJr:

oh, very nicely.

E:

Well, that - that'11 suit us fine. I'm - I'm
that - then we'll stay right on there with -

with sure - I understood you had an appointment at two.

120

-3HMJr:

Yeah, well, I'll work that out with Bell.
You had an appointment with Bell at two?

E:

Well, what we were going to do, we figured that
we would - you see, we're going to meet you at
three, and I had suggested to Dan that that that that might not give us too much time to

discuss the subject of this sort

Well

with twelve people in,and so he said, "Well,

E:

why don't you come over at two and meet with
me, and then whenever the Secretary is through.
E:

Yeah.

why, then we can meet with him."

"

HMJr:

Well, I'll

HMJr:

Okay.

E:

So that was the way the thing was arranged.

HMJr:

Well, let's leave it that way.

E:

So we'll come over at one, and then we'll the whole afternoon is - will be available.
I've told the presidents to plan on spending
the afternoon in connection with this work.

HMJr:

Good.

E:

So they're planning on it.

HMJr:

Fine.

E:

So we'll see you at one o'clock then.

HMJr:

Thank you.

E:

All right.

"

HMJr:

121

February 26, 1943
3:25 p.m.

Donald

Davis:
HMJr:

Don Davis talking, Mr. Secretary.
Hello, Mr. Davis.

D:

Yes, sir.

HMJr:

Mr. Davis, Mr. Nelson seemed to want you so

such and you've seemed 80 reluctant that - well,

on - I didn't think it would be wise to push it,

you know?
D:

I see. Well, I tried to spell it out to you in
terms that if I was asked to do that, I would

not consider any service under duress, but on
the other hand, my personal preference right now
is here.

HMJr:

Well, I thought I would take cognizance of that,
and I wasn't going to make an issue out of it.

D:

Yes.

HMJr:

Well, I just thought I'd tell you.

D:

HMJr:
D:

Again may I express my appreciation for the consideration of me.

Right. (Laughs)
And the manner in which you've handled it has
been very helpful to mo.

HMJr:

Well, anyway I hope to see you again sometime.

D:

Thank you very much, sir.

HMJr:

Goodbye

D:

Goodbye.

122
THE SECRETARY OF THE NAVY
WASHINGTON

February 26, 1943

My dear Henry:

Confirming my verbal statement to you on Wednesday, I am glad
to advise you that the Navy will provide the Coast Guard for your use
a brand new replacement Lodestar sometime prior to March 1. Under my

instructions, this plane will be fitted up with an interior arrangement
similar to the one you are now using.

Sincerely yours,

Francinct
Honorable Henry Morgenthau, Jr.

The Secretary of the Treasury
Washington, D. C.

123

TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE

TO

Secretary Morgenthau

February 26, 1943

FROM Joseph J. O'Connell, Jr.

You have asked whether there is legal objection to

employing someone in the Treasury Department who is at the
same time on a leave-with-pay status from private employment.

The statutory hurdle most directly in point is section
66 of Title 5 of the U. S. Code. This statute provides that

no Government employee "shall receive any salary in connection

with his services as such an official or employee from any

source other than the Government of the United States IHHI and

no person *HH shall make any contribution to, or in any way
supplement the salary of, any Government official or employee
for the services performed by him for the Government of the

United States. "

The Attorney General has rendered opinions on this sort
of situation on several occasions, and in each he has, in
substance, stated that the prohibition is against the payment
by anyone other than the Government of the employee's salary

in connection with his services as such public official, and

that the mere fact of compensation from a private employer

does not, without more, preclude employment by the Government.

Thus he held that the Chancellor of the University of
Puerto Rico could, while on leave of absence with pay, be

employed as Regional Administrator of the Puerto Rican Admin-

istration (See 38 Op. A. G. 294 (1935)). Likewise, he held
that a professor at M. I. T. could be granted leave of absence
with pay in order to accept employment as a consultant in the
service of the United States. The most recent pronouncement
of the Attorney General on the subject is in an opinion
addressed to the President dated April 27, 1942. In this
opinion the Attorney General states the general principles

applicable to this type of situation, and in so doing cites

with approval the rulings in the cases to which I have already
referred.

124

Secretary Morgenthau,

2.

Under the circumstances, it is quite clear
that there is no legal objection to our employing

a man who is on leave of absence with pay from
private employment unless it appears that compensa-

tion is being paid to him by his private employer
"in connection with" his services for the Government.

This, I take it, is clearly not the situation in the
case you have put to me and hence there can be no

doubt but that it can legally be done.

125

MEMORANDUM FOR THE SECRETARY.

February 26, 1943.

Mail Report

The lead gained last week by opponents of the
Ruml Plan was Increased this week. There were only
25 who wanted adoption of the plan without any amend-

ment. Forty-three letters, however, stated flatly
there must be no forgiveness of taxes.

However, the general point of view might be summed

up as, "Don't forgive taxes, but get on the pay-as-yougo basis". There is very definite approval of some
sort of pay-as-you-go method of taxation, the total
number of letters endorsing the idea in general having
passed the 100 mark, while 60 letters contained suggestions, many of which implied this approach to
income tax collection. There were 44 letters of
inquiry, and scattered suggestions for discounts to
award complete payment by March 15, and similar ideas.

The Victory Tax is still unpopular, though mail

mentioning it has greatly fallen off. The ratio is

9 unfavorable to 2 favorable. A number have suggested
that refunds on the Victory Tax be applied to 1942

obligations, or to payment for Bonds. A number of

businessmen stated that the concurrent payment of 1942
and 1943 taxes would wreck them, while 7 individuals
protested any discussion of higher taxes.
Four CIO Unions requested the raising of present
exemptions, and the. repeal of the Victory Tax. Strong

opposition to taxation of men in the service was expressed in several letters.

There were 35 Bonds sent the Secretary for redemp-

tion, and of the 8 received Friday morning, 7 were from
either North or South Carolina. Complaints continued
to specify delay in receiving Bonds, particularly
families of men in the service, or employees in some
connection for the War Department. There were 36 such

complaints, out of a total of 43.

126

-2Memorandum for the Secretary.

February 26, 1943.

There were only 3 complaints of the use of the
mailing tube which is said to be too expensive and
elaborate for the purpose.
There were 8 unfavorable letters regarding the
notice that 3-3/8% Treasury Bonds, 1943-47, are to he

called. Three letters enclosing clippings about the

stock market pointed out the danger of a rising market

so far as Bonds are concerned.

