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100
TREASURY DEPARTMENT
PROCUREMENT DIVISION
WASHINGTON
OFFICE OF THE DIRECTOR
SECRET
April 6, 1943
MEMORANDUM TO THE SECRETARY:
There is submitted herewith the operating
report of Lend-Lease purchases for the week ended
April 3, 1943.
Mr. Stettinius recently discontinued the
regular staff meetings of the OLLA with representatives of the procurement agencies and substituted
a plan which provides for meetings at times when
there are special matters requiring discussion.
In announcing the discontinuance of regular meetings,
he stated that operations now seemed to be running
smoothly and scheduled meetings are no longer neces-
sary.
E. lack
Director of Procurement
Gather
PORVICTORY
BUY
ENTER
BONDS
STAMPS
(37861)
i#
LEND-LEASE
TREASURY DEPARTMENT, PROCUREMENT DIVISION
STATEMENT OF ALLOCATIONS, OBLIGATIONS (PURCHASES) AND
DELIVERIES TO FOREIGN GOVERNMENTS AT U. S. PORTS
AS OF APRIL 3, 1943
(In Millions of Dollars)
Administrative
Total
U. K.
Allocations
$2925.6
$1545.7
(2922.5)
(1545.7)
Purchase Authoriza-
$2362.8
$1347.5
tions (Requisitions)
(2348.0)
(1338.6)
Requisitions Cleared
$2257.4
$1291.9
for Purchase
(2227.2)
(1274.5)
Obligations
$2198.9
$1272.7
(Purchases)
(2179.8)
Deliveries to Foreign
$ 965.6
(955.4)
Governments at U. S.
Ports*
Russia
China
Expenses
Miscellaneous &
Undistributed
$1066.6
(1066.1)
$103.4
$6.1
$203.8
(102.9)
(4.6)
(203.2)
$ 916.6
(912.4)
$ 41.7
(41.7)
$ 870.6
(859.8)
$ 41.6
(41.1)
(1259.4)
$ 833.9
(829.2)
$ 41.1
(41.1)
$ 724.4
(719.7)
$ 213.7
(208.2)
$ 17.0
(17.0)
-
-
-
-
$4.6
(4.5)
-
$ 57.0
(55.3)
$ 53.3
(51.8)
$ 46.6
(45.6)
$ 10.5
(10.5)
#Deliveries to foreign governments at U. S. Ports do not include the
tonnage that is either in storage, "in-transit" storage, or in the
port area for which actual receipts have not been received from the
foreign governments.
Note: Figures in parentheses are those shown on report of March 27, 1943.
101
Treasury Department
102
Division of Monetary Research
Date April 9, 1943 19
To:
Miss Chauncey
From:
L. Shanahan
The attached copy of statement is
a very poor one, but as you received the
original copy on April 7th, will this
one do?
103
April 6, 1943
Meeting in Mr. White's Office
April 6, 1943
4:15 P.M.
Present: Dr. Clark
Mr. Plumptre
Mr. Carswell
Mr. Currie
Mr. White
Miss Kistler
children
.106
Dr. Clark and Mr. Plumptre called on Mr. White to continue the
discussion on the implementation of the arrangement concerning Canada's
U.S. dollar reserve. Dr. Clark submitted a statement on Canada's
dollar position as of March 31, 1943 which showed that the Canadian
Government held gold and U.S. dollars on that date totalling $537 million.
Dr. Clark explained that against this reserve, there was a backlog
of payments due to Lend-Lease for "Can-Pay" requisitions which on March 15
totalled $125 million. He said there was also due from the Canadian
Government to the U.S. Government $34 million as rebates on ships. Deducting these items and the $71 million of net U.S. dollar proceeds from
security sales during the first quarter of 1943, which by the arrangement
are to be considered outside the reserve, brings the Canadian Government's
holdings of gold and dollars down to $378 million. The current forecast
for the second quarter of the year indicates a surplus over and above net
proceeds from security transactions of only $20 million. It was agreed
that the current trend indicated no urgent need for action.
Mr. White asked Dr. Clark what procedure he would prefer to have
adopted to implement the arrangement. The procedure Dr. Clark outlined
is very similar to the original one considered here--namely, the diversion
of materials from one contract to another as they are delivered. Dr. Clark,
however, repeated the fear of the Canadian production people and their
strong reluctance to have our procurement people here informed of the
arrangement and the measures taken under it. He said that he would like
to think about the matter a little more and discuss it further with the
people here and in Ottawa before formulating his decision. His second
preference he said would be the procedure outlined by Mr. Carswell at the
last meeting. This procedure would not involve any change in the contracts but would effect the required reduction in Canada's dollar receipts
through the reimbursement by the Canadian Government for goods delivered
in excess of the amount required to maintain Canada's reserve between the
agreed-upon limits. Dr. Clark gave as one reason for wishing to exclude the
procurement people and for not informing them of what is being done under
the arrangement, the chances for leaks on Canada's dollar position as the
number of people informed of it increases and the concomitant possibility
104
Division of Monetary
Research
2-
of rumors and speculation on the security market. The Canadians
reiterated their opposition to bringing the U.S.-Canadian Joint War
Production Committee into the picture. They stressed the fact that
the function is really one of the Munitions Assignments Board.
Mr. Currie and Mr. Carswell joined the group at 5:00 P.M.
Mr. White reviewed Canada's dollar position for Mr. Currie, who mentioned that the $125 million owed by Canada to Lend-Lease was offset in
part by $40 million owed by the U.S. Government to Canada for munitions.
The latter, however, appears to represent only a normal backlog, while
the former is an accumulation of seven or eight months.
Dr. Clark then outlined the tentative conclusion reached by the
smaller group concerning the procedure to be followed. Mr. Currie
suggested that the Treasury should ask to be informed and be given a
chance to voice an opinion on what particular contracts should be
diverted from the United States to Canadian account. He pointed out
that this is necessary in order to insure that the steps taken under the
scheme would be the best from the point of view of our public relations
here. This met with the approval of the group. It was agreed not to
attempt to crystallize the details of the procedure now but to leave it
open until an occasion arose for action to be taken.
Mr. White asked about the security floatation in this country of the
Steep Rock Iron Mines. Dr. Clark offered an explanation in terms of an
apparent difficulty of the group to find interested investors in Canada.
He also mentioned that the type of ore made it natural for the promoters
to go to the Cleveland group for financial backing.
The group adjourned, Dr. Clark remaining behind to see the Secretary.
T. M. Kistler
105
Canada's Position it Earch 31, 1943
Aggragate heldings of U.S.dollars and gold by the inister
of Finance and the Foreign Exchange Control Board as at March 31, 1943,
were as follows:
(124 millions
Gold
U.S.collars, P.M.O.S.
250
Minister of Finance
133
-
8537
-
Excludes 19 mills as held in the redemption account for the
rodampt tion of Dominion of anada 5% bends which were called
for redemption on Marci 15. 1943, vital. the Dominion issued a
refunding lown in New York in January.
The total of 3531 william includes the special
receipt of $150 million received from the inited Singdom
(821 million in December, 1942. 1204 million in January, 1943.
and 625 all ion in February, 1943.).
The receipts daring the first quarter of 1943 may be susmarized
as follows:
First
861.00 at
Balance
.
March 31,
1943
1943
821
$104
225
8-
129
9150
296
15.
42
32
89
387
#67
132
218
8537
319
"
Mar.
Feb.
Jam.
(In millions of dollars)
Special Receipts
free U.K.
other Receipts (net)
quarter
1943
Doc. 32/42
$119
Exaludes transact ons in the bond redent tion account
referred to above.
as yet
The following data are all that wra/available to axphin the
changes, as compared with the foregast made in February but dated
March 1,1943,
First T.
h. Sales of Canadian securities
other than Donagovt. Financing
Mar. 1943
11 Lone of dollars)
Feb.
Jan.
(in
824
$19
$25
a
665
Forecast
62
B. Sales of U.S. and foreign
C. Deposits by far Supplies Limited 28
D. Colo saloo to P.N.G.B.
12
?
2
1
7
securities
3
22
27
77
100
11
11
34
35
- estimated
April 3,1963.
Randed to ir. White by J. Claric of As 12
106
April 1, 1943
Meeting in Mr. White's Office
April 1, 1943
10:15 A.M.
Present:
Mr. Carswell
Mr. Plumptre
Mr. Currie
Mr. White
Miss Kistler
This meeting was a continuation of the conversations held in
Mr. White's office with Mr. Plumptre and Mr. Scully on March 30, 1943
on the proposed implementation of the agreement concerning Canada's
U. S. dollar reserve. Mr. Plumptre opened the meeting by restating his
position for purposes of clarification. He said that in his opinion
implementation of the agreement is a matter to be handled between the
two Treasuries. Mr. White objected and said that in his opinion it was
a government-to-government matter and that the question of which U. S.
government agency should handle the problem for the United States was
for this Government to decide.
Mr. Currie said that an apology was in order to Mr. Plumptre and
he explained that there had been a misunderstanding on our side. Mr.
White outlined the procedure which we had contemplated; that is, the
diversion of goods from one contract to another at the time of the
delivery.
Mr. Carswell objected that such a procedure would discourage the
placing of future contracts in Canada by U.S. Government agencies. He
feels that the result of introducing Canada's dollar position into the
picture again may be an unfortunate one, because U. S. procurement
officers may take it as an indication that they should place no more
contracts in Canada. He stressed the fact that six to eight months from
now Canada might need dollars and there would be no backlog of contracts
with which to work. He outlined the alternative the Canadians wished to
suggest; namely, that U. S. Government orders continue to be placed as in
the past and that when Canada's U. S. dollar receipts are in excess of
the amount needed to maintain Canada's reserve between the agreed-upon
limits, the goods delivered on these contracts be charged to Canada's
Mutual Aid Bill appropriation and credited under lend-lease account to
the United States.
Mr. White said that his first reaction to this suggestion was unfavorable for political and other reasons. Mr. Currie emphasized that
what should be done is to take advantage of Canada's comfortable dollar
position to get out from under the contracts we had placed in that
country for munitions to be lend-leased to Great Britain. He emphasized
the vulnerability of this procedure particularly when Canada's balances
are at a reasonable level.
/
--
Division of Monetary
Research
Mr. Plumptre brought up the point that war production is no
longer expanding in either country. He stated that in fact production
is being contracted and that what the Canadians fear is that the
United States services will take advantage of this situation to cancel
their orders in Canada, placing the major part of the burden of contraction on the Canadian economy. Mr. Carswell seemed extremely concerned
about Canada's excess capacity and the probability that it would be
ignored by American procurement officers in favor of excess capacity
in the United States. Mr. White said that if both countries have excess
capacity in the broad sense of available labor facilities, etc., he was
at a loss to see why the United States should employ Canadian excess
capacity when there was capacity in this country and no justifiable
reason for preferring Canadian plants. He said he thought that excess
capacity in Canada was as much the Canadian Government's responsibility
as excess capacity in the United States is our problem. He also pointed
out in this regard that it was his understanding that the integration of
war production in the two countries and the placing of contracts where
it would be most advantageous for maximizing joint war production of
both countries, was one of the reasons for the establishment of the
Joint War Production Committee.
Mr. Carswell suggested that perhaps instead of Canada's lendleasing material to the United States an arrangement could be worked
out whereby Canada would reimburse the U.S. Government periodically for
payments made in excess of the amount necessary to maintain Canada's U.S.
dollar reserve within the agreed-upon limits. Mr. White and Mr. Currie
felt that this suggestion is a distinct possibility provided that the
services could be assured that the cash refunds on these contracts could
be tagged in such a way to a particular contract that the funds would be
available to them for later disbursement. It was agreed to explore this
matter further and to see what information could be gotten together on
it before next Tuesday, April 6, when Drs. Clark and Shields are expected
from Ottawa to continue the discussion.
The question then discussed was what agency should be given the
responsibility of deciding for what materials the U.S. Government should
be reimbursed. The Canadians reiterated their strenuous opposition to
making this a function of the Joint War Production Committee. Mr. White
and Mr. Currie stressed the point that the Treasury was not in a
position to keep track of the orders and deliveries and decide what
contracts were the most vulnerable. They emphasized that this function
would have to be performed by some other agency. Assured that the work
would be done by the staff of the Joint War Production Committee and not
107
108
--
Division of Monetary
Research
the contracting officers, the Canadians were somewhat reassured on
the possible use of the Joint War Production Committee for this purpose.
Mr. Carswell said that he wanted to ask one question on behalf of
Dr. Clark; namely, what our reaction would be to the Canadian Government
taking over the Alaskan Highway. On inquiry, he replied that about twothirds of' the men employed on the Highway are American military forces
and that U.S. Government expenditures on the project are running at about
$20 million per quarter. Mr. Currie again stated his position; namely,
if the Canadian balances were higher than the maximum that we should use
the opportunity to clear up the contracts placed in Canada for goods being
lend-leased to the United Kingdom. I reminded the group that the policy
of placing such contracts in Canada had been initiated without the
knowledge of the Treasury and contrary to an interdepartmental decision
reached in the summer of 1941 in which the Treasury had participated.
Mr. Carswell then said that he was also asked by Dr. Clark to raise
the question of Canada's relaxing her travel restrictions in the United
States. Mr. White said that he would have to consider the question be-
fore giving an official answer but that unofficially he felt very strongly
that this was not an appropriate time to be encouraging travel.
T.M. Kistler
108
--
Division of Monetary
Research
the contracting officers, the Canadians were somewhat reassured on
the possible use of the Joint War Production Committee for this purpose.
Mr. Carswell said that he wanted to ask one question on behalf of
Dr. Clark; namely, what our reaction would be to the Canadian Government
taking over the Alaskan Highway. On inquiry, he replied that about twothirds of the men employed on the Highway are American military forces
and that U.S. Government expenditures on the project are running at about
$20 million per quarter. Mr. Currie again stated his position; namely,
if the Canadian balances were higher than the maximum that we should use
the opportunity to clear up the contracts placed in Canada for goods being
lend-leased to the United Kingdom. I reminded the group that the policy
of placing such contracts in Canada had been initiated without the
knowledge of the Treasury and contrary to an interdepartmental decision
reached in the summer of 1941 in which the Treasury had participated.
Mr. Carswell then said that he was also asked by Dr. Clark to raise
the question of Canada's relaxing her travel restrictions in the United
States. Mr. White said that he would have to consider the question be-
fore giving an official answer but that unofficially he felt very strongly
that this was not an appropriate time to be encouraging travel.
-
T.M. Kistler
10g
APR 6 1943
My dear General Burns:
Thank you very much for your letter of
April 1, 1943, transmitting a copy of "Program
of Requirements for Armaments, Equipment and
Materials for Supply to the U.S.S.R. by the Government of the United Kingdom During the Period
July 1, 1943, to June 30, 1944" (Third Soviet
Protocol)
Sincerely yours,
(Signed) H. Mergenther Jr.
Secretary of the Treasury
Major General J. H. Burns, U. S. Army
The President's Soviet Protocol Committee
Washington, D. C.
GLjr:jkr
Envelope marked "confidential"
Photo file in Diary
(Mack's office had copy of
enclosure)
Original incoming and copies of
reply ret'd to Mack 4/7/43
CONFIDENTIAL nu
THE PRESIDENT'S SOVIET PROTOCOL COMMITTEE
WASHINGTON
April 1, 1943
My dear Mr. Secretary:
By direction of the Chairman of the President's
Soviet Protocol Committee, there is enclosed for your
information a copy of the "Program of Requirements for
Armaments, Equipment and Materials for Supply to the
U.S.S.R. by the Government of the United Kingdom During
the Period July 1, 1943 to June 30, 1944" (Third Soviet
Protocol).
Sincerely yours,
J . BURNS
Major General, U.S. Army
The Honorable,
The Secretary of the Treasury.
Inclosure
IDENTIAL
111
SECRET
PROGRAM OF REQUIREMENTS FOR
ARMAMENTS, EQUIPMENT AND MATERIALS
FOR SUPPLY TO THE U.S.S.R.
BY THE
GOVERNMENT OF THE UNITED KINGDOM
DURING THE PERIOD
JULY I, 1943 TO JUNE 30, 1944
(Submitted April 1, 1943)
112
SECRET
PROGRAM OF REQUIREMENTS FOR
ARMAMENTS, EQUIPMENT AND MATERIALS
FOR SUPPLY TO THE U.S.S.R.
BY THE
GOVERNMENT OF THE UNITED KINGDOM
DURING THE PERIOD
JULY 1, 1943 TO JUNE 30, 1944
(Submitted April 1, 1943)
SECRET
PROGRAM OF REQUIREMENTS FOR
ARMAMENTS, EQUIPMENT AND MATERIALS
FOR SUPPLY TO THE U.S.S.R.
BY THE GOVERNMENT OF THE UNITED KINGDOM
DURING THE PERIOD JULY 1, 1943 TO JUNE 30, 1944
(All weights given in long tons)
GROUP I. ARMAMENTS AND MILITARY EQUIPMENT
Item 1. - AIRPLANES
Amount requested: 2,400 pursuit planes "Spatfire" at rate of 200 planes per month
Item 2. - TANKS
The same types E.S has been agreed upon by the Second Protocol
Amount requested: 3,000 tanks - at rate of 250 tanks
per month.
Item 3 - POWDER
Amount requested: 12,000 tons - at rate of 1.000 tons
per month.
Item 4 - MINE SWEEPERS
Amount requested: 10 Mine Sweepers.
GROUP II. VARIOUS MATERIALS
Item 1. - TIN
Amount requested: 6,000 tons - at rate of 500 tons
per month.
Item 2. - LEAD
Amount requested: 12.000 tons - at rate of 1,000 tons
per month.
Item 3. - COLD DRAWN POLISHED DRILL RODS - High Speed Steel
Amount requested: 120 tons - at rate of 10 tons
per month.