There are increasing reports of cashing Bonds to
pay income taxes, or for no specified reasons, and
many threats that the Bonds already bought must be
cashed, or payroll deductions changed, because of tax
demands during the current year.
Among many suggestions, the following are outstanding: Revoke redemption privileges; provide more

sales facilities, especially at points where prospec-

tive purchasers have cash in hand; employ insurance
salesmen to promote Bond sales; allow Bonds to be used

as collateral for tax loans to prevent cashing in.

In the miscellaneous mail there was strong approval

of the Treasury's statement in regard to agricultural

credit agencies. Eleven banks commented favorably.
There were 2 or 3 scattered expressions of disapproval,

one of the best of which is contained in the abstract.

Continuation of the salary ceiling of $25,000 was

favored by 3, opposed by none.

Congressional mail, including Bills submitted for
consideration, was unusually heavy. Many of the letters, as
referred, followed the usual pattern of Treasury mail,
being inquiries on income tax matters, suggestions,
Bond comments, etc.

Gateburh

127

General Comments

M. W. Thatcher, Vice Chairman, National Executive
Council, Farmers Educational & Cooperative Union of

America, St. Paul, Minn. As one of your friends and

strong public supporters, I feel perfectly free to
criticize your attitude toward the new type of credit

being offered by R.A.C.C., to induce farmers to increase

production of certain designated war crops. Let us
take flaxseed to illustrate our point. It is a hazard-

ous crop to raise, but a large domestic production is
essential to meet wartime requirements. If the farmer
gives up the production of less hazardous crops - which
have been part of his normal production schedule and

are more certain of maturing - and, instead, plants
flaxseed to support the war effort, he should be given

some protection by the Federal Government on this risk
crop. In substance, the Federal Government says to the
farmer: "You furnish the work and the land, and we
will loan you the money you need for seed, gasoline,

oil, etc. If the flax crop fails to mature, we will,

on proper proof of loss, cancel the note which you
have given to R.A.C.C." Now compare the limited risk
the Government assumes in this kind of an agreement

with the farmer, to the full risk it assumes when
private industry converts its plant from peacetime
production to wartime production. I believe that the
position which you have taken on this matter -- that
a loan to a producer of flaxseed, for example, under
conditions which I have outlined, is to be regarded

as "loose credit" -- is most untenable. It is a danger-

ous position for you to take, when the lack of inducement to put in risk crops could easily result in our

having a much smaller supply of these crops than is

needed. * I am enclosing the newspaper article which
states your position and quotes some of your remarks.

I believe it must rank, if it is true, as one of the

most demoralizing news stories which has come out of

Washington in recent years. I am afraid that the
farmers will feel most resentful of the position which

-2the Associated Press states you have taken, and un-

fortunately, I believe they have a right to feel this
way. In most parts of the country the banks are still

charging 7% interest on production loans. I have
heard of no banker who is willing to share any of the
financial risks in connection with farm production -even on risk crops which the Federal Government de-

clares are so essential to the war effort.

Congressman Reid F. Murray forwards letter he has re-

ceived from Frank D. Chapman, President, Berlin Chapman
Company (Canning Machinery), Berlin, Wis., which reads

as follows: As a small manufacturer employing between
four and five hundred men, I am trying to write some-

thing constructive. We are not in the class that

couldn't get work because we are able to get all the
work we can do. We also have a surplus labor supply.
We are also able to get material on a reasonable
basis. Our factory at present is engaged in making
rubber condensers, 100 Octane gas, Ships' Condensers

for Escort Vessels and Merchant Ships. To properly
turn out the required amount of production, it has
been necessary for us to expand our plant facilities

enormously. Our big question is just one thing, this
is a Necessity Certificate. As you know, a Necessity
Certificate is a directive by the Treasury Department
allowing us to depreciate our new facilities 20% a
year for the duration of the war, in case the war is
finished in less than five years. So far, we have been
successful in getting Necessity Certificates, but the
time element has given me gray hair and the creeps.

It takes too long to get a Necessity Certificate through
the Treasury Department so the manufacturer takes
can feel
from

safe in expanding his facilities. It

six months to a year to get these. During this time
we are forced to buy, or deem it our patriotic duty to
buy, more machinery to get out equipment on time, but
the financial end of it is that if these Necessity
Certificates are finally not granted, this company is
sunk. I am just wondering, although I do not wish to

make a complaint, if some attention couldn't be called
to the Treasury on the slowness in getting out these
Certificates.

128

129

W. . Wilkinson, President, The Bank of LaCrosse,
LaCrosse, Va. I see your statement in the press this
morning regarding the competition of Production Credit
Associations with our local banks. Glad that some
Government Agencies realize the unfair competition
non-Government enterprises have to contend with.

Look at this advertisement for business (local Production Credit Association). They neither pay taxes nor
income, yet they are protected by taxpayers' money

against loss. This one has a surplus of $27,000.00,
yet they have never paid any tax nor income. I hope
your suggestions will be put into effect at once.
J. M. Burkholder, Secretary, James Mercantile Co.,

Encinal, Tex. I am also in favor of rural banks handling
seed and production loans and do not favor Government

Agency competition. In our section of the country, the

rural banks exact from 6 to 10% interest on small loans
and are reluctant to renew loans from season to season,
in cases where it is necessary, and when conditions get
bad, they all want a borrower to pay up. The Federal
lending agency will lend money for 42% and don't require such rigid repayments; it is for these reasons
that many are changing from the rural bank to the Federal Lending Agency. Personally, I think if banks could

charge no more than 6% on small seasonal farm and crop
production loans, and 5% on livestock and farm machinery

loans of longer terms, that the rural banks would soon
regain most of the lost business, and the Government
would be relieved of the burden that should be borne by
the private banking system.

K. A. Riner, Vice President, Farmers State Bank, Mentone,
Ind. Referring to your press conference wherein you

stated that you hoped that rural banks would get "first
crack at farm war production loans", and that representatives of 6,000 to 7,000 banks had complained of

Government competition in loans to farmers for war
production, by the Regional Agricultural Credit Corpora-

tion, and further you believed that rural banks would
be in a better condition to cooperate with the new
Victory Loan drive in April if they were "in a happier

130

-4frame of mind", we are wondering if you appreciate the
seriousness of the situation with respect to country

banks in their effort to survive the onslaught of, not

only the recently revived Regional Agricultural Credit
Corporation, but the Production Credit Associations,
and other subsidized Federal Lending Agencies.

Country bankers, although eager and willing to continue
to cooperate with the Treasury Department in its War
Band selling campaign, are rapidly approaching the

position where they will have little, if any, time to

devote to any activity other than that of endeavoring

to protect their institutions against the co-ordinated
activities of the Regional Agricultural Credit Corpora-

tion, The Production Credit Associations, and the
Agricultural Adjustment Administration.

M. A. Perry, Cashier, New Harmony National Bank, New

Harmony, Ind. It is a great satisfaction to the country
banks of this country to see you take a stand in their
behalf. It seems to me that this Administration has

taken the attitude that a bank is of no importance in
their community, and that they should be put out of
business, not by direct legislation, but by setting up
agencies to compete with them. * # * We have in this
bank more than a million dollars of deposits with less
than one hundred fifty thousand dollars in loans.

The yield of the Government securities is so meager
that we must have local loans to overbalance this low

income. # When our country wants to do their financing, they call upon the banks. They have never failed
to do their duty.
They do it without one single
*

penny of compensation. Then when they follow up with
some damn fool law which robs us of our just income, we

feel that we have a just complaint. # This bank

is making very meager profits. We have five employees,
three who are being paid less than $1,000 per year. We
are within twenty miles of a defense plant where the

employees are being paid from $50 to $100 per week.
How do we keep our help? They are just loyal, knowing
we cannot pay more. If they were Union help, we would

be compelled to fold up and close.

* I hope you will

131

-5use your influence to see that these Government Agencies
cease to operate, that we may be able to regain our

earning power in order, if for no other reason, that

we can pay our help what they earn, and what they justly
deserve. We would also like for you to do all you can
to have us placed in the class where we play an im-

portant place in the winning of this war. A helper in

a bank is of little use for at least the first year.
He is of little use until he has that raining. We

must have this help when you ask us to put over your
financing.

Everett L. Williams, Sparta, Wis. Congratulations on
your radio talk. It was sincere and honest, and given
in the kind of way folks like to hear.

132

-6Favorable Comments on Bonds

R. Lal Singh, Editor, India News, Los Angeles, Calif.

We Indians of Los Angeles were very proud and happy
when we received your warm congratulatory telegram on
January 26, 1943. INDIA NEWS was very happy to have

initiated and carried through the project of selling

a huge amount of U. S. War Bonds on the day traditionally observed by Indians throughout the world as
Indian Independence Day. We appreciate too the full

difficulties faced by the Administration in its treat-

ment of a subject so delicate as the subject of India.
Because we appreciate this difficulty, we all the more
appreciate your kind words to us, and were very glad
to show by our actions that the Indians of Southern

California are heartily in support of the United

Nations, and wish the American and British and all
United Nations forces every possible success in de-

feating the Axis. *

L. B. Slaughter, (Whole Distributor of Humble Oils),
Electra, Texas, in reporting excess Series E Bond

purchases, says: * * * Living in a small town, doing

a very small business with some farming and stockraising on the side, should we close up shop and rush
to some defense work, or should we redouble our efforts

here and contribute our all to the job in hand? Not
having the physical stamina nor youth we once had, we

decided on the latter and went all-out at once, re-

ducing our help for farm and ranch work to one man,
and one man for the gasoline business. Our former
employees went to defense work immediately. We also

streamlined our domestic and social affairs, the extra

money that ordinarily was paid out each week for maid
service, gardener, wave sets, manicures, and even shoe-

shines (it is surprising what an application of paste
polish applied at home will do for an old pair of shoes),

was banned. This all went into a Defense Stamp fund.
We found that by so doing, we were able each month to

133

-7buy an additional $25 Bond. We also found that a
college football game, or a big league baseball game
could be almost as exciting heard over the radio, as

sitting in the reserved section. Dollars thus

saved were added to our Stamp fund. By this careful
planning, we have been able to give not 10%, not 50%,
but every penny above our actual necessary expenses,

to the purchase of Bonds. Of course, we have not
been restricted to forty-hour weeks. Our weeks include Sundays, and they are from dawn to dark, but
we are not complaining, and do not feel that we have
sacrificed anything. In fact, when we hear our leaders
mention the rationing of gasoline and food as an addi-

tional sacrifice, we are a little ashamed, as we feel
that the only people, thus far, who have sacrificed

are those who have given their loved ones in line of
duty. We have, perhaps, been inconvenienced a bit,

but if there is any of the pioneer fiber left in our

souls, we will be stronger by having these experiences.
We are eagerly awaiting your reply, and trust that you
will understand that our Bond buying was for no selfish purpose, but was the only way we knew to prove
our allegiance to the Government that has made it

possible for us to save and to share in its securities.

134

-8Unfavorable Comments on Bonds

A Number of Employees, (Five names given), Philadelphia,

Pa. (Letter referred by the White House.) We are em-

ployed at the Quartermaster Depot and most of us have
pledged 10% of our wages every week since last May.
As yet, we have not received any Bonds, and if anyone

dares to inquire about them, we are either laughed at
or reprimanded and told there is a war going on. *

Why aren't we getting these Bonds, and why doesn't

some one look into this matter as they tell us Washing-

ton is to blame. We have noticed that whenever anyone
wrote to Washington, they were called down severely

about it in the office. As we do not wish to risk our
jobs, or be put on work where the remuneration is
small, we will sign a few names of the people who are

also interested in receiving their Bonds. Please in-

vestigate the manner in which this place is conducted.

Ernest F. Farley, Esmond, R. I. I represent the

workers of the Union (Esmond Mills) as an executive
member. I am a member of the big labor management

committee, to help solve the problems of the Mill.

I am a member of the small labor management committee,

whose job it is to take care of the sale of U. S. War

Bonds and United War Fund. * * We were deducting from
the pay of the workers about 30% in November. This we
felt was not enough so we held an outdoor rally, and
we increased our payroll deductions to 92%. We re-

ceived a Minute Man Flag to fly over our mill. But
since then, through the lack of receiving our Bonds,

I mean the workers, of course, our payroll deductions
have dropped to 66%. The main reason for people stop-

ping the Bonds is the fact that it takes two to three

months to receive them after they are paid for.

*

We have asked some of the payroll workers why we are

not receiving our Bonds faster, and they tell us the

bank can't send them out any faster because of lack of

help. So we suggested to management to become an issuing
agent. *
Management does not feel as though they

135
9-

would care to stand this responsibility because they
have to buy the Bonds, and if any were lost, they
would have to pay for them.

They were told by

the Providence office that they need not buy the
blank Bonds. They would send them to the Mill in case

management wanted them, and when they were paid for

($18.75) by a worker, type their name on the Bond and

serial number along wi th the official stamp, give

the Bond to the worker and forward the money to the
bank. Then management inquired further and the Federal
Reserve Bank tells them this cannot be done, or at

least, it implied as much, but we did not see the
letter, and management maintains they must buy the

blank Bonds, and don't feel as though they care to

take this responsibility. In the meantime, our quota
Somewhere along the
is going down all the time.

line, someone, somewhere, is holding up these Bonds, and

our soldiers are not getting bullets for their guns.
* I hope you will answer my letter and tell me just

what is what, because every time I go through the Mill,
workers say, where is my Bond? When am I going to get

it? I'm going to stop my Bond deductions, and they stop
their deductions, and this does not help the War effort.