114
-2-
SECRET
GROUP II.. Continued
Item 4. - SHIPBUILDING STEEL PLATES, FOR SHIP REPAIR
Amount requested: 12,000 tons - at rate of 1,000 tons
per month
Item 5. - INDUSTRIAL DIAMONDS
Amount requested: $2,400,000 worth - at rate of $200,000
worth per month.
Item 6. - RUBBER
Amount requested: 24,000 tons - at rate of 2,000 tons
per month
Item 7. - JUTE AND JUTE PRODUCTS
Amount requested: 36,000 tons - at rate of 3,000 tons
per month.
Item 8. - SISAL AND SISAL PRODUCTS
Amount requested: 18,000 tons - at rate of 1,500 tons
per month
Item 9. - SHELLAC
Amount requested: 2,400 tons - at rate of 200 tons
per month.
Item 10. - WOOL
Amount requested: 24,000 tons - at rate of 2,000 tons
per month.
Item 11. - CEYLON GRAPHITE
Amount requested: 1,200 tons - at rate of 100 tons
per month
GROUP III. INDUSTRIAL EQUIPMENT
Item 1 - MACHINE TOOLS
Amount requested: 6,000 each - at rate of 500 each
per month.
Item 2. - COMPLETE STEAM ELECTRIC POWER PLANTS
with an installed capacity up to 25,000 KW each.
total capacity of 150,000 KW
115
-3-
SECRET
GROUP III., Continued
Item 3. - COMPLETE SMALL STEAM POWER PLANTS
with an installed capacity of 100 - 500 KW each,
total capacity of 25,000 KW
Item 4. - MOBILE STEAM ELECTRIC POWER PLANTS
with an installed capacity of 1,000 2,500 KW each,
total capacity of 100,000 KW
Item 5 - INDIVIDUAL TURBO-GENERATORS
with a capacity up to 25,000 KW each,
total capacity of 250,000 KW
Item 6 - STEAM VALVES AND FITTINGS
Amount requested: $3,000,000 worth
Item 7. - PUMPS
Amount requested: $2,000,000 worth
Item 8 - COMPRESSORS
Amount requested: $5,000,000 worth
Item 9. - ELECTRICAL EQUIPMENT
Amount requested: $14,000,000 worth
Item 10 - MINING, CRANE-EXCAVATOR, TRANSPORTING AND
OTHERINDUSTRIAL EQUIPMENT
Amount requested: $8,000,000 worth
GROUP IV. QUARTERMASTER GOODS
Item 1. - ARMY WOOLEN CLOTH
Amount requested: 3,000,000 yards
Item 2 - RETANNED UPPER LEATHER
Amount requested 1,000 tons.
116
SECRET
4GROUP V. MEDICAL SUPPLIES
Item 1. - MEDICAL SUPPLIES
Amount requested: $6,000,000 worth
*****
1. It is understood that the following equipment,
such as machine tools, steam power equipment, electrical
equipment, forging and press equipment, cranes, excavators
and transporting equipment, oxygen plants, testing machines,
control and measuring instruments which the United Kingdom
Government agreed to deliver to the U.S.S.R. during the
Second Protocol period, but the terms of delivery of which
equipment extends beyond the term of the Second Protocol,
shall be delivered in excess of the quantities requested in
the Third Protocol Program.
2. The types of complete steam and mobile power
plants as well as electrical equipment should correspond
with the types already accepted for manufacture by the
British firms for the Union of Soviet Socialist Republics.
3. Food products will be delivered in quantities
agreed upon by the respective Governments in accordance with
available tonnage.
117
Original to Mr. Mack 4/7/43
nmc
CONFIDEN
THE PRESIDENT'S SOVIET PROTOCOL COMMITTEE
WASHINGTON
April.5, 1943.
The Honorable
The Secretary of the Treasury
Dear Mr. Secretary:
With reference to my letter to you of March
26, 1943, a request has been received from the Chairman
of the Government Purchasing Commission of the Soviet
Union in the U.S.A. that the following item under Group
II be inserted in the "Program of Requirements for Armaments and Materials for Supply to the U.S.S.R. by the
Government of 'the United States during the period July 1,
1943 to June 30, 1944" (Third Soviet Protocol):
Item: 10,000 tons of bi-metal strip.
Sincerely yours,
nomms
J H. BURNS,
Major General, U.S.Army.
DENTIAL
119
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE
Secretary Morgenthau
April 6, 1943
FROM Frances McCathran
CONTROVERSIAL ISSUES BEFORE CONGRESS
1. Farm Parity - The Senate today considers the President's
veto of the Bankhead Bill to include government subsidies
in parity computations. Despite the President's warning
that the measure will unleash "a tornado of inflation,
and Senator Hatch's prediction that to pass it over the
veto would be "to play right into the hands of John L.
Lewis, it farm bloc representatives, backed by leading farm
organizations, have been rallying their forces in support
of the bill. Four major farm groups, the National Grange,
American Farm Bureau Federation, the National Council of
Farker Cooperatives, and the National Cooperative Milk
Producers' Federation, yesterday issued a joint statement,
to keep any of their representatives from wavering, and
claimed "once more agriculture is to be used as the whipping
boy to further appease the wage degands of organized labor
and to divert attention from the real source of inflation."
The vote today is expected to be en extremely close one,
with farm bloc leaders predicting that Administration supcorters will be able to muster only 30 votes out of an
estimated 33 necessary to sustain the veto. However, they
are reportedly admitting privately that the vote could swing
the other way at the last minute by an equally slim margin.
Also admitted is the fact that the House, where the farm
oloc is not as powerful as in the Senate, would probably
refuse to pass the bill over the President's veto. In an
effort to stem the tide of inflation, the OPA warned yesterday that the Bankhead Bill, if enacted, would increase
retail food costs 6.7% add one and a half billion dollars
to the consumers' annual food bill, and boost by half a
billion the cost of feeding the armed forces and the allies.
Although the OPA admitted that sugar, wheat, and corn would
be the 3 main commodities affected by the Bankhead Bill,
yet since corn is a basic feed, increasing its price, according to the OPA report, would inevitably increase the prices
of stock such as hogs, poultry and poultry products, beef
and deiry products. Meanwhile, the Senate Agriculture
120
Committee reopens hearings today on the recommited Pace
Bill to include the cost of farm labor in parity, with
Secretary Wickard, Food Administrator Davis, and OPA Brown
scheduled as the first witnesses. The Committee was amazed
this morning, however, when none of them appeared. Food
Administrator Davis, with what Chairman Smith called the
best excuse of the three, explained his failure to appear
on the grounds that he was still new on the job and thus
could be of little immediate help now. Price Administrator
Brown also sent his regrets but said he had to meet with a
delegation from the west this morning, and Secretary Wickard
remarked that since neither of the other two were coming,
he wasn't either, but as the Committee met in Executive
Session to decide whether to subpoena them, both Vickard
and Brown sent word that they were on their way.
2. Farm Labor - All phases of "the farm issue" held the stage
yesterday on Capitol Hill as the Senate Appropriations
Committee increased the appropriation from 21.1 million to
40 million dollars in a House-approved bill to recruit and
transport farm workers to labor shortage areas. However,
the FSA, now under investigation by the House, was completely
eliminated from any part in the spending of the money. The
House measure had placed the program in the hands of the
Agricultural Extension Service, but since the Davis Food
Acministrator appointment has been made since that date,
the Senate Committee granted authority to administer their
appropriation to him, and it is expected that the House will
probably concur in this decision.
3. McKellar Bill - The McKellar Bill, requiring Senate confirmation of Federal employees earning more than $4,500 a
year, will be reported favorably to the Senate today by
Senators McCarren and McFarland. Yesterday the Senate
Judiciary Committee, considering the measure, voted to include the Tennessee Valley Authority in its provisions, thus
reversing their previous action in approving an amendment
by Senator Hatch to exempt the TVA from the bill. The
charge has been leveled that McKellar's chief purpose in
offering the measure was to gain control of the appointments
of the TVA, centered in his home state.
121
55
NOT TO BA PRE-TRANSMIT
COPY NO.
L
13
ITISH LOST SECRET
ARR
U.S. SECRET
INSURANCE
14
081 is No. 113
Information received up to 7 a.m., 6th April, 1943.
1. NAVAL
On 4th/5th Sunk Head Fort shot down two enemy aircraft minelaying
in THINGS ESTUARY.
2. MILITARY
YUNISI... U.S. Sector. 3rd/4th. An enemy counter attack to the
South of the GAFSA-GABES road captured some high ground. 4th. US. Forces just
North of the road attacked in E south-southeasterly direction and gained 1 point
Latrids the road but were later forced by henvy artillery fire and tanks to withdraw to their original position. An attack against U.S. positions ten miles east
of of GUETTAR was repulsed. In other Sectors activity on 4th WALD confined to
patrolling and artillery.
RUSSI.. In the KUBAN the lull caused by the than has ended and
sovere fighting has been reported.
3. AIR OPERATIONS
WESTERN FRONT. 4th/5th. KILL. Over 87 por cent of Force sent out
attacked dropping over 1,350 tons in about 50 minutes. Oving to thick cloud impossible at present to estimate extent of success. Soarchlights could not penetrate
10
cloud. h/ moderate, scattered and inaccurate. 137 H.C.A.F., 37 R.A.A.F. and
Nev Zealand aircraft took part. 5th. 65 Fortresses and 18 Liberators attacked
aircraft repair works at ANTWERP. Preliminary reports indicate fairly good bombing
Enomy casualties by fighters 4, 1, 5. by bombers (provisions1) 11, 6, 4. Allied
casualties - 4 bombers, 1 fighter. 12 escorted Venturas attucked BREST Harbour,
bombs foll on the arsenal and naval barracks and alongsido a tanker in dry dock.
Heavy h. intense but inaccurate, much fighter opposition. Enemy casualties 1,
nil, 4. Ours 4 bombers (one crow safe) and two fighters.
ITALY. 4th. NAPLES. 91 Fortresses from TUNISI. dropped 190 tons
on the harbour, airfield and railway centre. One ship destroyed, another set or
fire. Two more and a tanker hit. 25 aircraft on ground also hit. All bombers
returned safely.
TUNISIA. 4th. Mitchells and Kittyhowks bombad enemy landing
grounds destroying 2 aircraft and dannging or destroying 6 on the ground.
it
SARDINIA. /th. Escorted Mitchells started fires in the docks area
CARLO
FORTE. A coaster and nine small boats were hit.
SICILIAN CINNEL. 4th. Mitchalls set fire to two ships in 11 conver
122
April 7, 1943
10:02 a.m.
HMJr:
Operator:
Hello.
Mr. LaRoche.
HMJr:
Hello.
Chester
LaRoche:
Good morning, sir.
HMJr:
Hello, Mr. LaRoche.
L:
Good morning, Mr. Secretary.
HMJr:
Can you hear me?
L:
I can very well, sir.
HMJr:
Good. Well, I wanted to thank you for all
the trouble you went to for getting Mr. Smith
and Mr. Albee. They worked out beautifully.
L:
Well, I'm glad. I thought they would.
HMJr:
Yes.
L:
And, of course, I'm pleased that you're pleased.
Well, I'm more than pleased that
Smith is a mighty fine fellow.
HMJr:
Yes.
L:
Absolutely dependable and - and very competent.
HMJr:
Yes. Well, it was a very wise choice on your
L:
HMJr:
part.
L:
Well, that's good and I'm glad you're pleased,
and I think you can count on them right along
to do things if you find them useful.
HMJr:
Well
L:
If you don't, why, just let me know, and we'll.
HMJr:
No.
123
-2....get somebody else.
L:
HMJr:
There's - there's - well, right now we're
sitting here trying to do one. We're - we're
up against speeches every day.
L:
Yes.
HMJr:
Now - 80 I don't want to wear out my welcome
with them, but there' d be - I can use all the
time that they can afford to give me. Inci-
dentally, you know I'm going to do this Monday
night in Carnegie Hall
HMJr:
L:
HMJr:
L:
HMJr:
Yes.
and they've got - all the financial leaders
in New York are going to be there
Yes.
and I wondered whether you'd care to have
a box for yourself and your friends.
Well, I'm counting on coming. I - I want to
be there to cheer you on, you know
Fine. Well, we'll see that they send you a
box.
L:
HMJr:
L:
HMJr:
Well, that's very kind of you. I don't need it.
I'd just go in with the rank and file.
No.
It doesn't make any difference to me, but
We'd like to have it, and I'm sure you have
some friends that you might want to take.
L:
Well, that's fine.
HMJr:
They - they'11 - they'11 send you a box.
L:
Are you going to rehearse the speech?
HMJr:
Rehearse it?
.
L:
124
-3L:
HMJr:
L:
Yes.
Oh, I always rehearse it. How
You do. Well, you play it back, do you? So
you
HMJr:
L:
Well, I haven't done that, but these men are
urging me to - to put it on a record and play
it back. I've never done that before.
Well, I would do it if I were you. You might -
it's a little painful when you do it the first
time (laughs) - when you hear your voice, no
matter what you think of it, you're a little
surprised, but I think it really helps you.
HMJr:
Well, we've always made a record and played it
back after the speech.
L:
Afterwards, yes.
HMJr:
But I've never done it before. Doesn't it upset you?
L:
No, not at all. Quite the contrary. It kind of
fixes it in your mind
HMJr:
Yes.
L:
.... and it helps you to put emphasis where you
want to put emphasis.
HMJr:
Well, we've - the men urged me last night to do
L:
Yes, well, I would do that. I think
HMJr:
You would.
it and we re getting a machine anyway.
that it's worthwhile.
L:
HMJr:
L:
Well, when all you professionale think 80, I'll
have to try it.
And
125
4-
HMJr:
Well
And if - of course, if there's a good radio man
there, he can help a lot and - just with suggesting inflection, suggesting
L:
HMJr:
Well, there are several very good radio announcers
down here. Any one of them, I imagine, would be
glad to - to listen.
Oh, I think that's important.
L:
HMJr:
We have - there are two or three very good men
that work out of Washington. Raymond Gram Swing
isn't bad, 1e he?
L:
Well, I think you need - I - I don't know how
HMJr:
Oh.
L:
You know, they're good because God made them good.
HMJr:
Yeah, I see.
L:
The - the fellows that you need generally are
good he' d be as a coach. Those fellows are good
naturally.
the professionals who coach the actors and who
have made a study of the business of technique.
HMJr:
Well, now I - I've never met that kind of a man.
L:
Well, I'11 tell you the best man...
HMJr:
Yes.
L:
HMJr:
L:
HMJr:
L:
How do you get hold of
in Washington today is Donald Stauffer, who
is over in O.W.I.
Wait a minute - Donald Stauffer?
Donald Stauffer - S-t-a-u-f-f-e-r.
What - is that "S" like
That's "S" like in "Sam.'
126
-5-
L:
Stauffer, yeah. Well, Peabody
S-t-a-u-f
HMJr:
....18 sitting - he's over at O.W.I.?
L:
Yes, he was head of our radio department.
HMJr:
He's a boy that went to Princeton. I've known
him for years.
HMJr:
Yeah.
L:
He's a very intellectual fellow and a mighty
fine fellow, and he's head of O.W.I.'s radio.
He just recently went in there. You'll find
him thoughtful and very keen and very patient
and a very fine fellow to work with, and he'd
love to do it.
HMJr:
And you say he's the best coach.
L:
He is the best coach that you can get. I can
recommend him because I worked with him for
years in radio, and he helped us build up our
radio department.
HMJr:
Well, I'11 - I'll contact him.
L:
He 8 coached the best actors in America in
radio.
HMJr:
Is that right?
L:
Donald Stauffer, yes.
HMJr:
Well, Peabody says he knows him.
L:
Oh, yes, Stu Peabody knowe him well. Of course
he does.
HMJr:
He's sitting here.
L:
Yes.
HMJr:
Well, I - and I'11 do that.
That's fine, that's fine.
L:
127
-6-
HMJr:
Yes.
Well, I hope to see you Monday night then.
HMJr:
Right.
L:
Goodbye and thanks for calling. Right nice of
you.
HMJr:
Thank you.
128
April 7, 1943
10:29 a.m.
HMJr:
Operator:
HMJr:
Robert
Hello.
Mr. Lovett.
Hello.
Lovett:
Good morning, sir.
HMJr:
How are you, Lovett?
L:
Fine, thank you, sir.
HMJr:
Lovett, I had a very good Treasury man spend
a couple of days around the Glenn Martin plant
finding out why they buy so few War Bonds, you
'see?
L:
HMJr:
Yes.
They're about at the bottom of our list, and in
going around amonget the workers one of the
things that he picked up is that they can't
understand why, seemingly, there are a large
number of bombers which have been lying around
the plant more or less finished for a half a
year - why something isn't done with it, you
see? Hello?
L:
Yes.
HMJr:
And they - I mean it seems to have a bad effect
on their morale.
L:
Yes.
HMJr:
And
I wondered
whether
you would
care to is. let
me have
a report
on what
that situation
L:
HMJr:
L:
Why, I'd be very glad to. We, as a matter of
fact, have had an inspector up there.
Yeah.
The - we got an indication from some labor
leaders that the - that there were an excessive number of PBY's in the plant, as well as
on the finishing mats outside.
129
-2HMJr:
Well this report said several hundred, but
L:
Yes.
my - this was just by word of mouth
from the workers.
HMJr:
HMJr:
I don't think that is correct.
Well, I don't know, so I'm hesitating using
L:
That's right. Now that's a dual-controlled
L:
any figure. But there are enough there that
they can't understand it.
plant. That is, they make both Navy types
and Army types.
HMJr:
L:
HMJr:
L:
HMJr:
L:
Well
The Army types are flown out of there for
modification
Yes.
whenever they're ready to fly. The Navy
types are not because they don't have a modification center.
Yes.
So that the report which was submitted to us
indicated that the Army types were being
cleared as soon as they were fit to fly and
that the plant was backing up in the Navy
PBM models because of the modifications which
the Navy had found necessary as a result of
combat service. I'll have the thing checked
again.