George S. Stevenson, New Haven, Conn. I address this

letter to you directly because I regard the matter as
of real importance, and because I believe that my feel-

ings are shared by large numbers of those who are enlisted under your good leadership for the Victory Fund
* You can depend upon the last
campaign in April.
ounce of energy of every last one of us. In the New
Haven area our chairman al ready has his plans skilfully and firmly drawn in the determination to make
April surpass December, and it will be no easy task.

On the eve of that supreme effort is it fair that we
be confronted with that dismaying statement about

"coupon clippers"? I write with especial feeling because my particular job appens to be the lining up of

prospects for substantial purchases, and during the
past few days I have heard some bitter comments on that

2

136

- 10 stigma cast upon bond-holders. For example, I have
been asked, "If my savings of the past are branded
as wrong, how about my savings of the present and

future? Now I beg you to take precaution that will

prevent the recurrence of such an unfortunate episode
as the "coupon clipper" statement. Please believe

me that-I write this letter soberly and earnestly,
after several days of deliberation as to where my

duty lay.

Miss Catherine J. Towner, Detroit, Mich. Last week
while buying a War Bond, I was especially taken with
the number of people in line who were cashing in their

older Bonds. The man who wrote out my Bond mentioned
that he cashes in twice as many Bonds a day as he
writes out

E. H. Benner, (Real Estate), Omaha, Neb. The Bond
issues which have been put out by your Department do
not seem to meet the needs of current business. As

you know, every business has to maintain itself in
liquid form, and if a Bond could be sold to the public

which was immediately redeemable at face value, with
a 2% earning power, a lot of the money which is kept
in banks to meet any sudden demand or exigency of
business would be invested in these Bonds. There
possibly would be considerable traffic in such Bonds,
but many businesses would not need to draw upon this
reserve and the funds would remain until some necessity arose. Businesses like ours have money on
account belonging to our clients and we cannot jeopardize that money because it is on demand, The demand

does not seem to come, but it is still there.

Honestly, I wish that the men in authority in Washington
would come to realize that the control of the businesses
of this country is not in the hands of people who have
a seven-year old mentality.
A. W. Lamm, Treasurer, Clay-Adams Company, Inc., N.Y.C.

We consider the attached letter received by us Feb. 5
from your New York Office, uncalled for, unjustified

137

- 11 and offensive. Inasmuch as we appear to have reached
no satisfactory agreement with our employees regarding the 10% payroll deduction plan for the purchase
of War Bonds, a number of questions are asked which
are in the same category as the classic, "Have you

stopped beating your wife yet?" In the first place,

we felt that we had reached a satisfactory agreement
with our employees regarding the 10% payroll deduction

plan for the purchase of War Bonds and Stamps, inasmuch

as every one of our employees, with no exception, is
enrolled in the payroll deduction plan, and has been

since March, 1942. When we have been asked to submit

detailed reports by your office, either in Washington
or New York, we have been glad to do so. Some of

our employees' deductions are for extremely small
amounts, whereas others run into much more substantial
amounts, far in excess of the 10% minimum, and these
varying deductions are governed, of course, by the
earnings of each employee in proportion to his obliga-

tions. * In answer to the last paragraph in the

letter, we enclose copy of letter we are writing to
Nevil Ford, State Administrator, returning the card

and the self-addressed envelope, which is the informa-

tion they want so they will be in a position to know
whether or not to try to service us. All we can say

is that if their letter is a sample of their service,
we think it is better if they don't. We consider that
the type of letter we received actually defeats the
purpose for which it is sent. You refer to employers'
efforts to inspire their employees. Do you consider

that the attached letter is inspired or inspiring,

regardless of the facts in the case?

J. R. Weiler, Cashier, Harlan National Bank, Harlan, Ky.
I am writing to enter a one-man protest against the
arrangement of "Request for Payment", on the back of

U. S. Savings Series E Bonds. The first blank line is

very confusing, and as I understand it, has no meaning
or value on the $25 Bonds because a partial distri-

bution of a $25 Bond cannot be made. Many owners sign

on the first line, and then if we have them re-sign on

the second line, the Federal Reserve Bank at Cincinnati

138

- 12 -

will not accept the Bonds, and we are required to
fill out Form PD 1522. In most cases, a bank clerk
must stand wi th his finger held on line 2, in order
to get the applicant for redemption to sign on that line.
This is a wastage of bank time. Blank line 1 should be
abolished. If this cannot be done, then lines 1 and 2
should be indicated by figures 1 and 2 set to their
left so that a bank clerk can hand the Bond back to a
customer and tell him to sign. on line 2. Any kind of
re-arrangement will be an improvement to the present

one. I hope you may see your way clear to readjust it
on future printings.

139

- 13 Favorable Comments on Taxation

Hansan Wu, Hansan Trading Co., N.Y.C. May I respect-

fully express my approval of your steadfast insistence
upon collection of the 1942 income tax and of your
resistance to the clamor of the proponents of the
Ruml and other tax cancellation plans. With the United
States engaged in a costly world war, taxes must be
paid by all of the people in extremely heavy degree,
not only to provide the sinews of war, but to reduce
Governmental borrowing and thereby retard the rate of

increase in our national debt which, if uncontrolled,

would threaten the very foundations of the America we

are fighting for. Under such conditions, isn't it mere

folly to scratch off taxes now due and about to be paid
into the Treasury on the ground that such a plan will
make it easier to collect future taxes? Has the old
American adage, "One bird in the hand is worth two in
the bush", become outmoded? * Many of my Chinese

relatives and friends are impatiently waiting to pay

their 1942 income taxes and my remarks express the

sentiments of several of them. A few of them have asked
me to ascertain the answer to a technical question. Are
they entitled to exemption for wives and minor children
whom they support, residing in China? I have been advised by a young lady clerk in the Internal Revenue
Department that the dependency of children under 18

years is allowed, but there is no provision made for

the wife of the taxpayer. Is this correct?

R. J. Simpson, Los Angeles, Calif. As a business

analyst and efficiency expert of twenty-five years
standing, I wish to heartily endorse the opinion of

your legal adviser, Randolph Paul, as broadcast from
Washington to wit: To amortize 1942 income taxes over
a period of six years and by no means to waive any

portion thereof. The pay-as-you-go plan for the pay-

ment of current 1943 taxes is quite commendable, but

to waive a matter of billions in taxes, 1942, is far

beyond my understanding of business procedure. We, in

140

- 14 -

California, suspect that there is a very powerful

lobby at work in Washington endeavoring to influence
prospective legislation to cancel 1942 taxes, and we do
hope that our President may lend his efforts towards

defeating any legislation favoring cancellation of

the said 1942 income tax. The U. S. Treasury cannot
afford such a loss as you may well know.
William W. Allen, Brookline, Mass. Keep up your

objection to the Ruml Plan. It is my hope that the

1942 taxes, as the tax law now stands, and part of
1943 taxes are collected in 1943.

A. Griffen Ojena, Los Angeles, Calif. * If your

Dad were Secretary of the U. S. Treasury, he would
make every effort to prevent the $200,000 and over
income taxpayers from sabotaging the Treasury in regard
to 1942 income taxes. The Treasury's weakness in fore-

stalling capital "appeasement" will lead to insistent

and effective demand by the "big shots" through the
use of the small income taxpayers to an ultimate cancellation of the 1942 income tax. The whole thing
seems unpatriotic, un-American, indecent, and an additionally criminal act against generations yet unborn.
V. E. Adams, Atlanta, Ga. The Treasurer of the U. S.
is 100% correct in opposing the Ruml Plan, or any other
plan to forgive 1942 income taxes due the Federal
Government. Last year was undoubtedly the P eak year

for war profits.

141

- 15 Unfavorable Comments on Taxation

Louis F. Lee, Lawyer, N.Y.C. * I am informed that

under the present tax law members of the Armed Services

are subject to tax even on their pay for such services,
and that the only extra deduction that is permitted
is the sum of $300 for a married non-commissioned
officer, and $250 for an unmarried non-commissioned

officer. Commissioned officers are permitted no deduction. I have talked with many persons concerning
this, and every one seems to be outraged at the fact

that anything received by any one in the Armed Services,
commissioned or non-commissioned, should be in any

wise taxed. Surely every one will agree that they are

giving their all for their country. *

Harry R. Allard, Les Angeles, Calif. There is a lot

of comment on the fact that income tax is slow in coming

in. May I state that up to yesterday, the company for
which I work has not notified the employees as to their
earnings for the last year? I have been ready and willing to pay my tax in whole, or in part, but cannot do
so without the notification by the company. It has
been the policy of this company for several years to
be months late with our notifications. While not all
of the employees would pay up, many would pay far

sooner than they have done if they knew their exact

income.

Mrs. F. B. Jalu, Chillecothe, Mo. (Encloses clipping

on "abating tax liabilities".) I supposed the tax

question was settled for this year, so I filed my return

at the Federal Office here January 8, 1943, with Geo.

Dameron, and gave him my check for the year - $250.37.
It was sent to Kansas City and cashed. Now I want my

money back, except the first quarter - $62.59. And in
the future will be careful how I pay, but am always
prompt in paying taxes. Thank you, and tell me how
to get my money.

141

- 15 Unfavorable Comments on Taxation

Louis F. Lee, Lawyer, N.Y.C. * * * I am informed that

under the present tax law members of the Armed Services

are subject to tax even on their pay for such services,
and that the only extra deduction that is permitted

is the sum of $300 for a married non-commissioned
officer, and $250 for an unmarried non-commissioned

officer. Commissioned officers are permitted no deduction. I have talked with many persons concerning
this, and every one seems to be outraged at the fact

that anything received by any one in the Armed Services,

commissioned or non-commissioned, should be in any

wise taxed. Surely every one will agree that they are

giving their all for their country.

Harry R. Allard, Los Angeles, Calif. There is a lot

of comment on the fact that income tax is slow in coming

in. May I state that up to yesterday, the company for
which I work has not notified the employees as to their
earnings for the last year? I have been ready and willing to pay my tax in whole, or in part, but cannot do
so without the notification by the company. It has
been the policy of this company for several years to

be months late with our notifications. While not all

of the employees would pay up, many would pay far

sooner than they have done if they knew their exact
income.
*

Mrs. F. B. Jalu, Chillecothe, Mo. (Encloses clipping

on "abating tax liabilities".) I supposed the tax

question was settled for this year, so I filed my return

at the Federal Office here January 8, 1943, with Geo.

Dameron, and gave him my check for the year - $250.37.
It was sent to Kansas City and cashed. Now I want my

money back, except the first quarter - $62.59. And in
the future will be careful how I pay, but am always
prompt in paying taxes. Thank you, and tell me how
to get my money.

142

- 16 -

Omar Holliday, St. Louis, Mo. I am 78 and retired.
My wife and I have a joint income of about ten thousand
dollars -- all from dividends. We own stocks that we
could sell today and which would yield about $7,200

profit. All are long-term. As I understand it, under
the law of 1942, the tax on this profit is $1,800. If

I could clear this transaction NOW, it would give
great pleasure to pay this $1,800 into the Treasury at
once, or as soon as the transactions are cleared. In
other words, if the law permitted, I could turn over to
the Treasury $1,800 almost at once. Since I cannot

know what I may have to pay under the law now under

consideration, I am afraid to sell. It seems to me

that a change in the law to permit payments or clearances as so on as the transactions are closed, might
bring a lot of money into the Treasury, which never
finds its way there under the present laws.

Miss Ernestine Conrad, St. Louis, Mo. I've got the
"Income Tax Blues" and here is why -- I am a salesgirl
and average $82.50 per month. Same salary this year

as in 1942. Now, you figure out how I and other
white-collar workers in this low income group are
going to live and pay taxes too. (Gives weekly budget.)
Out of $3.00 per week that is left, must come

necessary personal toilet replacements, necessary
clothing and underwear replacements. Then, on top
of this, must come the income tax. In the meantime,
there has also been a compulsory Red Cross and Com-

munity Chest contribution.

*

So, Mr. Morgenthau,

you'll just have to put me in jail because I don't

see how I can pay the income tax the way you Washington

officials have it figured out. The Treasury Department
seems to think that people are not paying their first
income tax installment because they feel the Ruml Plan,

or a similar one, will go into effect. The plain

truth is that we in the lower brackets just cannot

afford income tax really, and at the same time maintain a half-way decent living standard and our health --

143

- 17 -

which surely in times like these must come first.
I can tell you many of us are praying for the day when

the Republicans get in again. We all feel like it

can't be worse under them, and it might be so much

better! It was with a feeling of positive revulsion
that I read Mrs. Perkins' proposal to increase the
Social Security rate. How are you going to squeeze

anything more out of us? Mr. Morgenthau, they say you

do not read mail like this, but I hope and pray that
your secretary will pass my letter on to you for your
personal consideration. If not, then I and thousands

of others like me, are sunk! We've got to get someone

to speak for us. Farmers have their lobbyists, factory

workers theirs through their Unions. Even the movie

stars organized against the salary ceiling limit. But,

who is there to speak for the low income, white-collar
worker -- he or she, salesgirl, clerk, or stenographer?
And I include those making up to $100 per month in this.