HMJr:
Would you care - this is quite a long report
on just the bond aspect. Would you care to
see it?
L:
HMJr:
Very - I'd like very much to.
I'11 send it over to you because - I picked
this plant because it happens to be about the
worst that we have as far as pay-roll deduction is concerned.
130
3-
L:
It's not very good on production either, you
HMJr:
Well, that I don't know.
L:
Yes.
know.
HMJr:
But I'll send you this, and then if you'd let me
have the other, I'm natur. - I'm interested.
L:
All right, sir. It'11 take us a little time to
HMJr:
Well, would - would you cover the whole plant?
L:
I beg your pardon?
HMJr:
Will you cover the whole plant?
L:
Oh, yes.
HMJr:
I mean you won't just give me Army? You'll
get it because the inspectors that we sent up
there are now out in Ohio on another job there.
give
L:
Well
me the story on the Navy
HMJr:
L:
We'll give you our general impressions of the
Navy.
HMJr:
will you do that?
L:
Yes.
HMJr:
Right, and I'11
And it's somewhat delicate to do, but we'll do
it.
L:
HMJr:
Well, it's just for me. I - I'm not going to
circulate it any more than this I'm sending
over to you. I'd like you to use your discretion on it.
L:
All right, sir.
HMJr:
See?
131
-4-
L:
Yes.
HMJr:
But I'll have this over to you within the hour.
L:
All right, fine.
HMJr:
We were over there checking up on War Bonds
L:
Yes.
HMJr:
and I ran into the other thing, and I'm still
interested in winning the war.
L:
Okay. (Laughs)
HMJr:
Thank you.
L:
All right, sir. Thank you.
HMJr:
Goodbye.
132
April 7, 1943
3:40 p.m.
WAR BONDS
Present:
Mr. Gaston
Mr. Gamble
Mr. Peabody
Mr. ager
Vr. Waldman
Dr. Likert
Dr. Cartwright
DR. LIKERT: We might start first, Mr. Secretary -
will you turn to that first chart? (See report attached
entitled "Rural Bond Sales in Iowa and Illinois.")
That shows in a nut shell - that first chart - one
of the most significant things we have found in this whole
sale of Nar Bonds to farmers, that the sales correspond
to quotas.
H.M.JR: Is this something new that you have done?
DR. LIKERT: This is just - the ink is hardly dry.
(Laughter)
H.M.JR: I can smell it. (Laughter)
DR. LIKERT: You notice the Iowa and Illinois quotas
for 1942, and here is the sales almost actually parallel
to cuotas. If you take the purchasing power of the two
States on number of different economic indices, the Illinois, you will find, is way below - the quota is way below
the purchasing power. The four counties that we studied
showed the same type of pattern. That is a second table
back in the report, opposite Page 13.
133
-2Actually the Illinois counties we were in had a
slightly higher economic level than the Iowa counties,
and yet the sales al Lost identically paralleled the quotas.
So the experience that it seemed to show - first of all,
the campaign in Iowa seemed to be more effective in reachin more farmers than the campaign in Illinois; and secondly,
with 8 higher quota, the farmers in Iowa bought substantially
more bonds than was the case in Illinois.
Approximately about thirty-seven million dollars in
purchasing power in Illinois wasn't sucked into war Bonds
that mi ht have been had the same effective CA paign been
carried on in Illinois that was carried on in Iowa.
H.M.JR: Now, what do you deduce from that? I don't
get your deduction.
DR. LIKERT: Our deduction is this, that the quotas
in Illinois ought to be materially raised - substantially
raised.
MR. GAMPLE: The farm quotas.
DR. LIKERT: This is the bond quotas for rural counties,
for farm counties.
H.M. JR: Who fixes the quotas?
MR. GAMBLE: In Iowa, Mr. Secretary, we have experi-
mented with a plan for farmers-1.M.JR: Louder, please.
VR. GAMBLE: In Iowa we have experimented with a plan
for farmers that has exceeded our fondest expectations.
We have established individual quotas for the individual
farmer, and have sent committees in to sit down and work
with the farmer and figure out how much he can afford to
put into War Bonds, instead of arbitrarily fixing 8 quota
for 8 county. we have set a quota for farmers, based on
their production - now many pigs - the amount of pigs
compared with last year, and SO on.
134
3-
H.M.JR: Who, Bill Myers?
MR. GAMBLE: It is a product of Vernon Clark in Iowa,
by and large.
H.M.JR: Why does that name sound familiar?
MR. GAMBLE: He is our administrator in Iowa.
H.M.JR: Do you get from this - if you raise the
sights, that people respond? Is that it?
DR. LIKERT: Yes, I think that, clearly, several
things - one is that if you raise the sights and if you
follow through the type of Iowa campaign where you have
these quotas worked out in terms of purchasing power -
the hogs he is selling - and that type of thing, and you
give the person who is making the call in face-to-face
contact, it is all important.
The people that are called upon buy substantially
more. Of the people that weren't called on, only thirty
percent of them bought bonds. Of the people called on,
it was something over seventy percent of the people who
had bought bonds - eighty percent. So your face-to-face
contact is terribly important.
Give the person in face-to-face contact some goal
toward which the person can shoot in terms of saying,
"Bill, it looks like your share - let's sit down and work
it out. Then you get substantially larger bond sales
depending a bit upon how the quotas themselves are set.
In doing this, there are some problems. We found,
for example, Tables 31 and 32 - 30, 31, and 32 at the
very back of the report, it is rather striking that in
Iowa, twenty-six percent of the farmers said that they
were told what to buy, whereas in Illinois only one percent of the farmers talked in those terms, where it was
about equal in terms asked.
135
-4That apparently reflects itself in A certain amount
of resentment. Some resentment was expressed toward the
campsign workers - some or much - by thirteen percent of
the farmers in Iowa, and only one percent in Illinois.
And on the next table, 32, twenty percent of the
farmers expressed some or much resentment with respect
to his size of the quota, against one percent in Illinois.
So there is a little danger that that would have to be
watched for in terms of how it is presented and the steps
that are taken. but certainly it can help materially in
siphoning off inflationary dollars and in increasing the
amount of bona sales to farmers.
Some of the reasons why farmers are buying bonds - the
chief reason given was, first of all, the Government needs
the money, by half the farmers; and forty-one percent of the
farmers mentioned some personal or farm financial reason
for a savings or investment. Three percent mentioned to
prevent inflation.
But one of the most significant things in that connection was that far more of the farmers in Illinois and love
were conscious of the danger of inflation than among any
other group of people we have ever worked with.
The difference between urban groups and those farmers
was just tremendous on the danger of infletion. When we
asked them why the Government wants farmers to buy bonds,
eight,-four percent said the Government needs the money and
fifteen percent mentioned to curb inflation, that this fear
of spiral
H.N. Let me interrupt you. You said they are
conscious of inflation, but only lifteen percent of them
think that buying bonds is one of the ways to curt inflation.
DR. LIKERT: That is right.
H.M.JH: Well--
CUSTOM
136
-5DR. LIKERT: Fifteen percent mentioned it. That is a
much higher proportion than in urban groups. And their
reasons - for example, eighty percent of the farmers in
Iowa and Illinois are satisfied at the present time with
farm prices, and one of the reasons why they don't want
farm prices to go on up is this inflationary spiral.
H.M.JR: Herbert, I think - of course, I think that
this thing ought to be put into the hands of somebody who
is fighting on this bill. Will anybody in the Department
of Agriculture - I would Love to have you tell this to I wonder .no is telling this - would it be Chester Davis,
or who would it be?
Mr. GASTON: The fight on the Bankhead bill?
H.M.JR: I think Barkley would like to know it.
MR. GASTON: Yes.
H.M.JR: What is Barkley's clerk's name? In this last
thing you told me - was it eighty percent satisfied with
their prices? What is this clerk's name?
MR. GASTON: Biffle.
H.M.JR: You (Likert) would be available later today,
if necessary, for them?
DR. LIKERT: I could. Tomorrow would be better.
MR. GAMBLE: OWI have just completed a survey that shows
the same thing out in Washington, Indiana.
H.M.JR: I will make you a bet they haven't put it
in the hands where they need it in the front lines.
MR. GAMBLE: I am certain of that.
H.M.JR: It is similar to this?
137
6-
MR. GAMBLE: Where the farmers said they were not
only pleased with the prices that they are getting, but
while it is going to be a hardship on them, they are
certainly going to meet all the food quotas set for them.
They will produce the food.
H.M.JR: For what States?
MR. GAMBLE: This was a survey made in Washington, Indiana.
H.M.JR: By whom?
MR. GAMBLE: OWI.
DR. LIKERT: I haven't seen that particular thing.
MR. GAMBLE: It is just new. I had lunch with Kuhn,
and he was telling me about this report.
H.M.JR: Why not get it? Why not-MR. GAMBLE: That is just one of many things that went
out, that they covered in this survey.
H.M.JR: This will do just as well.
MR. GAMBLE: It is the same idea, but it is general.
DR. LIKERT: Here is a separate memorandum that deals
only with the price, in case you would like that as well.
(See memorandum attached regarding farm prices.)
Incidentally, we have just finished a study on dairy
products and find the same picture there. There is a
surprising amount of satisfaction with prices. And for
the first time, farmers are saying that prices for consuners are getting as high as they ought to go. This is
the first time in all the work we have done, where ve had
the farmers saying that prices to consumers are about as
high - six or eight or ten percent of farmers are beginning
to mention that. So you are getting - the city cousin is
now beginning to talk back to the country cousin in terms
of this price situation.
(Mr. Gamble left the conference temporarily.)
138
-7-
That dairy material I have given to Ben Cohen, Byrnes,
and some of those people.
H.M.JR: You have?
D.L. LIKERT: Yes, I have.
H.M.JR: Have you given them this? (Indicating report
attached.)
DR. LIKERT: No, we haven't. This is just off the-H.M.JR: Will you give it to Ben Cohen?
DR. LIKERT: I shall be delighted to.
Now, it is rather striking about plans for use of money
obtained from cashing in bonds. We asked farmers why -
what they are planning to do - any special plans for using
bond money. Fifty-three percent had no plans, so that the
bonds hadn't been built financially into their lives in
terms of the reasons for buying. Long-term savings such
as trips, education for the children, and things like that
were mentioned most frequently; that was fourteen percent.
To invest in land or home is twelve percent; farm improve-
ments, six; pay off debts, six; help against postwar de-
pression, three; consumer goods, one; postwar purchasing
power, two; farm equipment, one.
H.M. JR: In your pre-Treasury life this should have
been very interesting to you.
MR. PEABODY: Yes.
H.M.JR: Did you get my tenses?
MR. PEABODY: Yes.
H.M.JR: "Should have been." (Laughter)
MR. PEARODY: I think the Co-op's have had a good deal
of effect on that opinion, don't you?
139
-8-
H.M.JR: of this opinion?
MR. PEABODY: No, not what he is talking about, but
to get back into my pre-Treasury life for a minute, the feeling that there is a limit beyond which it is not sound to
raise prices to the consumer.
H.M.JR: Not at present. I think as near as I can get,
the Co-op's are amongst - the dairy Co-op's and their
representatives here are amongst the main people fighting
for increase in these bills.
MR. PEABODY: They are?
H.M. JR: I think so. Do you know about that?
DR. LIKERT: You have a rather sharp difference between
organizations like the National Dairy Co-op, or whatever
it is, and the Dairymens' League, and large national organizations of that type which are pressing along with the
Farm Bureau and the Grange for higher prices, and a lot of
the smaller cooperative creameries scattered ail over the
country, which are most likely to take the position that
prices are pretty good.
H.M.JR: I am particularly sensitive. At the farm
over the week end I got between a very large buying Co-op,
and a very small local Co-op, and the big one tried to
grind me out as between the two. (Laughter)
I raised such a damned holler that they quickly drew
in their horns. Very interesting. I mean Co-op's that buy
rather than sell. I got between two of them and did I yell!
(Laughter)
(The Secretary held a telephone conversation with
Mr. Biffle, as follows:)
140
April 7, 1943
3:53 p.m.
Leslie
Biffle:
HMJr:
B:
HMJr:
Yes, sir, Mr. Secretary.
I take it you're still interested in some
statistical information showing the farmers
are satisfied with prices
Very much
that they're getting?
B:
Very much 80.
HMJr:
Well, Dr. Likert - L-1-k-e-r-t - of the
B:
Uh huh.
HMJr:
Department of Agriculture did a survey for
the Treasury in Illinois and Iowa
on War Bonds, and in connection with that
he went into the question of prices, and he
has information -- he's sitting here with
me -- that 80% of the farmers in Illinois and
Iowa are satisfied with the present price
structure.
B:
Uh huh.
HMJr:
Hello?
B:
That would be very interesting to have.
HMJr:
B:
HMJr:
And I thought that if - if you'd like to
have him put it into your hands for the
Senator, he - he'd be glad to do it.
Yes, I'd like ever so much to have it.
Well, now how and when - how long do you
work tonight?
B:
Oh, we'll be here until 5:30 or 6:00.
HMJr:
5:30 or 6:00.
B:
That's right.
141
-2-
HMJr:
And what room?
Just come to the Senate Chamber. We'11 be
B:
in session until 5:30 or 6:00, because we're
going to take up on the Farm Appropriation
Bill
HMJr:
Well, I mean should he go to Colonel Halsey's
B:
Yes, that'd be better.
HMJr:
Just
B:
And after awhile we'll take Senator Barkley
HMJr:
Well, I'll - I'll have him come up there and
room and ask for you?
out there and we'll talk to him.
then go to Colonel Halsey's room and ask for
you.
B:
HMJr:
That's fine. Thank you very
Because I thought this - well, the stuff is
so new the ink hasn't even dried on it. I can
smell it.
B:
Oh, well, that's fine. That would be very
worthwhile.
HMJr:
And I thought that particularly Illinois and
Iowa
B:
Yes, because Gillette has just finished making
a speech on that same subject.
HMJr
B:
Well, here's some stuff that is absolutely
fresh from the field.
Fine. Well, thank you very much, Mr. Secretary.
HMJr:
I hope
B:
Glad to have it.
HMJr:
Thank you.
B:
Goodbye.
142
9-
DR. LIKERT: We asked the interviewers to make an
estimate as to whether or not the individual can buy more
bonds, and that, of course, is a bit of a hazardous esti-
mate, but we thought we might get some rough appraisal
on what the probability was of increased bond purchase
among these farmers and among those who are now buying
bonds - about forty percent - forty-two percent - of the
farmers who are judged to have economic resources and purchase
ing power, to buy more bonds than they are buying. But a
third of the group who are not buying bonds were judged
to be in the position of being able to buy some bonds.
So from the standpoint of at least talking with these
people for anywhere from forty-five minutes to an hour
and a half, and discussing the whole bond situation, you
have this feeling and it Isn't too precise. I mean, the
economic data on purchasing power of the counties, I think,
is a more valid thing, but nevertheless, it is suggestive.
And about a third of the farmers - two-fifths - are appraised
by the interviewer of being able to purchase more war bonds.
The chief competitor, at the present time, for purchase
of bonds, as far as we were able to estimate it, is payment
of debts. That stands at about forty percent of those who
are buying bonds and fifty-three percent of those not buying
bonds. That seemed to be the major factor competing with
bonds. Livestock increases and improvement was fourteen and
fifteen percent, respectively, of the buyers and non-buyers.
Land purchase was eight percent among the buyers and two
percent among the non-buyers. Consumer goods and various
other things dropped off there to about three and four
percent - farm equipment, savings, income taxes, and so on.
H.M.JR: Can I interrupt you a minute? I don't know
how you happened to come to do this one, but I am delighted
you did. Are we paying for this?
DR. LIKERT: Yes.
H.M.JR: Gamble would know. How did this one come into
being?
143
- 10 -
DR. LIKERT: Lloyd Partain and Mr. Odegard suggested
that we do it.
H.M.JR: I was just thinking of this. You see, we
start this drive on the 12th. Could your men in the field
act as sort of listening posts for us, to see how this
drive is going - where we are falling down? Could we give
you a retainer again to do that?
DR. LIKERT: Perfectly willing.
H.M.JR: Scatter your men in the forty-eight States.
have you got something on?
DR. LIKERT: We won't be able to cover all fortyeight, but Nevada, Wyoming, and some of those States won't
mean too much to you, anyhow. We certainly could cover
the major States.
H.M.JR: If you could do that-MR. PEABODY: It would be splendid.
H.M.JR: Because Dr. Likert's work is best, and tell
these fellows they would have to use airmail on their
reports. You see, to be listening posts for us - where
it is good and why, and where it is bad and why.
DR. LIKERT: I will be very happy to do that.
H.M.JR: I think that would be wonderful.
DR. LIKERT: That starts April 12?
H.M.JR: Yes. who makes the financial arrangements
with you?
DR. LIKERT: I think Mr. Thompson is the person you
arranged with last time. He checked with Mr. Jump,
of Agriculture.
144
- 11 -
H.M.JR: Shall I have Thompson come in before you go
and tell him to do it? What do you think?
M.M.JR: But then we would have it come in, not to
me, but - Mr. Robbins was here - let the stuff flow in to
him. I think that would be very useful. what do you think,
Merbert?
MR. GASTON: I think it would.
H.M.JR: This is good.
I think others will want to see you longer, but I am
a little pressed, as usual.
DR. LIKERT: The percentage of income spent for bonds this is based upon the study that you asked Mr. Odegard to
have made the last week in March, or thereabouts, so we
rushed through it, and this is the first one coming in now.
The distribution of ownership of bonds runs about the
same except that those owning less than six percent dropped
off slightly; those owning six to ten is roins on up because
of pay-roll deduction and the ten percent objective on the
pay-roll deduction.
DR. CARTWRIGHT: This is purchase rather than ownership.
DR. LIKERT: That is right. The proportion of people
who are that much in. eighteen percent were putting
less than
six of
their income
putting
percent
into 'bonds last less
September; now it is only fourteen percent putting
than six percent in. Twenty-three percent owned no bonds
at that time; now it is twenty percent. Those putting six
to ten percent has jumped from thirty-one to thirty-six;
over ten percent nas remained about the same.
H.M.JR: Pretty low, isn't it?
1
MR. PEABODY: I think it would be splendid, Mr. Secretary.
145
- 12 -
LIKERT: There is a lot of evidence that your
quotas act as an incentive upward, but also act as a deressant downward. I think one of the real problems is
to work out a presentation which will not act as a depressant, that will push it up and then continue on up.
e have got some suggestions there that we have made.
H.H.JR: I would like very much - I think you and
Robbins ought to sit down with Dr. Likert and give him
time. will you arrange it?
MR. PEARODY: Yes, we would like very much to.
H.M.JR: I mean, I would tell Robbins that I very
definitely would like him to sit down with him for whatever it takes - an hour or two hours - what do you want?
DR. LIKERT: I should think an hour would be more than
adequate - half an hour, and whatever additional time is
necessary based on that preliminary discussion. The
method of bond buying is a rather significant shift there
in Table 2. Those people who were buying under a regular
plan of their own, twenty-three percent last September,
dropped to ten percent in March, and the chief impact is
taxes - income taxes - but also this whole business of the
cost of living going up. Those shifted over to some
irregular plan, not buying as much in the way of bonds.
Your pay-roll deduction people have gone on up.
The next table three is one of the most significant
things that we have found in this March study. we found
in talking to people for about forty-five minutes -
thirty-five or forty-five - that people would indicate
how they felt about bonds without necessarily asking any
question about fear of non-redemption. It would come out
in one way or another - they would indicate. Last Septem-
ber two percent actually indicated that they were fearful
that bonds would not be redeemed. That has jumped to five
percent. And where it was five percent last fall - where
other people are afraid bonds won't be redeemed - that has
now jumped to sixteen percent. we checked - ...'. Odegard
has a copy of a report from the immor Clinic at boston -
146
- 13 -
one of the things circulated is this rumor that the bonds
will not be redeemed. We checked with the Foreign broadcast
Intelligence Service. That has been one of the major
themes that the azi propegandists have been hamering on,
this danger of non-redem tion of bonds in the financial
structure of the United States.
H.M.JR: I didn't know that:
DR. LIKERT: And it reached 8 peak about three months
ago. It has dropped off a bit since then.
h.M.JR: That stuif ought to come in to me when I am
doing a speech.
DR. LIKERT: I think it suggests that some copy ought
to be directed very definitely to this business of-MR. PEARODY: To this thing, yes.
H.M.JR: It is news to me. Did you know it?
MR. PEABODY: No, sir, I didn't.
I...JR: I didn't, either.
DR. LIKERT: It is "greatest in the Middle West, it is
8 little less on the West Coast - twenty-nine percent, and
drops off to twenty-two percent, New England; sixteen percent, Middle Atlantic; and ten percent in the South.
There is some indication, in fact, that it tends to
run parallel with the irritation with, and dissatisfaction
with, a lot of other Governmental activities such as rationing, and food shortages, and things of that kind. You get
generalized resentment which seems to carry over.
It also tends to be greater - explain table 5. This
is the first time I have seen this.
147
- 14 -
DR. CARTWRIGHT: In interviewing these people, we
asked them how they decided what percent of their money to
out into bonds. There are two groups that you can distinguish. One is, "We decided after looking at our own
financial condition how much to put into bonds, and
the other group said, "We are buying what they ask us to
buy." In other words, the people who - your quota people
versus those who decided themselves.
This Table 5, people who are buying what they were
asked to buy, if that was a high amount, over ten percent they are now the most fearful group that bonds will not be
redeemed. They have sunk a lot of money into it and they
have been pushed to do that, and they are now the most
fearful group.
The second most fearful group is the people who have
decided themselves to buy less than five percent. in other
words, they have already now done something about it, so
that their purchases are low.
H.M.JR: I am going to have to stop now, but 1 would
like very much if you would arrange wi th Mr. Peabody and
Mr. Robbins.
MR. PEABODY: I will get in touch with Dr.Likert.
(The Secretary held a telephone conversation with
Mr. Thompson.)
2
148
UNITED STATES DEPARTMENT OF AGRICULTURE
Bureau of Agricultural Economics
ATTITUDES OF IOWA AND ILLINOIS FARMERS
TOWARD FARM PRICES
MEMORANDUM
For Administrative Use Only
April 7. 1943
Program Surveys Division
149
ATTITUDES OF IONA AND ILLINOIS
FARMERS TOWARD PARK PRICES
This memorandum presents the attitudes of 221 representative lown
and Illinois farmers toward present farm prices Those attitudes
were obtained in answer to two questions on a recent survey (as
yet unpubliehed): "What do you think about fare prices now and
"Do you think it would be a good idea for the prices of farm producte to go much higher?" Most farmers cooded little encourage
pent to answer and discuss these questions in some detail. Most
of them presented not only their point of view, but also their
reasons for holding it
Eighty percent do not want
general farm prices to go higher
Relatively little demand for higher prices is found among Illinois
and Iowa farmers Four-fifths of those interviewed indicated that
they have no desire for farm prices in general to go higher than
they are at present (Table 1), although about a quarter of these
qualify their statements by montioning conditions which they believe would justify future increases Eighteen percent were
obviously satisfied with the present level of prices but gave no
specific reasons why prices should not go higher. Two such cases
are illustrated in the following quotations.
"I'm tickled pink the way they are now All farm prices are
very good."
"I figure if I can't make money out of farming now, I'm doing
the country an injustice by staying on the form."
The reasons which other farmers give for keeping farm prices from
going higher show that many farmers are thinking of their own welfare from a long-term point of view Boom-time profits now might
be very acceptable from one point of view but they could not
compensate for the drop which many farmers feel is the inevitable
follow-up to abnormally high prices Lighteen percent mentioned
or described inflation as an undesirable consequence of ipher
prices. and an additional 12 percent montioned the drop which could
be expected to follow excessively high prices The experience of
many farmers with the post-was depression of 1921 and the post-boom
depression of 1933 is evident in their answers One gains the
definite impression from the interviewe with those farmers that
they would sacrifice 8 2PORT deal of temporary profit for Long-
term stability and security
150
3
2
In addition to those farmers who oppose further price-rises on the
basis of a long view of their own welfare, there is a smaller
group which shows a genuine interest in the offects of high prices
on non-farm consumers. For some, this concern about reduced consumption is in part concern about the reduced demand for what a
Table 1: Attitudes Toward Present Price Level
Prices should not go higher
No reason specified
Higher prices will cause inflation
If they go higher the drop later
will be bad (like last war)
farmer has to sell (rather illogical at the present time), but
number of farmers show an understanding of the effects of rising
prices on those who live in cities on relatively fixed incomes.
18% )
58%
12
Non-farm consumer suffers
Other prices should come down
"No sir, I don't I think they're all right like they are
8
"I always figure if prices go too high they'11 have to drop
later on. I don't want to go through again what I did a few
17
3
22
Unless taxes go higher
Unless defense workers' wages go higher
1
1
)
10
3
1
17
1
In order to make it possible for farmers
1
1
3
Not ancertainable
100%
N=221
"No, I don't think prices should be any higher than they are
now. This is no time for us to be making a lot of money; what
we have to think about is getting enough food for the boys who
are sacrificing a lot more than we are in the service.
(Do you think it would be a good idea for the prices of farm pro-
)
to pay debts
No reason specified
years back, when we wore just able to make expenses and a living off the farm and that was all. Maybe the oorn farmors
think different than I do abou prices, but for a livestook
farmer like no 1 think prices are high enough right now. If
they'11 keep prices at present levels it will be all right."
Prices should go higher
Because prices of things purchased have
not been kept in line
Because farm labor coats are so high
Because defense workers get paid so much
In order to increase production
illustrated in the following quotations:
Some farmers would like to 600 hoga up to $25 . hundred, but
not for no.
2
Prices should not go higher - conditional
Unless prices of things purchased rise
Unless labor oosta on farm go higher
Some of the reasons farmers give for not wanting pri de rises are
18
ducts to go much higher?)
"I don't believe it would because if they go much higher labor
will want more money and if they get it then we will want more
and that is the way it goes."
"Have you ever been drunk1 Drunk so that you felt it the next
morning? That's what happens when wajes and prices start
chasing each other around in a criole It's . horse race and
it's no good for anybody. I think it would be better if hoge
was 12 cents. No, I don't want to see skyrooket prices."
Present satisfaction with prices
depends for 22 percent on other
conditions remaining the same
Although most farmers are satisfied with farm prices now, about a
fifth of those interviewed indicated that their satisfaction with
4
present prices was contingent upon other prices and wages remaining
in line. The parity concept 16.5 evident in their opinions. Most
of their concern was about possible future increases in living and
operating expenses. A future increase in the prices of things the
farmers have to buy was most frequently mentioned as an adequate
justification for future price rises. Farm labor 00 at i more nontioned by three percent and a very small proportion mentioned taxes.
A factor not directly related to farm expenditure, namely, increases
in defense workers' wages, was mentioned as a justification for
future farm price rises by only one percent of the respondents.
Seventeen percent want
farm prices to go higher
Less than one-fifth of the farmers interviewed indicated a domand
for higher farm prices. The reasons given for this demand largely
involved the assertion that the conditions menti oned in the previous paragraph - prices of things a farmer purchases, farm labor
costs, and defense workers' wages - were already out of line with
farm prices. These three conditions are entioned with almost
equivalent frequencies by two groups. Uno indicates that if these
Factors get out of line, then form price increases would be justified, while the second group demands price increases now, basing
this decand upon the assertion that these conditions are now out
of line with farm prices.
Quotations from farmers who want higher prices follow:
"According to everything sloe, it ought to be higher. I mean
according to the stuff you have to buy and according to what
people are getting in factories. Well, if they keep the other
stuff down like I said, it don't make much difference But if
other things is ra) sed, then the prices should & higher.
There's too much difference now between what you've got to buy
at the store and what raises the farmers got so far. People
don't realize what it oosta to farm. There are follows in
town who think it costs nothing to put our your crop and tend
it."
"Well, I don't know. They could stand to go higher the way have to buy things. That's one reason farmers are leaving the
farm." farm, because they can't pay enough to keep their hands on the
"I think
theywith
ought
back
equal
it." to go higher unless they put the other stuff
The relationship between farm prices and other economic factor
especially those most directly affecting the farmer, is obviou
playing a large part in the farmers' attitudes toward prices.
However, it is clear that at present the opinion that fara pri
are out of line with other prices is limited to relatively for
farmers in Iows and Illinois.
152
UNITED Schien DEPARTMENT OF AGRICULTURE
Bureau of Agricultural Economics
RURAL BOND SALES
IN IOWA AND ILLINOIS
For Administrative Use Only
Study 60
Report No. 39
Program Surveys Division
April 6, 1943
153
Dollars
in Millions
100
75
50
25
0
nl.
Iowa
Quotas
1942
Iowa n1.
Potential Bond Sales
Estimated from Economic
Factors*
Iowa ml.
Actual
Sales
1942
Figure 1. Total quotas,potential bond sales, and actual sales for
all rural counties in Town and Illinois.
sales (solid bars) are calculated on the basis of the
relation Potential between economic factors and bond sales in Iowa in 1942.
The dotted portion represents an indefinite addition which the is
added on the assumption that 1942 sales do not represent
maximus possible.
.
154
THE REPORT IN BRIEF
THE LARGE DIFFERENCE BETWEEN
RURAL AREAS OF IOWA AND ILLINOIS
IN WAR BOND SALES IS NOT DUE TO
ECONOMIC DIFFERENCES
Although the Iowa and Illinois counties in this study are of
equivalent economic level, bond sales for 1942 in the Iowa
counties were two and one-half times as great as in the Illinois
counties. A similar difference is found for rural counties in the
two states as a whole.
REASONS FOR THE DIFFERENCE
1. A major reason for the difference in sales is the difference
in county quotas which are considerably more than twice as
high in Iowa as in Illinois. Bond sales correspond such more
closely to quotas than they do to the potential bond sales
which are estimated from economic level of farmers in the
two states.
2. A second important cause of the greater sale of bonds in Iowa
is that considerably more farmers in that state were personally
asked to buy bonds by members of the local campaign.
3.
In addition to the difference in the number of farmers who
were approached through the local campaign, there was considerably greater pressure for large bond purchases put upon farmers
in Iown.
4. Other differences between the states which account in part for
differences in bond sales are found in the attitudes of the
farmers. Farmers who are worried about their own post-war
economic security react in the traditional way by putting
every extra penny into paying off their debts. The tendency
to do this, which is one of the strongest deterrents to
bond-buying, is much more common in Illinois.
PRESENT ATTITUDES OF IOWA AND ILLINOIS
FARMERS TOWARD WAR BONDS
Farmers are Sold on the Value of
War Bonds to the Nation
Iowa and Illinois farmers have been sold very effectively on the to
idea of War Bonds as a use for their excess income. Few fail
mention War Bonds when asked what they believe to be good uses for
155
11
11
their money. They give the same reasons for buying bonds that have
been stressed in fiar Bond publicity - "The Government needs the money
"We must buy bonds to help win the war", "War Bonds are a good investment", etc. Some of the farmers have been inspired by the publicity
to the extent that they have bought bands of their own accord, but
many of then have not. The farmers who have not bought bonds say that
they have inadequate income or that they have debts to pay.
It is true that low economic level is often justifiably a deterrent
to bond-buying and that the payment of debts is the major competitor
for War Bonds. However, many farmers who do not buy Far Bonds spontaneously and who say they have inadequate income or excessive debts
can buy bonds. This is evidenced by the fact that many of them do
buy bonds when they are approached personally by workers on local
war savings campaigns. Contact with the local campaign workers was
found to be the most effective factor in causing farmers to buy bonds.
Attitudes Deterring Bond-Buying
Not Sufficiently Stressed in
Bond Publicity
Since War Bond publicity is so widespread at present, it is impossible to determine how effective the sales approach by minute nen
would be without the background of favorable attitudes toward bonds
which advertising techniques have produced. However, it should be
pointed out that attitudinal factors which show the greatest effect
as deterrents to bond-buying have not been given a large place in
the nation-wide publicity campaign, although they have been stressed
to a greater extent in local campaigns.
nature of a contribution each B.C they night make to the Red Cross,
or even as spending. The necessary exphasis on patriotian and
"doing DTV B part probably contributes to this. It seems likely
that nerry of these famora would be more willing to "do their part"
is they were convinced that they would not suffer by it.
Uncertainty About Redemption
of Bonda Not Council
There is very little indication that failure to buy bonda is due
to a loak of faith in the redeemability of War Bonds after the
an
war. Relatively few farmers mention this possibility. It is
interesting commentary on the effectiveness of the patriotic
axphacis in "an" Bond publicity that several of the farmers who
express unsertainty about the full redeesability of War Bonds
have bought bonda and a willing to consider them as their contribution toward winning the war if necessary.
KORE Internal Compaign in Illinois
could Increase
The difference in bond sales between Iowa and Illinois is too
to be rea sonably accounted for on the basis of the of rela- the
great sull economic difference between the rural areas of
tively states. It is apparent that increasing the intensity This the
- Illinois campaign would increase bond sales in that state. quotas
be done by increasing the amount of rural county bonds
might and by making sure that all Carners were asked to buy men.
either at seetings or during personal visits by minute
Farmers not Sold on Value
of War Bonds to the Farmer
Some farmers who have pressing debts believe that they should buy
bonds in addition to paying on their debts in order to have a back-
log of relatively liquid assets to apply to their debts later,
perhaps when their income is lower. But many others do not have
this point of view and do not buy bonds. It is significant that
farmers who are worried or uncertain about their post-war situation
are less likely to buy bonds than those who are not worried.
Apparently there is a considerable group of farmers who have debts
and who anticipate a reduced income after the war. Their method of
meeting this situation in this period of high prices is the
orthodox one of putting every extra penny into paying off their
The other factors which differentiste Iowa and Illinois payment are of the
proportion of farmers who put greater emphasis upon who are worried
than bond-buying and the proportion This
debts upon about their post-war economic situation may
or uncertain not be a result of the differences in the Iova a and great Illinois deal
or may The Iova caspaign has certainly put in protecting
local campaigns. the part which War Bonds can play the post-war
of the emphasis farmer upon BE well as the nation against rationale effects of for bond-buying
adjustmentwho
period,
it has
a a case,
great be
deal of
haveand
debts
to provided
pay. In any
by farmers to bond-buying which is found in Illinois meet may the uncerresistance attributed to the tendency of Illinois famers of to putting the
taintier of the future before by any the other orthodox forms method of expenditure. the An part attack
debts. They have not been sold on the function which Lar Bonds can
play in meeting the situation. One gains an impression from the
payment of debts of view by forcefully showing farmers of future low
interviews themselves, which is difficult to find in explicit form,
which HEJ Bond probably can produce a considerable increase reduce sales
that some farmers think of the purchase of Far Bonds as being in the
upon this point play in staving off the effects in bond
prices sales among would Illineis farmers. It would certainly
resistance which now exists.
156
iv
TABLE OF CONTENTS
RECOMMENDATIONS FOR INCREASING
Page
BOND SALES IN RURAL COUNTIES
1. Increase the quotas for rural bond sales. This should materially
increase bond sales in Illinois where present quotas appear to be
acting as an upper limit to bond sales. However, since it would
THE REPORT IN BRIEF
INTRODUCTION
be necessary to more than double present quotas in most counties
will facilitate bond sales in other rural areas in proportion as their
rural economy is similar to that of Iowa and Illinois.