What has this Administration, which always has made a

talking point of being on the side of the "little fellow"

really done for us?

"A Worker". Philadelphia, Pa. I am a worker at the
Philadelphia Mint and have taken it upon myself to express the idea of the men in general about their financial statement for salary earned in 1942, etc. We have
been trying since February 1 to get this report so we
can file our returns, but the office contends that
Washington is responsible for the delay. In the meantime, March 15 is drawing near and we still do not have
the statement. We don't know who is responsible for
this, but please do something for us if you possibly

can. *

Walter V. Bennett, Overbrook, Pa. It is certainly going
against the grain for me to have to vote the Republican

ticket next year, but I am afraid it's going to be necessary, despite my great admiration (and affection) for
President Roosevelt. * * I have come to believe that
the present Administration is concerned only with the
people making $2,500 or less, and is not at all concerned

144

- 18 about the middle-class. The idea of pay-as-you-go
taxation is a good one. We know that about 75% of

the forty billion dollar increase in the national income

for 1943 (estimated) over the national income for 1931

will go to labor. And every last one of us knows that

the average mechanic will change from plant to plant
merely so that no one can trace his income, and he will
therefore pay no taxes. Under the pay-as-you-go plan,
it would come out of his pay envelope, and he couldn't

dodge it. But, take the middle-class man like

myself, paying a tax of, we'll say, around $2,000 a
year. You know darn well he won't have that $2,000
laid away, and will count on paying the amount quarterly.
* If you start to bite 20% or 25% out of that 1943
salary on the pay-as-you-go plan, the poor but honest
guy has no chance whatever of paying both taxes, and

will be forced to sell Bonds he o wns, close out his
life insurance, and in many cases, give up his home.
When you do a thing like that to a person, Mr. Secretary,
war or no war, you produce a hater of the Administration.
My advice to you would be to watch your step very carefully because it's full of dynamite, and believe me,
I am just as anxious as you are to see that our soldiers
get good food and good equipment, because I have an only

son in the war and I want him to return safe and sound.

Robert I. Minson, San Diego, Calif. Please inform me
why you object to the Ruml Plan. None of the published

objections that I have yet seen appear valid. The fact
that some rich men might secure an advantage means

little or nothing. The rank and filers, like the writer,

are the birds whose tax money sustains the nation. It
seems that whenever there are two ways to do a thing,

the Government never fails -- it always does it the

hard way. Isn't it about time that you upset this custom and apply a little common sense and simple honesty
to the tax problem?

Mrs. Wandeyne Macdonough, N.Y.C. Here we are, almost

one hundred and thirty million people waiting patiently
for Congress to decide on the tax situation. We have

145

- 19 been patient so far, but now the time is growing
shorter, and no longer will we tolerate this fumbling
and "dilly-dallying that is going on in Washington.

This jealousy between the backers of the Ruml Plan and

the Treasury Department is positively disgusting to all
of us. We, the people, who must pay the taxes, want
the Ruml Plan passed, and it is up to you to remove

this situation and friction. We will gladly pay our
taxes, but we want a fair deal. It won't cost the

Treasury a single cent by making this easy for us, instead of antagonizing the whole country.
Howard W. Niven, Rochester, N.Y.

I have been on

the point of writing to you several times to urge you
to approve a pay-as-you-go plan for taxes. This article

from "Newsweek", however, put it so clearly and concisely
that anything I might say would probably be superfluous.
May I suggest that you step out into the meadow and take

a look at the forest as a whole, and realize that the

mass of us would think considerably more of you if you
would concur with our wishes?

F. E. Rownd, Kansas City, Mo., sends Secretary Morgenthau copy of letter he has addressed to Senator Bennett

Champ Clark, which reads in part as follows:

Press reports indicate that you are familiar with the

public thought on this subject of income tax payments.
It is not the amount of tax, but the manner of paying,

it that the Treas-

that the public objects to, in the present law. On the

close
to enough
the public
ury other is hand,
not appears
Secretary thought. of the Up to

now, he has added to the efforts of thousands of others

in the Administration, to bring about the defeat of the

New Deal in 1944.

Roman V. Kirchner, Lancaster, Pa. Why will the

Collector of Revenue not accept currency issued by the
U. S. Government in payment for income taxes imposed

146

- 20 by the same Government? Any person unfortunate enough

not to have a checking account in a bank must pay his
taxes with a Money Order. Understand me, I am not
complaining about paying the tax, but the additional
fee necessary in obtaining the Money Order. I cannot

feel satisfied that this is a just condition, and I am

asking you for some explanation.
Anonymous N.Y.C.

#

I am a Public Accountant

since over 15 years, and during this time tried to attend to tax matters in a way that should do justice

both to the Tax Department and the taxpayers. * #
I am alarmed by the unfriendly attitude these Bureaus
(Internal Revenue) seem to take lately when they find
out that the questioning is coming from an Accountant,

and openly state that the information is only available

for taxpayers. I have no desire to criticize these

Bureaus but desirous to call your attention to the fact

that such attitude is against the interest of the
Treasury Department. * * It is a mistaken belief that
the tax experts are working against the Treasury Depart-

ment; on the contrary, as It is their own interest that
the report should be acceptable and not subject to
further questioning.

147

TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE

TO Secretary Morgenthau
FROM

February 26, 1943

Frances McCathran
CONTROVERSIAL ISSUES BEFORE CONGRESS

1. Tax: Ruml Plan - As Republicar Congressmen appeared to be

lining up in support of the Ruml plan, Representative Reed,

a member of the Ways and Means Subcommittee drafting

pay-as-you-go legislation, declared it to be the only one
which would make taxpayers fully current in 1943, since all
other proposals would take several years. No loss of revenue
would result from the Ruml plan, he claimed, but instead
"revenue would continue to flow into the Treasury as usual,
the only difference being that 1943 taxes would be geared
to the higher level of 1943 income which will actually

result in a collection this year of $13,000,000,000 in per-

sonal income taxes as against $10,000,000,000 if 1943 taxes
are based on 1942 incomes". He also asserted servicemen
would be benefited because those who had high civilian
incomes in 1942 wouldn't have to pay taxes on them out of

army pay.