Many Farmers Can Buy More War Bonds
Payment of Debt, Livestock Increase, and Land are
Most Frequent Competitors for War Bonds
Farmers Emphasize Debts More Than Bonds in
Comparing the Two
The Purchase of Land a Potential Competitor for
War Bonds
A Few Farmers Mention Possibility of Non-Redemption
7
The first three of these recommendations are specifically based on
differences between Iowa and Illinois. The others apply in Iowa as
well. However, it is likely that application of these recommendations
Inadequate Income and Preference for Paying Debts
the Most Frequent Reasons Given for not Buying Bonds
7
5. Increase the exphasis in Bar Bonds publicity upon the value of
bonds to the farmer. A farmer who believes he is making a sacrifice when he buys bonds to help the Government is not likely to
be enthusiastic about large quotas. Many specific applications
of this recommendation are to be found in the publicity now being
put out by the Iowa War Savings Staff. They describe War Bonds
in terms of liquid assets, as depreciation reserves, and as means
of meeting future debt payments.
Few Plans for Use of Bond Money Show Effect of
of Wartime Shortages
5
this is suggested in the following recommendation.
Most Farmers Think of Bonds as a Means of Saving
5
the implication has been accepted by many farmers, that bond-
buying is in the nature of & patriotic sacrifice. A remedy for
Reasons Given for Buying Bonds
4
desirable act. However, it carries the implication, or at least
National Economic, Personal Finance, Patriotic
5
4. Decrease the relative emphasis upon patriotic reasons for buying
bonds in War Bond publicity. Present emphasis upon purchasing Bar
Bonds as a patriotic act has been done well - it has laid a background of attitudes favorable toward buying bonds as a socially
also Favored
3
age to having relatively liquid assets in the form of ar Bonds
while they still have debts to pay.
Payment of Debts and Increase of Livestock
3
3. Educate the farmers to the value of War Bonds as a hedge against
possible post-war depression. Many of them do not see any advant-
The Purchase of War Bonds is the Most Favored
Outlet for Excess Income
2
2. Approach every farmer personally and ask him to buy. Many farmers
who have not been contacted personally in Illinois will buy if they
are asked. This includes many farmers who do not appear to be good
prospects because of apparent low economic level.
AND WAR BOND COMPETITORS
1
in the way present quotas do.
I. FARMERS' ATTITUDES TOWARD WAR BONDS
1
some kick-back night be expected. Another alternative to avoid
this difficulty would be to adopt some other method of stimulating
and allocating the amount of bond sales which would not limit sales
1
in Illinois to take advantage of their bond-buying potentialities,
of War Bonds
10
II. FACTORS RELATED TO BOND-BUYING
Direct Contact with Farmers the Most Effective
Determinant of Bond-Buying
10
157
Page
INTRODUCTION
Economic Level an Important Determinant of
Bond-Duying
11
The War Savings Staff has known for some time that rather large
differences in bond sales exist among rural counties from state
Emphasis on Bond Purchases Rather than Debt Payment
Facilitates Bond-Buying
11
Fear of Inflation Closely Related to Bend-Duying
12
Farners Not Worried About Their Post-War Economic
Situation More Often Buy Bonds
12
Other Factors Less Closely Related to Bond-Buying
III. FACTORS INFLUENCING BOND SALES IN IOWA AND ILLINOIS
13
14
Difference Between Bond Sales in Iowa and Illinois
not due to Economic Factors
14
Quota Differences Account for much of Difference
in Sales
Other Factors Favor Bond-Buying in Town
15
15
More Farmers Contacted by War Savings Campaign in
Iowa than in Illinois
15
Enphasis on Debts and Worry About Post-Mar
Situation Kore Common in Illinois
16
Other Factors Do Not Differentiate Iowa and Illinois
17
Greater Sales Pressure in Iowa than in Illinois
17
More Resentment of Bond Campaign in Iowa
APPENDIX
Interview Schedule
Tables
TECHNICAL APPENDIX
17
to state over the country. The purpose of this investigation is
to isolate and to study some of the major factors influencing
bond-buying among farmers and, thus, to account for some of the
differences in sales now known to exist.
In order to eliminate gross differences in economic level and in
major agricultural enterprise, this investigation is confined to
counties in Iowa and Illinois. These two states have been selected
for study because, despite their gross similarities, large
differences between them exist in the sale of bonds in their
rural counties. Farmers in each state were interviewed to
determine the attitudinal background against which the bond canpaign is being conducted and to appraise the effects these
attitudinal influences and other factors have upon bond-buying
Four counties in Iows wore equated for economic level with four
in Illinois on the basis of (1) average value of land and buildingo, and (2) average rent. Each pair of counties was selected
approximately at the median of each quartile of economic level
so that all levels are represented. In order to limit the
study to rural counties, all counties (1) adjacent to counties
containing metropolitan areas, or (2) containing oities of over
10,000 population were excluded from the group from which the
was selected. The counties included in the sample are:
Benton, sample Grundy, Taylor, and Union counties in Iown, and Brown,
DeWitt, Moultrie and Wayne counties in Illinois.
A total of 221 intensive interviews was taken between February
11 and 27, 1943. of these, 114 were in Iowa and 107 in Illinois.
Seventy-five percent of the interviews in each state were with
farm operators and the remainder were with wives of operators. 31.
The number of interviews in each county ranged from 25 to
158
I. FARMERS' ATTITUDES TOWARD WAR BONDS
AND WAR BOND COMPETITORS
The purchase of War Bonds is just one of the possible ways in which
farmers may dispose of the excess income which most of them have at
the present time. The other outlets are many and include retirement
of debts, purchase of land, livestock increase, farm improvement,
etc. This section contains information on farmers' attitudes toward
War Bonds and other possible outlets for their excess income which are
in competition with War Bonds.
The Purchase of War Bonds
is the Lost Favored Outlet
for Excess Income
The idea of putting money which cannot be used to purchase consumer
or producer goods into War Bonds is very widespread among Illinois
and Iowa farmers. Nearly half of those interviewed indicate that
the purchase of War Bonds is the best use they could make of their
money (Table 1) ,and 86 percent of them mention War Bonds among
their first three choices (Table 2). This emphasis on liar Bonds is
quite spontaneous, since no reference to War Bonds or any other
specific use for money was made by the interviewers prior to the
question on which Tables 1 and 2 are based. That this preference
for War Bonds is not mere lip-service is indicated by the fact that
77 percent of the farmers interviewed have actually purchased one
or more bonds.
Payment of Debts and
Increase of Livestock
also Favored
The payment of debts and increase in livestock are the only other
outlets considered as the best use for excess income by more than
5 percent of the farmers. Payment of debts is the most preferred
use for 29 percent of the farmers interviewed, and increase in
livestock is favored by 9 percent. of the farsers who have not
bought bonds, more prefer to pay off their debts and increase livestock than prefer to buy Tiar Bonds (Table 1).
When second and third preferences for use of excess income are
combined with the "best" use, there is little change in the order
of importance of the various alternatives (Table 2). One excep- three
tion is the purchase of land, which is found among the first
choices as frequently as is the increase of livestock.
The competitors for bonds will be discussed in more detail in a
later section.
. Tables are in Appendix
159
3
2
Few of the respondents admitted that the rural bond-selling campaign
was an important factor in getting them to buy bonds. However, evidence to be presented later indicates that the campaign has a much
National Economic, Personal
Finance Patriotic Reasons
Given for Buying Bonds
greater effect than is indicated here.
The interview schedule did not include a direct question on why
the respondent had or had not bought bonds. The reason for buying
bonds which the respondent thought most important was judged by
the interviewers on the basis of what the respondent said during
the course of the interview as a whole. In about half the interviews a single reason is not clearly dominant. In these cases the
two reasons of apparently equal importance are listed.
Reasons for buying bonds stated in terms of national economics are
given by more than half of the respondents (Table 3). Of these
reasons, by far the most common is one that has been implied in
much War Bond publicity - that the Government needs the money.
Specific uses for the money are often mentioned, such as to buy
planes, tanks, guns, or to pay for good equipment and food for "our
boys". The prevention of inflation appears as an important reason
for buying bonds to only 3 percent of the farmers interviewed,
although so percent of the farmers interviewed mention inflation
or its consequences during the course of the interview.
In addition, when asked why the Government was anxious to get people
to buy bonds, 15 percent indicate that the Government wants to curb
inflation (Table 4). The following table sumarizes the farmers'
attitudes toward inflation.
Mentions or describes inflation
during the interview
50%
Says that the Government wants
Mentions the prevention of
inflation as a major personal
reason for buying bonds
15
Bond publicity. L'uch of this publicity is naturally concerned with
giving reasons for purchasing lar Bonds. The frequency with which
these reasons recur in the interviews indicates the extent to which
they have been accepted.
Most Farmers Think of Bonds
as a Eeans of Saving
About half of the farmers interviewed speak of War Bonds in terms
of a place to keep money, as an emergency fund, or as a hedge
against the future, i.e., as savings (Table 5). Twenty-eight per-
cent are more concerned with bonds as an investment. In discussing
bonds, this latter group emphasize the interest rate or the
increase in value at maturity. The resainder do not mention bonds
in relation to their own personal or farm finances. The proportion speaking of bonds in terms of savings or investments is not
significantly different for bond-buyers and non-buyers.
Few Plans for Use of Bond Koney
Show Effect of Wartine Shortages
Less than half of the farmers interviewed have specific plans for
the use of the money they will obtain when they cash in their
bonds. There is little indication that wartime shortages have had
much influence on the farmers who do have plans. Less than onefourth of those who do have plans mention consumer goods, farm
equipment such as machinery, or more permanent forms of farm
3
people to buy bonds to prevent
inflation
It is likely that the reasons which respondents give for purchasing
War Bonds actually represent a measure of the effectiveness of Ear
improvement. The most frequent plans are for things which farmers
might be expected to save for regardless of the war, such as
travel, education for the children, more land, or a home for retirement.
Reasons connected with their personal or farm finances are empha-
aized by 41 percent (Table 3). Twenty-four percent indicate that
bonds
should
bought as a means of saving, and 17 percent speak
of
bonds
as anbe
investment.
Fifty-three percent of the respondents who have bought bonds have
no plans for the use of their bond money.
Patriotic reasons, such as: The must buy bonds to help our country",
or
"Tie munt buy bonds to help win the war" are important to 26 percent of the respondents.
Inadequate Income and Preference
for Paying Debts the Kost Frequent
Reasons Given for not Buying Bonds
half of the farmers who have not bought bonds assert as a
major Nearly reason for not buying that their income is inadequate (Table 7).
160
5
4
Twenty-six percent prefer paying their debts to buying bonds, and
16 percent indicate that some emergency such as illness in the
family or loss of livestock had made it impossible for them to
meet their pledge. Table 7 is based only on the most emphasized
reasons for not buying bonds. Many farmers, such as the one quoted
below, give more than one reason.
"I ain't buying bonds because I ain't got the money
and I wouldn't buy many of then if I did have it.
signed that pledge but I don't buy them. A farmer
can't do everything."
(How do you think a famor should stand on his debts
before he buys bonds?) "I think he should have them
all paid up. There ain't no use in paying big money
for the stuff you borrow and then not paying it off
as fast as you can 80 you can buy bonds at a low rate
of interest. I say get the debts paid off. Of course,
if you only got a $50 $75 debt that might be different, but most farmers have larger ones than that,"
Reasons for not buying bonds which are unconnected with the farmer's
own financial situation are very infrequent.
Many Farmers Can Buy
Fore War Bonds
It is difficult to determine whether a farner is able to buy bonds,
or, if he is buying, whether be is able to buy more. However, the
interviewers were asked to make this judgement for each respondent
whether or not he could buy more bonds without sacrifice. of
those who have bought bonds, 42 percent were judged as able to buy
more, and 37 percent unable (Table 8). Of those who have not bought,
35 percent were judged able to buy, and 37 percent unable. The
interviewers could not make this judgment in 22 percent of the cases.
The judgment was based on information obtained from observation of
Payment of Debt, Livestook Increase,
and Land are Meet Frequent Competitors
for War Bonds
The faot that farmers are not buying bonds "to the limit" indicates
the existence of competitore for their excess income. The interviewers were asked to make a judgeont on the basis of the interview as a whole as to the major competitor for bonds. For nearly
half of the respondents (44 percent) this was judged to be the
payment of debts (Table 9). The increase and improvement of
livestook and the purchase of land were judged to be the major
competitors for bonds in 14 percent and 6 percent of the cases
respectively. No other competitor was indicated as most
important for more than 5 percent of the respondents.
In the light of recent increases in domand deposits in rural banks,
the small proportion (2 percent) for whom savings is considered
as a major competitor is of interest. It is possible that the
reason for this is that farmers speak of money in the bank as
savings only when it is in savings accounts. Donand deposits
are more likely to be thought of as cash on hand and may be
represented more conoretaly in other categories, such as:
(1) livestook increase, (2) livestock improvement, (s) farm
improvement, (4) farm equipment, (8) land purchase, and (6)
taxes. When all of these items are combined with the savings
item they are the major competitor for bonds for 32 percent of
the respondents.
There are implications in a number of interviews that War Bonds
are not considered as liquid assets comparable to savings accounts.
A quotation from one respondent illustrates this point:
"Some farmers are saving their money and some are spending
it. They are putting into the bank what they don't put in
bonds and I don't blame them. I think they should have
come to fall back on if they need it.
the farm and how it was kept up, and from the interview itself. Dur-
ing many interviews, respondents mentioned the amount of debts or
savings they had, recent expenditures for consumer goods or farm
equipment, costly emergencies such as sickness or stock losses, etc.,
as well as the actual amount of bonds they had bought. In the
absence of consistent data on income, expenditures, and bond purchases,
this judgment was necessarily tenuous and must be accepted with very
great caution. However, it is of interest that over 40 percent of the
entire sample of farmers save the impression that they could buy bonds
or buy more bonds without sacrifice (Table 8).
Farmers Emphasise Debts More
Than Bonds in Comparing the Two
Twenty percent of the respondents believe that a farmer should 41 pay
off all his debts before buying bonds (Table 10). Another
percent put more emphasis on paying off debts than on buying bonds. before
of these believe in bringing debts down to: a reasonable level
Most
161
7
6
The Purchase of Land
putting much money into bonds, although many would and are buying
a few bonds in spite of large outstanding mortgages. A third
group includes 19 percent of the respondents abo put approximately
equal emphasis on the payment of debto and the purchases of bonds.
Nine percent put more emphasis on the purchase of bonds than on
paying off debts. None, understandably, would buy bonds to the
neglect of debts. Some of the points of view are illustrated in
the following quotations.
I
"I think a farmer should pay all his debts first.
have always been afraid of having a mortgage come due,
because ever since I was a kid that has always moant
losing a farm. I have always felt a man is better off
if he has his debts all paid. I would never go out to
borrow money to buy bonds."
"Debts is what fixes me, but if anybody has money they
should put it into War Bonds. It is safe. It is the
safest place you can get. If it ain't safe with the
Government it ain't safe any place. You would be help-
ing the war effort. The sooner that's over the better.
I've bought some bonds already and I'm going to
buy some are. I had to borrow some money to buy this
land and I had the mortgage made out for 15 years, but
I can pay it off in 5 years if I want to. I'm going to
pay off that 20 percent each year and then buy bonds
with the rest of my money as & sort of investment to
use in paying off the rest of the mortgage if I need it
in the next couple of years. I will lose a little doing
that way, because the thar Bonds will bring me in only
2 percent and I have to pay 4 percent on the mortgage,
but I figure bonds are a safe enough investment so that
I can stand to lose that much. I would like to pay off
the mortgage in a year or two but I may not be able to
make it, and the bonds will help me later.'
"A farmer who has a debt shouldn't expect to pay that
off before he buya any bonds and let his neighbor buy
all the bonds. But some consideration should be given
to the man carrying a big mortgage."
As might be expected from the frequency with which debts are the
major competitor for bonds, the attitude toward payment of debts
is significantly related to bond purchases (Table 11). Those who
put more esphasis on payment of debts are less likely to buy bonds.
Potential Competitor for
War Bonda
Twenty-six percent of the farmers interviewed say without qualification that they believe land to be a good buy at the present time
(Table 12). In addition, nearly half of the respondents say that
land is a good investment under certain conditions, although they
are not in the market at present. Some recall unfortunate experisnoes which they or others had after the land boom of the last
war, and are not likely to be interested in land unless land prices
show a marked decrease. Some others, more inmediate, are potential
purchasers of land, the only obstacle in their way being insufficient cash to make a down payment of 50 percent or more. As
some of these farmers accumulats purchasing power in the form of
bonds they are likely to enter the market for land. Some farmers
mention land purchase when asked what they plan to do with the
money they receive from cashing in their bonds (Table 6).
Twenty-eight percent of the respondents indicate without qualification
that they are unfavorable toward the purchase of land at present.
The attitude toward the purchase of land is not significantly
related to bond-buying (Table 18). This is consistent with the
fact that land purchase is listed as a major competitor for bonds
for only siz percent of the respondents (Table 9) Occasional
statements appear in the interviews, however, suggesting that
the desire to purchase land may play a larger part than is indicated
here. Several Minute Men mention cases of farmers who had made
small token purchased during the bond campaign and then had
purchased a farm. The Minute Men took the land purchase as
evidence that the farmer had money and immediately put pressure on
the farmers to buy more bonds. It is possible that the purchase
of land or the intention to do so competes with bonds by reducing
the amount of bonds purchased while it does not prevent a farmer
from buying a few bonds. The part that land say play as a future
competitor for bonds has been rentioned in a preceding paragraph.
A Few Farmers Mention Possibility
of Non-Redemption of War Bonds
Sixteen of the 221 interviews contain some reference to the possibility that bonds might not be redeemed or that some difficulty
might be encountered in getting a full return by the time the Bonds
mature. Eleven of the respondents express some doubt that the bonds
will or can be redeemed. This is not necessarily given as a reason
for not buying bonds Six of the eleven seem perfectly willing to
let all or part of their bond purchases be considered as a donation
162
6
9
if that is necessary to win the war. The remaining five morely
mention the possibility that the bonds might not be redeemed in
full, without further comment.
The other mentions of uncertainty as to the full return of the
money invested in bonds include two references to the discounting
of Liberty bonds during the last war, and two statements that if
we lose the war or the Government "goes broke" nothing, including
War Bonds, will be any good. The latter opinions are not expressed
as oritioisms of bonds.
Quotations from some of the interviews discussed above are presented
below.
"I helped sell the bonds around here. You know, a lot of
people didn't want to put much in, they say you won't get
your money back. That was the main reason people didn't buy
even more. of course, we didn't tell them they wouldn't get
their money back, but for myself I figure even if we don't
get it all back, we'll get some of it back, and we've got to
do something to win the war. Most of the farmers around here
have sons and brothers in the Army or Navy and they want to
do all they can. I really think the only way to sell these
bonds is making them sure it's patriotic."
"One thing I don't like. I as old and I can die. The money
would just go to the Government. There are many old people
here. When the time comes to get the money, many of them
will be dead and all that money will go to the Government
instead of their families."
"There are some who think that it won't be repaid. I have
a doubt in my own mind if the Government will be able to
pay without some kind of a moratorium. But if the Government
doesn't pay them nothing else will be any good either. They
tell people to buy bonds now and buy machinery later. You
know the Government can't pay it back the day the war closes
or even the year after. I feel that eventually the bonds will
be paid but I certainly don't expect them to be paid any
time you want to turn then in. I don't ... how that possibly
can happen. It may be that the dollar will have to be
devaluated after the war. Over the long pull they will be all
right. They were the last war."
"I should say about 50 percent, no make it 76 percent,
around here bought all the bonds they could without saorifice. Some of them could buy lots more. (Whom do you have
in mind?) Wall, they're just a lot of wealthy people in
cities who haven't been made to buy. Most farmers have put
out all they can. In fact, they have put out more than the
city people. But I'd say 25 percent are . little leery, they'ro
afraid - they don't want to get rid of all their money. And
also they are afraid of where they put all their money. I
mean some of them argue they didn't got their money after the
first war. These are old timers - they got stung last time.'
163
10
II. FACTORS RELATED TO BOND-BUYING
The previous section was concerned largely with a presentation of
what farmers say about Bar Bonds and other potential outlets for
their excess income. In this section these expressed attitudes
and other factors are related specifically to whether a farmer has
or has not bought bonds. Six factors are found to be significantly
related to bond-buying (Table 14). These include three non-attitudinal
factors: (1) direct contact of the farmer with the campaign,
(2) economic level, and (3) taking an active part in the campaign,
and three attitudes: (4) emphasis on bonds vs. payment of debts,
(5) fear of inflation, and (6) presence or absence of worry or uncertainty about his post-war economic situation.
An additional 13 factors were investigated for which the significance of their relationship to bond-buying is questionable (Table 15).
Direct Contact with Farmers
the most Effective Determinant
of Bond-Buying
A direct contact with the war savings campaign is found here, as in
other studies, to be the most effective cause of bond-buying.
Eighty percent of the respondents who came in contact with the canpaign through attending meetings or who were contacted personally of those
workers bought bonds, while only 30 percent who
by campaign contact bought bonds (Table 16). If we include the campaign the
had workers no themselves among the group contacted by the campaign,
proportion buying bonds is increased to 83 percent.
percent of the respondents who have taken an active with
Ninety-seven in the campaign as minute-men bought bonds, compared This suggests only
part of those who have not taken an active part. farmers an
that 74 percent the sale of bonds could be increased by giving more A few campaign
opportunity to participate actively in the campaign. to bonds themselves
indicated that they felt it necessary buy of then:
workers before they could ask others to buy. To quote one
"I had to buy some bonds because I ran the campaign $500 bond. for
I have a mortgage but I took a
quota
into school
but the
We thisour
broke
township.
anddistricts
assigned
district a quota. Our district went over I
each township didn't, 80 we went back to some people.
bought another $100 bond."
the evidence does not indicate whether most or canvassers whether
However, result of being made minute-men their favor- they
bought bonds as to a help in the campaign as a result of suggest that
were selected Consequently it might be unwise to the
able every attitude. other farmer be made a minute-man in order to increase
sale of bonds.
164
12
11
Economic Level an Important
Determinant of Bond-Buying
that the payment of debts is the best place for their money is
supported by their actions (Table 11). Although many farmers who
The economic level of famera is second in importance among the
bonds, they are much less likely to do so. The proportion of
farmers who buy bonds is closely related to the extent to which
they favor bonds rather than the payment of debts (Table 11).
Only 53 percent of those who favor payment of all debts before
non-attitudinal factors in the extent of its relationship to bond-
buying. Eighty-nine percent of the respondents who are above the
average of those interviewed on the economic level index bought
bonds, while only 60 percent of those below average bought bonds
(Table 17). The fact that 40 percent of those below average have
not bought bonds suggests that many of the non-buyers who give
inadequate income as a reason for not buying (Table 7) are justified.
There is some evidence that the two factors, contact with the
caspaign and economic level, were not entirely independent. Canvassers are somewhat more likely to visit farmers in the upper
economic levels than those in the lower. All of the respondents
who were not contacted (or were not canvassers) are in the lower
three-fourths of the economic scale (Table 18). This fact suggests
that one reason for the apparent effectiveness of contacting the
farmer in the campaign is that many farmers who are unable to buy
for financial reasons are not contacted. However, this is true
only in part. If selection of potential buyers were the only reason
for the apparent effectiveness of directly approaching farmers, we
should expect that a higher proportion of contacted farmers would
buy bonds in Illinois than in Iowa. (Since proportionally fewer
farmers were contacted in Illinois the selection of potential buyers
should have been ore effective than in Iowa, where nearly all
farmers were contacted.) Actually, the difference is in the opposite
direction. Eighty-six percent of the farmers contacted in Iown
bought bonds, while only 78 percent of the contacted farmers in
Illinois bought bands.
Emphasis on Bond Purchases
Rather than Debt Payment
Facilitates Bond-Buying
In many cases, the reasons farmers themselves give for buying or
not buying bonds do not stand up under further analysis. For
example, the relationship between campaign contact and actual bond
purchases is very high, yet campaign pressure is listed very infrebonds quently by the farmers themselves as the major reason for buying
(Table 3). On the other hand, the farmers' frequent statements
.
Economic level was measured for each farm on which an interview
was size taken by means of an index based on 13 items. These included
of farm, cropland acreage, number, type, and age of tractors,
type of land, condition and equipment of buildings, the respondont's statement of the value of his farm, and an interviewer's
estimate of general economic level.
favor the payment of all debts before purchasing bonds have bought
buying bonds have bought, while 97 percent of those placing equal
emphasis on bond-buying and debt payment have bought bonds.
Eighty-nine percent of the small group who place more emphasis
on bonds than debts are bond-buyers. The number of cases in this
group is so small that the reversal is not significant.
Fear of Inflation Clonely
Related to Bond-Buying
The fear of inflation is much more closely related to bond-buying
than would be expected from the infrequency with which it is given
as a reason for buying bonds (Table 3). of those who express some
fear of inflation (which frequently occurs in answers to questions
concerning farm prices rather than during the discussion of bonds)
68 percent bought bonds, while only 66 percent of those who do not
express such a fear bought bonds (Table 19). Although fear of
inflation is evidently related to bond-buying, it may not be an
effective cause of bond-buying. The proportion of farmers express-
ing a fear of inflation increases with the extent of their contact
with the war savings campaign and also with increasing economic
level (Tables 20 and 21). It is possible that fear of inflation
and bond-buying are concomitant results of these two factors and
that fear of inflation does not necessarily facilitate band-buying.
Farmers not Worried About Their
Post-Bar Economic Situation
More Often Buy Bonds
To one who has read farm bond publicity exphasizing bonds as A
post-war cushion, it is surprising that farmers who are not
worried or uncertain about their personal economic situation
the war are more likely to buy bonds than those who are
after worried (Table 22). This uncertainty which farmers level. express about Farmers
their post-war situation is not related to economic than those
who are below average are no more likely to be worried
who are above average (Table 23). This indicates that those farmers "sold"
worried about their future have not been sufficiently position
who on Lar are Bonds as a means of reinforcing their own economic
after the war.
165
13
Other Factors Less Closely
Related to Bond-Buying
For a number of other factors the relationship
statisticalwith bond-buying is
rather high but does not attain the criterion of sig-
Dollars
in Millions
nificance used in Table 14. Among those for which the difference in
proportion of bond-buyers is 14 percent or more are the respondent's
attitude toward the war and three factors related to the conduct of
the bond campaign (Table 15).
statistically significant here is very possibly due to the relatively
small number of cases in this study. However, it is also likely that
attitudes much as the patriotian involved here are closely related to
bond-buying only when bond-buying is relatively voluntary. Ninety percent of the farmers interviewed in this study had some direct contact
with the war savings campaign. Under such conditions, absence of
patriotic desire to buy bonds is probably more than compensated for by
social pressure.
The remaining three factors showing differences of 14 percent or more
suggest that too great pressure exerted on farmers during the caspsign
may be undesirable. Fewer farmers among those who say they were "told"
to buy bonds actually bought than among those who said they were "asked".
In addition, fewer farmers among those who showed resentment of the
manner in which they were approached during the campaign or of the size
of their quota bought bonds than among those who expressed no resent-
ment. However, there is no evidence of the direction of the relationship. It is possible that farmers who do not buy bonds (because of
inadequate income or other reasons) show resentment and describe the
campaign approach unfavorably in order to rationalize their failure
5-
4-
3-
2-
1-
0
A previous study, "Participation in the Bar Savings Program", indicated that *war-involved patriotian" tended to facilitate bondpurchases in a group which WAS largely urban. The fact that the
relationship between "support of the war" and bond-buying is not
III.
Iowa
Total 1942
Quota
Ill.
Iowa III.
Iows
Potential
Actual Sales
Sales*
1942
to buy bonds.
Other factors which show very little relationship to bond-buying
include attitudes toward Government spending and other Government
policies, attitudes toward prices of particular products which the
farmer produces and sells, attitudes toward the redeesability of
Bar Bonds, the function of War Bonds (as savings or investment) in
the farmer's own financial situation, and two non-attitudinal items
including age and whether a member of the family is in the armed
forces.
Figure 2. Quota for 1942, potential sales, and actual 1942
sales for four sample counties in Iowa and four
in Illinois.
. Potential sales (solid portion of bar) are calculated on the
basis of the relationship between economic factors and actual
sales in Iowa in 1942. The dotted portion represents an
indefinite addition which is added on the assumption that
1942 sales do not represent the maximum possible.
166
14
III. FACTORS INFLUENCING BOND
SALES IN IOTTA AND ILLINOIS
One of the major problems of this study is to account for the
differences in rural bond sales in Iows and Illinois. Figure 2
in the four counties in each state which are included in the
sample, shows the total 1942 sales together with 1942 quotas and
an estimate of potential bond sales based on economic measures for
these counties.
Difference between Bond Sales
in Iowa and Illinois not due to
Economic Factors
Economic factors obviously affect bond sales and night be expected
to account for differences which are found between total onles in
different states, The effect of economic differences betreen
Iowa and Illinois was eliminated in the present study by the equating
of the counties sampled in the two states. The average economic
level of the counties campled in Iowa and Illinois in teras of
the economic index used in their selection is practically
identical (Table 34, Itsm 1). A prediction of potential bond
sales in the four counties in the two states based on the relationship between economic factors and 1942 bond sales in all rural
counties in Iowa** is slightly in favor of the four sample Illinois
counties (Table 24, Item 2). This is essentially a prediotion of
what sales would have been in Illinois and Iows if the 86,730
advantage had been taken of the economic potentialities as was
taken in Iown. In other words, in teras of economic ability to
buy, bond sales could have been somewhat higher in the four
Illinois counties than in the four Iows counties included in
the study. Actually, the total bond sales for 1942 in the
four Iowa counties were over two and one-half times as great ..
the sales in the Illinois counties (Table 24, Item 3).
The potential sales per farm in the rural counties in Illinois
are also somewhat greater than for Iova, although the greater
number of forms in Iowa results in a prediction of a somewhat
This index is based on two items, average value of land and
buildings and average rent for each county, obtained from the
1940 census.
.. A technical discussion of the regression equations upon which
this prediction of potential bond sales is based is included
in the Appendix.
.
167
16
15
greater total sales in Iows. Actual total sales are over twice as
great in Iowa (Table 25).
with the war savings campaign (Table 26). Ninety-six percent of
the respondents in Iowa had direct contact with the campaign in
comparison with 74 percent in Illinois.
Although economic level and contact with the war savings campaign
play an important part in the difference in the proportion of bondbuyers in Iowa and Illinois, there are further differences which
are not accounted for by those two factors. When we consider only
Quota differences Account for
much of Difference in Sales
It is evident that economic factors do not account for the radical
difference in bond sales between the two states. One factor which
plays a very large part is the site of the quota. Total sales
both for the sample counties and for the state as . whole correspond
much more closely to the quotas than to the bond sales which could
be expected on the basis of esonozic ability to buy (Table 24, Items
3 and 4). It would appear that bond sales in rural counties in
Illinois are materially reduced by the low quotas which were
assigned (or that sales in Iowa are materially raised).
Other Factors Favor
Bond-Buying in Iowa
Other factors which contribute to the difference in bond sales between the two states are included in those which have been shown
to relate to bond-buying by individual farmers in the previous
sections of this report. Differences between I and Illinois
in terms of the six factors which are found to be significantly
related to bond-buying are with one exception in favor of a
higher proportion of farmers buying bonds in Iowa (Table 26).
The fact that one of these factors - the proportion of respondents
who are above average on the individual farm economic index shows
a difference of 12 percent in favor of Iowa indicates that the
matching of the Iowa and Illinois samples was not as accurate
is indicated by the avorages of the county and farm economic indices
(Table 27). Since the average individual farm economic index for
as
the samples in the two states are practically identical, this indicates that the difference was due to the distribution of economic
level in the two samples rather than to . difference in level.
I
Although the difference in proportion of farms above is
of not great, it indicates that a part of the difference average in the proportion
farmers buying bonds in the Iowa and Illinois counties of this
sample may be attributed to economic level.
farmers who are above average in economic level and who vere contacted
by the campaign, there is still a difference in the proportion of
farmers who bought bonds in the two states (Table 28). A somewhat
smaller difference, also in favor of Iowa, is found for contacted
farmers who are below average 'n economic level.
Emphasis on Debts and Worry
About Post-War Situation
More Common in Illinois
Other factors which may account for the remaining difference in
results of the campaign in the two states include two attitudes
which were shown previously to be related to bond-buying (Table 26).
Those attitudes which favor bond-buying are: absence of worry
about post-war security, and greater emphasis upon purchase of
bonds than upon payment of debts.
More farmers in Illinois than in Iowa are worried about their postwar economic security. The fact that this attitude is associated
with less frequent bond-buying suggests a potent appeal which has This
not yet been sufficiently exploited, particularly in Illinois.
point is strengthened by the rather surprising fact that the
attitude of uncertainty about post-war security is not significantly
related to economic level. Sixty-two percent of the respondents
who were above the average economic level were worried or uncertain
about their post-war future, compared with 62 percent of those be-
low (Table ). This evidence indicates that many potential the
bond-buyers, average particularly in Illinois, need to be convinced and of
part which War Bonds can play in averting both personal
national difficulty after the war.
More farmers in Illinois than in Iowa emphasized the importance Since this of
paying debts when directly comparing bonds and debts. closely
emphasis upon a major competitor for bond purchases is so another
related to bond-buying (Tables 14 and 11), it suggests
More Farmers Contacted by
War Savings Campaign in
Iowa than in Illinois
point which night be made more effectively in War Bond publicity, reasons
especially in Illinois. The farmers must be shown adequate income
it is to their advantage to put more of their debts. excess
why into War Bonds and less into the payment of
A second difference between the taro states which was shown in the
previous section to be significantly related to individual bond.
buying (Table 14) is the number of farmers who had direct contact
,
168
17
Other Factors Do Not
Differentiate Town
and Illinois
Other factors which are closely related to bond-buying by individuals (Table 14) are less important as reasons for state differences
in bond sales (Table 26). The proportion of respondents who took
an active part in the campaign and the proportion expressing fear
of inflation were very similar in Iowa and Illinois.
APPENDIX
Greater Sales Pressure in
Iowa than in Illinois
In addition to these factors which have previously been shown to
relate to bond-buying, there is considerable evidence within the
interviews that the Iowa campaign involves considerably greater
pressure than the Illinois campaign. This is to be expected as a
result of the much larger county quotas which are assigned in Iows.
Since the Iowa and Illinois sample counties are roughly comparable
in economic level, the radical difference in quotas and sales in
the two states suggests that the lower quotas in Illinois are
actually deterring bond sales in that state.
The greater pressure in Iown is evidenced in several ways. Eightysix percent of the farners who had direct contact with the campaign
in Iowa bought bonds, while only 78 percent of those in Illinois
bought bonds (Table 29). The increased pressure in Iowa is evidenced
rather subtly by the difference in the words which the respondents
used to describe the manner in which they were approached. Approximately one-half of the farmers who were approached in each state
said that they were "asked" in describing the approach used. Thirtyone percent of the Town respondents used the word "told", compared
with 1 percent in Illinois (Table 30).
More Resentment of
Bond Compaign in Iowa
The difference was not just an accident of expression. Thirteen
percent of the Iowa respondents expressed resentment of the manner
in which they were approached, and 20 percent resented the size of
their bond quota (Tables 31 and 32). Only 1 percent expressed
resentment of either in Illinois. This resentment was not always
expressed in strong terms, but its presence at all in a fifth of
the respondents in Iowa indicates the existence of sales pressure.
It also indicates that there are limits to the campaign pressure
which can be used to increase bond sales if undesirable reactions
are to be avoided.