2. Salary Limitation - In a report written by Representative
Disney reviewing the salary limitation issue, the House
Ways and Means Committee urged the House to pass the Debt
Limit Bill containing the Disney salary rider, which would
nullify the President's order on salary ceilings and impose
the same limitations, retroactive to Pearl Harbor only, by
Congressional process. The bill also contained a provision
permitting banks and trust companies to serve as redemption
agents for War Savings Bonds. In his report, Disney stated
that while Congress disapproves the "amassing of large
fortunes as a result of the war" a "crop of war millionaires"
would be prevented by present taxes and regulations, such

as: (1) the high excess profit tax rate: (2) the power of
the Treasury and the war agencies to renegotiate war contracts
which "if they chose to be tyrannical" could bankrupt a contractor; and (3) the Treasury's authority to disallow
unreasonable salary increases for tax deduction purposes. In
his report, Disney declared that Congress had never given

148

the President authority to limit salaries under the October
Anti-Inflation Bill and reiterated his already often-repeated
statement that his amendment was an attack on "government
by directive". There were indications, however, that the
question of the propriety of tacking a political rider on
to a war finance bill might be raised on the floor of the

House.

3. Farm Parity - With even staunch Administration supporters
like Senators Barkley, Wagner and Mead voting for it, the
Bankhead Bill to exclude subsidies or incentive payments in
the computation of the parity formula passed the Senate
yesterday with a vote of 78 to 2. Senator Barkley, however,
supported it "with some trepidation" and hoped it would not
lead to "runaway inflation". Passage of the measure led

to speculation on the fate of the Pace Bill in the House
to include farm labor costs in computing price ceilings.
Some quarters predicted that a compromise between the Administration and the farm bloc was in the offing, with the
bloc dropping the Pace Bill which would raise prices about

10 or 15% and ceasing objections to subsidies in return
for Administration acceptance of the Bankhead Bill. Representative Pace remained confident of his bill's acceptance,
however, and other sources chalked the Bankhead Bill up

as an outright victory for the farm bloc and a slap at

the Administration's Stabilization Program. Bankhead claimed
that Congress never intended to give the President authority
under the Stabilization Act to exclude government payments
in fixing price ceilings but Senator Barkley said Congress
should have made itself clear and that the President conse-

quently had a right to his own interpretation. The

Senate also almost considered along with the Bankhead Bill a
proposal submitted by Senator Danaher to repeal the

President's Salary Order but finally decided to let the

House act first on the Disney amendment.

149

m White discussed
orally with by 2/27/4 3.

150-

TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION

DATE Feb. 26, 1943

Secretary Morgenthau

TO

Mr. White

FROM

Subject: Developments in North African Program

1. Currency for new invasion areas.
An agenda has been prepared for a conference Monday morning

with the British Government on the type of currency to be used in
an invasion of the European continent. The British have questioned
the desirability of the continued use of the yellow seal currency
in invasion areas in preference to military notes, and the various
refugee governments have made representations for the use of their
local currency as against any special currency issued by the Allied
governments.

2. Pay of Officers and Crews of French Men-of-War.

In accordance with the President's instruction to the Secretary of State, steps have been taken to provide dollar funds for
the pay of officers and crews of the French men-of-war undergoing
repair in the United States.
A provisional arrangement to meet the immediate needs of the
French was agreed upon between representatives of State, Treasury,
War, and Navy and representatives of the French military and naval
missions in the United States whereby French authorities have drawn

a sight draft on the French Treasury in North Africa in the sum of
31,250,000 francs in favor of the Secretary of the Treasury. The
proceeds of this draft will provide adequate funds to meet the
immediate needs of the French for salary payments. This provisional
arrangement was made in preference to using blocked funds of the
former French Government in view of the broad questions of policy
involved in the use of these funds.

A cable has been dispatched to Mr. Murphy by State, Treasury,
War, and Navy advising him of this provisional arrangement and
instructing him to undertake discussions with General Giraud to
provide arrangements to cover similar expenses that may arise hereafter.

3. Sterling arrangements with North Africa proposed by British.
The British have indicated that they plan to make an arrange-

ment, in agreement with the French, to handle payments between the

151

-2-

Division of Monetary
Research

Sterling Area and French Africa through special exchange accounts
in the Bank of England and the North African Treasury. These

institutions are to be the sole holders of sterling and North
African francs. The sterling accruing to the French can only be
used in the Sterling Area. The advisability of this regularized
procedure will be discussed orally with the British on Monday,

March 1, 1943.

4. Allocations of local costs in North Africa.
American representatives in Africa have indicated that the
questions involving the policy to be followed in handling Allied
payments to the French are pressing. Especially urgent are the
questions of Allied payments to the French for civilian defense
measures and for the Allied use of port facilities and the Algerian
railway.

The British Government has indicated that they are not liable
for any part. of the cost of the military or civil expenditures of
the French other than for services and supplies actually furnished
to them. For these services and supplies they will pay cash and in
turn will ask payment in cash for any services or supplies furnished
by them to the French. If the French are unable to meet the whole
cost of their budget, the deficit will have to be covered by arrangements between the United States and the French administration. A
discussion of this matter is being undertaken with the British.
To provide for the immediate problem, a cable has been dispatched to General Eisenhower by State, War, Treasury, Lend-Lease,
and Board of Economic Warfare advising him that for the time being

he should continue to incur any expenditures for the account of the
United States Army which he is satisfied are needed by reason of
the military situation. If any situation arises where there is a
disagreement as to what constitutes the respective shares of British, French, and Americans, the British and the French should pay
what they believe to be their share and the United States Army

should pay the balance of the bill. It is emphasized that this

arrangement is provisional pending subsequent over-all financial
arrangements to be made with the British and the French.
5. Budgetary Assistance to the French.
The French have already stated that they expect considerable

financial aid from the Allied nations. The High Commissariat in
North Africa has indicated that a deficit of approximately 27,000
million francs is expected in the military and civil budget.
The budgetary problem is not one of a shortage of dollars, but
shortage of franc receipts. In this connection the French North
a

152

Division of Monetary
Research

African authorities have available to them over $40,000,000 held
in the names of the central banks of Algeria and Morocco for the

account of the French Treasury in Africa. It is reported that an

additional $40,000,000 in United States yellow-seal currency is
held by the banks in North Africa.
6. Currency holdings of returning Army personnel.

Arrangements have been provided through the customs authorities

to remove as far as is practicable any difficulties that may be experienced by the United States military personnel in bringing their
holdings of United States currency into this country when returning
from North Africa.

7. Local currency for French North and West Africa.
Arrangements for the manufacturing of local bank notes in the
United States for the Bank of Morocco and the Bank of West Africa
and for the supplying of the Bank of Algeria with materials for the

printing of its own notes are proceeding satisfactorily. As soon

as adequate supplies of local currency are available the special
United States yellow-seal currency will be withdrawn from circulation.