169
INTERVIEW SCHEDULE
1. What do you think about farm prices now?
2. Do you think it would be a good idea for the prices of farm
products to go much higher?
3. We know there are lots of things we can't buy these days.
What do you think is the best use you can make of your money?
4. Why would you use it that way?
5. Are there other things you would put your money into?
6. What are farmers around here doing with their money?
7. Do you think it is a good idea to buy land right now?
8. How do people around here feel about buying Tiar Bonds?
9. What do you think about War Bonda? (Determine at this time,
if not already answered, whether respondent has bought War
Bonds. If yes, ask question 10).
10. Have you made any special plans for using that
money?
11. Where do you think a farmer should stand on his debts before
be buys War Bonds? (Alternate question: How much of his
debts should a farmer have paid off before he buys War Bonds?)
12. What debts are you referring to?
13. Why do you think the Government is arxious to get people to
buy War Bonds?
14. Any other reason?
15. What do you think about the way the Government is using its
money?
16. We've been interested in these bond campaigns around the
country. Has there been one around here?
17. Who put on the campaign? (Interested in county level or
closer.)
18. How do you like the way it was handled?
170
19. Did they go around and see everybody? (Find out if respondent
was contacted personally.)
Table 1. Most Preferred Uses for Excess Income*
20. Do you see any way in which the campaign could be improved?
28
22
6
1
2
1
0
0
2
Question
6
0
Not ascertainable
1
2
money for living expenses
No profitable way to use money
1
1
Pay taxos
Marginal incoise - need all their
1
2
2
Savings
3
General spending (consumer goods)
1
are they any different?)
45%
37
4
25. Do you think this war is any different from the last one? (If
not covered, probe: How about the things we're fighting for -
18%
25
5
24. What makes you think it will be that way?
Land purchase
Sample
55%
4
23. What do you expect things will be like for you after the war?
Buyers
4
22. How have Government var policies here at home affected you?
Farm improvement (includes purchase
of farm equipment)
Buyers
Total
5
in Washington are handling the war problems?
Pay debts (or interest on debts)
Livestock increase
Non-Bond
5
21. To change the subject: What do you think about the way people
Mar bonds
Bond
5
20b. How such do you think a farmer in your position
should put into War Bonds during a year?
Most Preferred Use
for Excess Income
9
20a. Do
youcould
thinkbe
there
are any other ways by which bond
sales
increased?
100%
100%
100%
N-170
N-51
N-221
3. "no know there are lots of things we can't buy these
days. that do you think is the best use you can make
of your money?
171
Table 3. Most Important Reasons for Buying Bonds Given by Farmers
Who have Bought Bonds*
Table 2. Uses
Excess
Income Mentioned Including First, Second,
and for
Third
Choices*
Reason for Buying Bonds
92%
65%
Pay debts (or interest on debts)
64
65
Farm improvement (includes purchase
of farm equipment)
Livestook increase
30
30
22
33
Land purchase
25
Pay income tax or other taxes
20
Sample
86%
63
31
National economic reasons
Government needs the money
To prevent inflation
To prevent depression (or too low prices in
the future)
To avoid necessity for raising taxes
24
24
4
8
3
4
1
8
2
2
2
1
2
the campaign
2
1
Community (social) pressure
0
2
Not ascertainable
44
N-170**
N-221
0
0
.
make of your money?"
Question 5. "Are there other things you would put your money into?"
Since more than one answer was possible per person, percentage totals
are more than 100 percent.
.
0
1
Question 3. "We know there are lote of things we can't buy those
days. that do you think is the best use you G&D
1
N-51
Feels he must buy because he is connected with
1
5
N-170
Campaign pressure
12
6
Mentioned no second or third choice
26
1
Mentioned no second choice
win the war")
9
income
Patriotic reasons ("To help our country", "To
1
No profitable way to use 9x0684
Marginal income - no excess above
living expenses
Investment
3
Insurance
17 41%
Savings
3
Spending for consumer goods
Livestook improvement
57%
Personal-financial or farm-financial reasons
24
5
Savings
52%)
1
War bonds
Total
1
Buyers
Non-Bond
Buyers
3
Bond
Use for Excess Income
Based on the interview as a whole.
When two reasons appeared to be of equal important for some total
farmers, both are included. Consequently, percentages
more than 100.
172
Table 5. Concept of Bonds as an Investment or as Savings*
Table 4. Reasons Farmers Attribute to the Government for Asking
People to Buy War Bonds
Concept of War Bonds
Total
Bond
Non-Bond
Buyers
Buyers
Sample
41%
51%
Reason
15
37
21
100%
100%
100%
N-170
N-51
N-221
. Based on discussion in the interview as a whole
Planned Use for Bond Money
Long term saving (trips, education for
children, etc.)
Invest in land or a home
Bond Buyers
14%)
12 )
6 45%
Farm improvement
Pay off debts, mortgages, etc.
Hedge against post-war depression
Consumer goods
3
2
Post-war puchasing power
1
Farm equipment
53
No plans
Not ascertainable
2
100%
N-170
.
The total is greater than 100 percent since more than one reason
Table 6. Plans for Use of Money Obtained from Cashing in Bonds*
1
Question 13. Why do you think the Government is anxious to get
people to buy war bonde
was recorded
28
6
N-221**
.
..
22
31
4
Not ascertainable
Not ascertainable
54%
2
Respondent does not know
14
2
depression
To make people war-conscious - by giving them
a ohance to help
To provide a good investment
To provide post-war purchasing power to
restore normal living
16
As saving9 (emphasis on safety,
a place to keep money)
As an investment (emphasis on
interest or earnings
4
To ourb inflation
To cushion the individual against a post-war
84%
6
The Government needs the money
Question 10. Have you made any special plans for using your bond
money?
173
Table 7. Reasons given by Non-Buyers for not Buying Bonds*
Table 9. Major Competitor for Bonds*
Non-bond buyers
Reasons for not Buying Bonds
Competitor for Bonds
49%
Inadequate income
Would rather put money into paying debts
Emergency arose could not meet quots
Opposition to Government spending and
Government policies
Fear of bonds not being redeemed
Putting money into increased production
Non-Bond
Buyers
Buyers
41%
53%
44%
14
15
14
25
2
4
2
0
2
2
2
1
2
3
13
4
5
Table Interviewers
Estimate of Respondents Ability to Buy (More)
Bonds*
5
Not aspertainable
10
0
No competitor
3
4
. Reasons found in various parts of the interview.
1
2
N-51
Inadequate income
2
Losses on stook
2
5
Incomes taxes, other taxes
4
2
8
Savings
100%
2
Farm equipment
Not ascertainable
16
4
2
2
Farm improvement
2
Land purchase
Consumer goods, and spending
6
Livestock increase and improvement
Sample
5
Pay debts
16
Total
Bond
100%
100%
100%
N-170
N-51
N-221
8.
Interviewer estimate based on the total interview
.
Total
Respondent can buy more
42%
35%
41%
Respondent cannot buy more
37
37
37
21
28
22
100%
100
Not cooertainable
100%
N-170
N-61
N-221
Table 10. Comparative Emphasis on Debts Vs. Bonds in Iowa and Illinois*
Iowa
Attitude
Pay all debts first
Most emphasis on debts
Equal emphasis on debts and bonds
Most emphasis on bonds
14%
Illinois
27%
29
23
35
20%
41
42
39
Total
10
This estimate is based on the interview as a whole plus other
information gathered by observation of the farm.
0
Not ascertainable
2
Buyers
1
Non-Bond
8
Bond
Buyers
9
Interviewer's Estimate
100%
100%
100%
N-114
N-107
N-221
Question 11. Where do you think a farmer should atand on his debts
before he buys war bonds?
.
.
174
Table 11. The Relationship between Bond-Buying and the Comparative
Emphasis which Respondents place on Payment of Debts Vs.
the Purchase of Bonds*
Pay all
debts
first
Most
Most
emphasis Equal
emphasis
on debts
on
emphasis
97%
bonds
Bond-buyers
53%
72%
Non-buyers
47
28
100%
100%
100%
100%
N-45
N-90
N-65
N-19
Table 15. Attitude Town Buying Land in Relation to Bend-Puying
Total
Sample
89%
77%
11
23
Favorable under
Favorable
Bond-buyers
74%
certain conditions
81%
Total
Unfavorable
75%
Sample
77%
100%
Non-buyers
N-221
26
19
26
23
100%
100%
100%
100%
H=58
N-92
N-63
N-221
3
. Question 11. Where do you think a farmer should stand on his debts
before he buys war bonds?
In two cases the attitude toward debts was not ascertainable.
Question 8. Do you think it's a good idea to buy land right now?
.
In eight cases the attitude toward land purchase was not ascertainable.
Table 12. Attitude Toward Buying Land in Iowa and Illinois*
Attitude
Favorable
Iowa
28%
Illinois
24%
Total
Sample
26%
Favorable only under certain
conditions
49
34
42
Unfavorable
19
38
29
3
4
4
Not ascertainable
100%
100%
100%
N-114
N=107
N-221
*Question 7. Do you think it is a good idea to buy land right now
175
Table
15. Factors whose Relationship to Bond-Buying is not
Statistically Significant according to the Criterion used
in Table 14
Category (a)
(Favorable to bond-buying)
Does not resent campaign
approach
Resents campaign approach
Difference*
19%
Indifferent or opposes the war 17%
Supports the war
Does not resent quota or
sise of quota
Resente quota or sise of
Says he was "asked" to
Says he was "told" to buy
to
buy bonds
22
Category (b)
(Unfavorable to bond-buying)
quota
bonds
Satisfied with prices of
product be is selling
Expresses disantisfaction
with prices of product he
is selling
Payment of debts is his
major competitor for bonds
Debts is not his major GOSpatitor for bonds
No mention of non-redeem-
Mentions possiblity of bonds
ability of bonds
Member of family in armed
forces
not being redeemed
Thinks of bonds as an
14%
9%
9%
5%
No member of family in armed
forces
Over 50
Age, under 50
16%
Thinks of bonds as savings
3%
3%
2%
investment
No oriticism of Government domestic policies
Some oriticism of Government domestic policies
No oritician of Govern-
Critician of Government
ment spending
Unfavorable to way campsign was handled
2%
2%
spending
Favorable to way campaign
1%
was handled
between the proportion of respondents in who category bought (a) bonds.
Difference bonds and the proportion in category (b) related to bond-
who bought described as not significantly
buying These differences since the probability are of their occurring by chance is greater
than 02.
176
Table 16. The Effect of Contact by the War Savings Campaign on Bond.
Buying
Percent
bond
Contact
Non-
Economic Level Index Score
Total
Lower
Personally visited by campaign
Attended meeting
80%
20%
100%
21
100
Not contacted
80
100
20
Upper
Quarter
Total
Sample
82%
85%
100%
93%
90%
14
Personally visited or
attended meeting
Upper
Middle
153
Contacted
79
Lower
Middle
10
15
18
100%
100%
100%
100%
100%
N=26
N-65
N-105
N-24
N-220*
7
worker
Quarter
0
buyers
buyers
N
How contacted
Table 18. The Relationship between Economic Level and Campaign
Percent
167
Respondent is , campaign
97
100
30
3
.
worker
Personally visited, attended
meeting, or is . campaign
worker
One respondent who did not know whether the family had been
contacted or not is omitted from this table.
83
17
100
197
30
70
100
23
23
100
220
No personal contact with
campaign
Total sample
77
Table 19. The Relationship between Fear of Inflation and Bond-buying
Does not
Indicator fear
One respondent is omitted from this table, a woman who did not know
whether her family has been convacted or not.
of inflation
.
Bond buyers
Table 17. The Relationship between Economic Level and Bond-Buying
Non-bond buyers
Economic Level Index Score*
Bond buyers
Non-bond buyers
. Described in a text footnote.
Above
Below
Average
Average
89%
60%
Total
Sample
77%
11
40
23
100%
100%
100%
N=170
N-51
N=221
88%
12
100%
N-170
indicates fear
Total
of inflation
sample
66%
77%
34
23
100%
100%
N-51
N-221
177
Table 22. The Relationship between Attitude toward Post-Mar Security
and Bond-Buying
Table 20. The Relationship between the Amount of Contact with the
Campaign and Fear of Inilation
Uncertain about
Worried
about own
own situation,
situation
depends
about own certainsituation able
Not worried
Summ contact
Much contact
(Canvassers)
(Personally visited
or present at a
meeting)
No contact Total
50%
67%
28%
50%
buyers
Does not mention
fear of
55
50
74
100%
100%
100%
100%
67%
N=50
N=167
N-23
N-221
25
50
33
13
100%
100%
100%
100%
N-63
N-110
N-22
N-6
50
The presence or absence for fea of inflation was determined by
the interviewer on the basis of the interview as a whole.
The degree of contact was not ascertained for one respondent,
.
WOMAN who did not know whether anyone in her family had been
contacted or not.
a
inflation
50%
75%
87%
Non-bond
Mentions fear
of inflation
Bond buyers
Not as-
Table 23. The Relationship between Economic Level and Worry and
Uncertainty about Post-Nar Economic Security*
Economic Level
Table 21. The Relation between Economic Level and Fear of Inflation
Attitude Toward
Post-Mar Security
Worried or uncertain
Economic LATOI
Do not indicate fear of
inflation
Below
Average
Average
60%
36%
Total
Not worried or uncertain
Average
62%
Below
Total
Average
Sample
61%
61%
39
39
58
100%
100%
100%
N-89
N=126
N-215
Sample
50%
40
64
50
100%
100%
100%
N=129
N-93
N-221
.
Indicate fear of inflation
Above
Above
Six cases for whom the attitude toward post-war security was not
ascertainable are omitted from this table.
178
Table 24. Comparison of Iowa and Illinois in terms of Potential and
Actual Bond Sales for the Four Sample Counties in each
Table 25. Comparison of All Rural Counties in Iowa and Illinois in
Terms of Potential and Actual Bond Sales, and Quotas for
1942
State
Iowa
Item
Illinois
Iowa
Iowa I11. ratio
1. Economic index used
to equate sample
counties
12.3
12.2
1.01
2. Potential sales in
sample counties
based on relationship between ocon-
bond sales in Iowa $4,253,490
Total potential sales**
in all rural counties
in 1942 based on the
relationship between
economic factors and
bond sales found in
Iowa in 1942
in rural counties in
$4,646,978
.915
3. Actual bond sales
1942
Total quotas in rural
in sample counties
counties in 1942
$4,582,742
$1,739,000
$86,708,133
$74,913,070
1.16
$86,550,000
$36,840,000
2.35
$93,010,000
$34,130,000
2.72
154,926
116,299
1.33
$559.68
$644.14
$657.05
$309.75
1.80
$600.35
$293.47
2.05
2.64
Number of farms in
4. Total quotas in
rural counties
sample counties in
1942
Iowa Ill. ratio
Total actual bond sales
omic factors and
in 1942
Illinois
$4,995,000
$2,012,700
2.48
Potential sales per
farm in rural
counties based on
the relationship
between economic
This prediction of potential sales is based on the regression
equation for predioting average sales per farm for each
county from four economic measures of the counties. This
equation is presented in the technical appendix.
factors and bond
sales in Iowa in 1942*
Actual sales per farm
in rural counties in
1942
.87
Quota per farm* in
rural counties in
1942
In the "per farm" data, sales for the county as a whole farms. (including
urban sales within the county) are prorated over the
of
.. A discussion of the regression equation on which the estimates appendix.
potential sales are based is included in the technical
179
Table 26. Differences Between Iowa and Illinois in Factors
Significantly Related to Bond-Buying
Factor Related to Bond-Buying
Iowa
Illinois
Table 27. Measures of Economic Level for the Iowa and Illinois
Samples
Direct contact with War Savings
Canpaign
Average
96%
72%
24%
64
52
12
Above average in economic
level
Individual farm economic level index
Percent of farmers above the average
individual form economic level index
about post-war economic
48
26
.
46
31
14
Taking active part in War
17
52
48
12.2
4.68
64%
4.62
52%
Based on census date on average value of land and buildings
and average rent for each county in the sample.
un Based on 15 items observed or otherwise obtained by the interviewer while visiting the farm. These items include size of
farm, cropland acreage, member, type and age of tractors, type
of land, condition and equipment of buildings, the respondent's esti-
N-114
N-107
4
Fear of inflation
11
6
Savings Campaign
12.5
22
Greater emphasis on bond
purchase than upon debt
payment
Illinois
County economic level index
Average
Absence of worry or uncertainty
situation
Iowa
Difference
N-221
statement of the value of his farm, and an interviewer's
sate of general economic level.
180
Table 28. Economic Level in Relation to Contacted Farmers who
Bought Bonds in Iows and Illinois
Table 30. Respondents Description of the Manner of Approach Used
by l'inute tien in Iowa and Illinois
Iowa
86%
N=109
Percent of contacted farmers above aver-
96%
N-69
age who bought bonds
Illinois
Iows
78%
N=88
87%
Respondent said he was "asked" so buy
Respondent said he was "told" to buy
Neither word used
N=52
Respondent WILD a campaign worker
40%
58%
26
1
Percent of contacted farmers (above and
below average) who bought bonds
Illinois
18
29
12
15
Percent of contacted farmers below
70%
No440
Respondent was not contacted
67%
17
4
average who bought bonds
100%
100%
N=114
N=107
N=56
Questions 17, 18, 19: Who put on the campaign? How do you like
the way it was handled? Did they go around and see everybody?
.