8. Internal financial controls in North Africa.
American representatives in Algiers have cabled the Treasury

that the French have finally agreed in principle with a program for
central administration for financial and commercial controls, uniform
administration for all of French North Africa, and a selective method
for the sequestration of economic property. Additional information
economic warfare embodying broad and flexible powers granted to a

as to the French position towards this matter has been requested.
9. General License for certain North African banks.

The Treasury has generally-licensed with a procedure for prior
notification, the accounts of the Bank of Algeria, the Bank of

Morocco, and the Bank of West Africa. The blocked accounts of commercial banks in French North and West Africa may be transferred to
the generally-licensed accounts of the three State banks upon request.
The American representatives in Africa have indicated their approval
of this procedure. As soon as these arrangements are in effective
operation remittances from and to North Africa may be satisfactoril
handled. No public announcement will be made here.

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-4-

Division
of Monetary
Research

10. Inflationary problems in Nor th Africa.
Inflation remains a problem of importance in French North and

West Africa. Discussions with French authorities indicates that
they have little awareness of the necessity for strong inflation
controls and that they are relying upon the United Nations to ship
consumer goods and products in quantities large enough to offset
the increased buying power of the population. Any Treasury action

that may
discussed.

be taken towards providing adequate controls is now being

11. Arrangements for franc notes of French sailors.
Arrangements have been made to allow sailors from the French

warships visiting American waters to dispose of their African
currency for dollars at approximately the official rate of exchange.

154

NOT TO BE RE-TRANSMITTED
COPY NO.

13

BRITISH MOST SECRET
U.S. SECRET

OPTEL No. 65

Information received up to 7 A.M., 26th February,
1. NAVAL

the 1943
One of H.M. Submarines is overdue from exerc off

the West coast

of SCOTLAND. Another of H.M. Submarines in the GULF. OF GENOA BADE 2 tuge on the

12th, possibly torpedoed a large east bound tanker on the 15th and shelled a
schooner building yard at CERVO damaging 2 schooners on the 19th. Another of H.M.

Submarines on the 18th off the north coast of SICILY shelled two schooners which
were left derelict.
2. MILITARY

TUNISIA. Eighth Army. Active patrolling continued by our light
armoured forces east of MARETH LINE. On 24th road from MEDENINE to within 10 miles
of MARETH LINE reported clear of enemy.

First Army On the 24th, the enemy's withdrawal through the KASSERINE

Pass continued with our forward units in contact throughout the day.
BURMA. ARAKAN. 22nd/23rd. In a small raid by our patrols on
MYEBON Southeast of AKYAB one river steamer and two launches were sunk and the jetty

destroyed before our forces withdrew.
3. AIR OPERATIONS

WESTERN FRONT. 24th/25th. WILHELMSHAVEN. Over 90% of aircraft

despatched of which 98 were R.C.A.F. attacked the objective dropping 182 tons of
bombs. Main force bombed on flares placed by Pathfinders and completed attack in

20 minutes. Glow presumably from fires seen reflected on clouds. No aircraft
missing. 25th/26th. 417 aircraft sent out - NUREMBURG 337 (9 missing, 1 crashed)
Tea mining 54, RUHR 6, leaflets 20. At NUREMBURG there was B certain amount
round haze.

IUNISIA 23rd. 53 U.S. heavy Hight and medium bonberr attacked
mony communic

tions and positions in the KASS RINE Area. Many vehicles were des-

royed or damaged At night Wellingtons and Halifaxes of Western Desert Mr For
dropped 51 tons of bomba on GABES town and landing gr

Allied medi

esLight bombers dropped 38 tons on enemy positions in the MARETH area th. 28
corted U.S. bombers attacked EL AQUINA airfield and roads and railways in the SBEITLA
and FERIANA areas.

SICILY. 25th. 31 escorted Mighter bombers attacked COMISO airfield

and a factory near PAONTHO.

IN I. 25th. 18 which ineffectively attacked the

DINJAN
area
ASSA were intero ted .S. Kittyhawks. Enemy casualties 6, 12,
nil.
Allied
nile

154

NOT TO BE RE-TRANSMITTED
COPY NO.

13

BRITISH MOST SECRET
U.S. SECRET

OPTEL No. 65

Information received up to 7 A.M., 26th February,

1943

1. NAVAL

One of H.M. Submarines is overdue from exerc: off the West coast
of SCOTLAND. Another of H.M. Submarines in. the GULF OF GENOA sand 2 tugs on the

12th, possibly torpedoed a large east bound tanker on the 15th and shelled a

-

schooner building yard at CERVO damaging 2 schooners on the 19th. Another of H.M.

Submarines on the 18th off the north coast of SICILY shelled two schooners which
were left derelict.
2. MILITARY

TUNISIA Eighth Army. Active patrolling continued by our light
armoured forces east of MARETH LINE. On 24th road from MEDENINE to within 10 miles
of MARETH LINE reported clear of enemy.

First Army. On the 24th, the enemy's withdrawal through the KASSERINE

Pass continued with our forward units in contact throughout the day.
BURMA. ARAKAN. 22nd/23rd. In a small raid by our patrols on
MYEBON Southeast of AKYAB one river steamer and two launches were sunk and the jetty

destroyed before our forces withdrew.
3. AIR OPERATIONS

WESTERN FRONT. 24th/25th. WILHELMSHAVEN. Over 90% of aircraft

despatched of which 98 were R.C.A.F. attacked the objective dropping 182 tons of
bombs. Main force bombed on flares placed by Pathfinders and completed attack in

20 minutes. Glow presumably from fires seen reflected on clouds. No aircraft
missing. 25th/26th. 417 aircraft sent out - NUREMBURG 337 (9 missing, 1 crashed)
CA mining 54, RUHR 6, leaflets 20. At NUREMBURG there was a certain amount of
ground haz

UNISIA. 23rd. U.S. heavy, light and modium bombers attacked
memy communications and positi in the KASSERIMKFArea. Many vehicles were des-

royed or damaged. At night Wellingtons and HalfTaxes of Westorn Desort Air Force
dropped 51 tons of bombs GABES town and landing ground and Allied medium and

light bombers dropped 38 tons on enemy positions is the MARETH area. 24th. 28 escorted U.S. bombers attacked EL AOUTNR airfield and words and railways in the SBEITLA
and FERIANA areas.

SICILY. 25th. 31 escorted fighter bombers attacked COMISO airfield

and a factory near PACHTNO.

INDIA. Path. 18 enemy bombers which ineffectively attacked the

DINJAN
nil.
Alliedarea
nil. ASSAM were ercepted by 32 U.S. Enemy casualties 6, 12,