Table 29. The Proportion Contacted in Each State in Relation to
Bond-Buying
Not
Contacted
Contacted
30%
50%
Total
Sample
Table 31. Resentment of Manner of Approach by Campaign Workers in
Iowa and Illinois*
Iowa
N=109
50
100%
N=4
15
100%
N=113*
No resentment expressed
Some resentment expressed
Euch resentment expressed
Illinois
10
78%
26%
69%
22
74
31
100%
100%
100%
N=88
N=19
N=107
1%
13%
15
12
Respondent was a campaign worker
17
4
Bond-buyers
Non-bond-buyers
65%
68%
3
14
100%
Illinois
Town
Attitude
1
Non-bond-buyers
85%
0
Bond-buyers
Respondent was not contacted
2
5
Not ascertainable
100%
#
N=114
One respondent who did not know whether her family had been contacted or not has been omitted from the Iowa percentages.
100%
N=107
Questions 17, 18, 19: who put on the campaign? How everybody? do you like
the way it was handled? Did they go around and see
.
181
TECHNICAL APPENDIX
PREDICTION OF POTENTIAL BOND
SALES FROM ECONOMIC FACTORS
Table 52. Resentment of Size of Quota Expressed in Iowa and Illinoise
Attitude
Iowa
No resentment of size of quota expressed
46%)
A considerable amount of economic data broken down by counties is
available in the 1960 census. Since many of these economic
variables should be expected to be related to bond sales, the
attempt was made here to determine such relationships in rural
Illinois
18%)
60%
14 )
Some resentment of size of quota expressed
16 )
65%
47
0
No mention of quota
20
1
15
17
2
4
4
Not ascertainable
4
Respondent was not contacted
12
)
Respondent was a canpaign worker
1
Euch resentment of size of quota expressed
100%
1002
N=114
N=107
counties of Iowa and Illinois. The four variables selected on
the basis of availability for all counties and for likely
relationship to boad-buying are (1) average value of land and
buildings, (2) average rent, (3) percent of farms mortgaged, and
(4) percent tenancy. In addition, county War Bond quotas for
1942 were used through a part of the calculations to determine
the relative weight of quota and economic factors in determining
sales.
Correlations of each variable with sales and intercorrelations of
each variable with every other are shown separately for each state
below:
Table A-1*
Intercorrelations for Iowa
Questions 17, 18, 19: who put on the campaign? How do you like
the way it was handled? Did they go around and see everybody?
T
M
R
L
or
6572
4619
.7536
-
3137
-
5393
-
.7601
-
-
.3382
-
-
-
6906
2153
-
.6560
2989
-
-
-
L
R
M
-
S
.6334
.6921
-
or
.6094
-
.8306
T
. The variables are denoted by the following symbole:
S Sales per farm in dollars**
Quota per farm in dollars**
Q L Average value of land and buildings in hundreds of dollars
R Average rent per month in dollars
M Percent of farms mortgaged
T Percent Tenancy
.. Total sales per county divided by number of farms. Some distortion
is involved here since urban sales within the county are prorated
to the farms.
*
182
iii
11
Table A-1 Continued
sales because they are casior to "make", In Iowa the economic
factors probably act as limiting factors as a result of the
Interoorrelations for Illinois
higher quotas.
x
R
T
L
a
.6317
.3422
.5266
-
-
follow:
For predioting average sales per farm for Iown counties quota
included:
-
-
-
8- .76709 or + .0087453 L . 15.025184 R -1.83879 M 4.61605 T - 3.96
-
-
-
For predioting average salos per fare for Illinois counties, quota
-
.5288
-
.6254
.4455
.3585
.8061
.3207
-
.4963
.8930
.4053
.7994
included:
-
S. .80638.Q . .0083837 L . 2.50852 R -2.93450 M -.63244 T . 96.28
-
-
S
Q
L
R
M
.5986
-
.9201
The correlational data were further used in the development of
regression equations for predioting average sales per farm in
each county from all other variables combined. These equations
T
For predioting average sales per farm for Iowa counties, quota
excluded:
All correlations are positive.
S- 022331 L + 28-636043 R -5.88880 M -5.18937 T . 433.97
From the above data multiple correlations were obtained as
For predioting average sales per farm for Illinois counties, quota
follows:
excluded
Table A-2
S - 016496 L + 17.30679 a -4-18764 M - 1.12793 T . 102.52
Correlations of Economic Variables and Quota with
Average Sales Per Farm for Iowa and Illinois Counties
Correlated variables
Sales with all variables, including quota
Sales with all economic variables (exclud-
The relative importance of these variables in the determination
of sales is shown in the following table.
Iowa Illinois
.9145
.9419
ing quota)
.7744
.7525
Sales with quita
.8306
.9201
Table A-3
Optimal Weighting of Independent Variables in Predioting
Sales Variable
Illinois
Iowa
Quota
These figures indicate that a very close prediction of sales oan
Variable
be made from a combination of economic variables with quota in
R
.152 (-) 171 (-)
T
Total
1.000
Quota
included excluded
.520 (+)
.061 (+) .156 (+)
.229 (+) .439 (+)
.073 (-) .239 (-)
W
Illinois than In Iowa. A possible explanation of this is that
the lower quotas in Illinois are more effective in determining
excluded
.485 (+)*
Q
L
either state and that the contribution of economic variables to
differences in sales among the counties is about the same in both
states. Predictions of those counties whose sales fall above and
below their quotas can be made on the basis of the economic data.
However, the contribution of quota is considerably higher in
included
Quota
Quota
1.000
.254 (+) .465 (+)
.043 (+) .275 (+)
.154 (-) .205 (-)
.029 (-) 057 i-
1.000
1.000
. Plue and minus included in the parentheses indicate the
direction of the relationship<
183
iv
Table A-4. Prediction of Sales in Iowa and Illinois based on
The regression equations for predioting sales from the four economic
variables are based on the above weighting. Assuming that the
maximum bond sales possible have been obtained in Iowa counties,
the regression equation for Iows counties may be used to prediot
potential bond sales for counties in other states where the values
of the economic variables are known. This has been done for the
four sample counties in Iowa and Illinois in Table 24. Since
predictions are on a "per farm" basis, the predioted sales for
each county is multiplied by the number of farms in that county
and the total of these values is presented in the table. In Table
25, similar total sales per farm are obtained for all rural
counties in each state based on the Iowa regression equation to
obtain a figure for potential sales in Iowa and in Illinois. This
estimate of potential sales is based on the assumption that Iowa
has realized the maximum sales possible (which may not be true)
and the assumption that economic variables have the same relation-
Regression Equations for Sales Per Farm for Each County
in Iowa and Illinois
Iows
based on Iowa regression equation
Total potential sales
in all rural counties
based on Illinois regression equation
Actual sales
economic potentialities in Illinois to the same extent that the
Number of farms in
Iowa campaign took advantage of the economic potentialities in
Iowa, the regression equation gives an estimate of the potential
sales in Illinois. Although the average potential sale per farm
is larger in Illinois counties (partly because of larger farms
in that state) the total potential sale in Illinois is smaller
than that in Iowa because of the smaller total number of farms in
the rural counties in Illinois (Table 25). However, the
difference in actual sales is much greater than the difference
in potential sales,
As a check on the procedure described above, the regression equation
obtained for predioting sales per farm in Illinois counties was
applied to Iowa counties (Table A-4). This serves to prediot
what sales would have been in Iows if the Iowa campaign had taken
no more advantage of the economic potentialities in Iowa than
the Illinois campaign did in Illinois. The ratio of potential
sales in the two states is practically identical to that
based
on the regression equation for Iowa counties. (See following
table)
Iowa -I11. ratic
Total potential sales
in all rural counties
ship to bond sales in Illinois that they do in Iowa. In other
words, if the Illinois campaign had taken adventage of the
Illinois
rural counties
$36,708,133
$74,913,070
1.16
$42,828,072
$37,086,830
1.15
$86,550,000
$36,840,000
2.35
156,926
116,299
1.33
$559.68
$644.14
.87
$276.44
$318.89
.87
$557.05
$309.75
1.80
Potential salos per
farm in rural counties
based on Iowa regression equation
Potential sales per
farm in rural counties
based on Illinois regression equation
Actual sales per farm
184
UNITED STATES DEPARTMENT OF AGRICULTURE
Bureau of Agricultural Economics
Since
4/7
MEMORANDUM
For Administrative Use Only
Program Surveys Division
March 30, 1943
185
ATTITUDES OF IONA AND ILLINOIS
FARMERS TOWARD FARM PRICES
This memorandum presents the attitudes of 221 representative Iowa
and Illinois farmers toward present farm prices. These attitudes
wore obtained in answer to two questions on a recent survey (as
yet unpublished): "What do you think about farm prices now?" and
"Do you think it would be a good idea for the prices of farm produots to go much higher?" Most farmers needed little encouragemont to answer and discuss the se questions in some detail. Most
of them presented not only their point of view, but also their
reasons for holding it.
Eighty percent do not want
general farm prices to go higher
Relatively little demand for higher prices is found among Illinois
and Iowa farmers. Four-fifths of those interviewed indicated that
they have no desire for farm prices in general to go higher than
they are at present (Table 1), although about a quarter of these
qualify their statements by mentioning conditions which they believe would justify future increases. Eighteen purcent were
obviously satisfied with the present level of prices but gave no
specific reasons why prices should not go higher. Two such cases
are illustrated in the following quotations:
"I'm tickled pink the way they are now. All farm prices are
very good.'
"I figure if I can't make money out of farming now, I'm doing
the country an injustice by staying on the farm."
The reasons which other farmers give for keeping farm prices from wel-
going higher show that many farmers are thinking of their own ght
fare from a long-term point of view. Boom-time profits now mi
be very acceptable from one point of view, but they could not
compensato for the drop which many farners feel is the mentioned inevitable
follow-up to abnormally high prices. Sighteen percent
or described inflation as an undesirable consequence of higher
prices, and an additi onal 12 percent mentioned the drop which could of
be expected to follow excessively high prices. The experience
many farmers with the post-war depression of 1921 and the post-boom the
depression of 1933 is evident in their answers. One gains that
definite impression from the interviews with those farmors for long-
they would sacrifice a groat deal of temporary profit
term stability and security.
186
3
2
In addition to those farmors who oppose further price-rices on the
basis of a long view of their own wolfare, there is a smaller
group which shows a genuine interest in the effects of high prices
on non-form a For some, this concern about reduced consumption is in part concern about the reduced demand for what &
Table 1: Attitudes Toward Present Price Level
Prices should not go hi ghor
No reason specified
Higher prices will cause inflation
If they go higher the drop later
will be bad (like last war)
farmer has to sell (rather illogical at the present time), but a
number of farmers show an understanding of the effects of rising
prices on those who live in cities on relatively fixed incomes.
18% )
58%
Some farmors would like to 800 hogs up to $25 a hundred, but
not for me.
8
2
"I always figure if prices go too high they' 11 have to drop
later on. I don't want to go through again what I did . fow
17
3
22
1
1
Unless labor costs on farm go higher
Unless taxes go higher
Unless defense workers' wages go higher
Prices should go higher
Because prices of things purchased have
3
17
1
Bacansa defense workers got paid so much
In order to increa se production
10
1
not been kept in line
Bocause farm labor costs are 00 high
In order to make it possible for farmers
1
1
3
Not ascertainable
100%
N=221
years back, when WO were just able to make expenses and a liv-
ing off the farm and that was all. Maybe the corn farmers
think different than I do about prices, but for a livestock
farmer like no I think prices are high enough right now. If
they'11 keep prices at present levels it will be all right.
"No, I don't think prices should be any higher then they are
now. This io no time for 118 to be making a lot of money; what
we have to think about is gotting enough food for the boy a who
are sacrificing a lot more than we are in the service."
(Do you think it would be a good idea for the prices of form pro-
)
to pay debts
No reason specified
illustrated in the following quotations:
"No sir, I don't! I think they're all right like they are.
12
Non-farm consumer suffere
Other prices should come down
Prices should not RD higher conditional
Unless prices of things purchased rise
Some of the reasons farmers give for not wanting prio rises are
18
duote to Co much higher?)
"I don't believe it would because if they go much higher labor
will want more money and if they get it then we will want more
and that is the way it goes.'
"Have you ever boon drunk? Drunk so that you felt it start the next
That's what happens when wages and prices
morning? each other around in a oriole. It's a horse race hogs and
it's chasing good for anybody. I think it would be better if
FGO 12 no cont u. No, I don't want to 800 skyrocket prices."
Present satisfaction with prices
depends for 22 percent on other
conditions remaining the summ
famore are satisfied with farm prices satisfaction now, about with a
Although fifth of most those interviewed indicated that their
:
187
9
4
present prices was contingent upon other prices and wages romaining
The relationship betwoon form prices and other ocoponio factors
capacially thos most directly affecting the farmer, is obviously
in line. The parity concept was evident in their opinions. Most
of their concern WAS about possible future increases in living and
operating expenses. A future increase in the prices of things the
playing a large part in the attitudes toward prices.
farmers here to buy was most frequently mentioned as an edequate
farmors in Town and Illinois.
Justification for future price rissa. Farm labor oste wore non-
tioned by three percent and a very small proportion montioned texes.
A factor not directly related to farm expenditure, nanely, increases
in defence workers' wages, 200 mentioned 0.5 a justification for
future fare price risss by only one percent of the respondents.
Seventeen percent went
farm price to go higher
Loss than one-fifth of the farmers interviewed indicated a do end
for higher farm prices. The reasons given for this domand Targely
involved the assertion that the conditions nationed in the previcus paragraph - prices of things c farmor purchases, farm labor
costs, and defence workers' wages - were already out of line with
farm prices. Those three conditions are contioned with almost
equivalent fraquencies by two groups. Uno indicates that if these
factors get out of line, then farm price increase would be justified, while the second group demands price increases row, basing
this docand upon the assertion that these conditions are DOW out
of line with fara prices.
Quotations from farmers who want higher prices follow:
"According to everything else, it ought to be higher. I moan
according to the stuff you have to buy and according to what
people are getting in factories. Well, if they keep the other
stuff down like I said, it don't make much difference. But if
other things is rai and, then the prices should & higher.
There's too such difference now betwoon what you've got to buy
at the store and what raises the farmers got so far. People
don't roalize what it oosta to farm. There NFO follows in
it." town who think it costs nothing to put our your crop and tend
"Hell, I don't know, They could stand to go higher the way we
have to buy things. That's one reason farmers are lonving the
farm." farm, because they can't pay enough to keep their hands on the
"I think
theydth
ought
back
equal
it." to go higher unless they put the other stuff
Howaver, it is olean that at present the opinion that farm prices
are out of lico with other prices is limited to relatively fow
188
Table 1. Percentage of Income Spent for Bonds
September
March
1942
1943
Owns no bonds
23%
20%
Less than 6%
18
14
6-10%
31
36
Over 10%
12
11
Percentage of Income
Not ascertainable
16
100%
19
100%
N=590
Percentages in this column refer to the urban portion
of the September study. This represented about 70 percent of the weighted sample of 535.
*
189
Table 2. Method of Bond-Buying
September
1942
Method
March
1943
Regular - own plan
23%
10%
Regular - payroll deduction
38
43
Irregular
11
25
Does not own a bond
23
20
2
5
Not ascertainable
100%
100%
N=590
*
Percentages in this column refer to the urban portion
of the September study. This represented about 70 percent of the weighted sample of 535.
130
Table 3. Fear of Non-Redemption of Bonds*
September
1942
March
1943
Respondent himself fears that bonds
may not be redeemed
2%
5%
Respondent says "other people" fear
that bonds may not be redeemed
No fear of non-redemption expressed
5
93
79
100%
100%
N=535
*
16
N=590
There was no direct question in the questionnaire on
redemption of bonds. Expressed fears about the redemption of bonds were spontaneously brought forth by the
respondent at one point or another in the course of a
general discussion about bonds.
191
Table 4. Fear that War Bonds May Not be Redeemed
as Related to Geographical Region*
Indicates
Region
Fear
Indicates
No Fear
Total
Number
Mid-West
29%
71%
100%
183
West Coast
29
71
100%
66
New England
22
78
100%
100
Middle Atlantic
16
84
100%
149
South Atlantic
10
90
100%
92
590
*
For purposes of regional analysis two types of expression of
fear are combined: (1) those who express the fear directly as
their own belief, and (2) those who assert that others have
this fear.
192
Table 5. Fear that Bonds will not be Redeemed as Related to
Percentage of Income Spent for Bonds for Two Groups of
Buyers
Group I. "We Decided How Much to Buy"
Buying
1-5%
Indicates fear
26%
Buying
6-10
Buying
More than 10%
16%
22%
Group II. "We are Buying What They Asked"
Buying
1-5%
Indicates fear
10%
Buying
6-10%
18%
Buying
More than 10%
39%
193
Table 6. Magnitude of Bond Purchases by Regular
Buyers as Related to How They Decided
What Percent to Buy *
of Purchase
We
They
Decided
Asked
1-5% of income
22%
6-10% of income
44
11-15% of income
15
16% or more
10
Not ascertainable
*
8%
82
6
1
Regular
Magnitude
3
9
100%
100%
N=275
N=209
Only regular bond buyers included in this
table.
194
April 7, 1943
4:18 p.m.
Operator:
William
Go ahead.
Robbins:
Yes, hello.
HMJr:
Hello, Robbins?
R:
Yes, hello. Hello, Mr. Secretary.
HMJr:
You're on the loud-speaker and Gaston and
Peabody are both here.
Good. Well, I haven't anything especially
to report, but I told you yesterday that I
R:
would call you from Boston.
HMJr:
That's right.
The program today so far has consisted of a
luncheon which I had with Mr. Paddock and
Mr. Stubbs and Mr. Hill and Mr. Creighton
R:
HMJr:
R:
HMJr:
R:
Yeah.
and then I went back to Paddock's office.
I've been there for about an hour - or to
Stubbs' office, I've been there for about an
hour. I'm over at the War Savings office
now and expect to spend - well, probably the
rest of the afternoon here. Then we're going
to have a little dinner tonight.
Yeah.
There's nothing that I can report of particular
interest, which has developed. I'm very much
pleased with the optimism of the War Savings -
or the Victory Fund crowd, which is the only
group with whom I've talked 80 far.
HMJr:
R:
I see.
They feel that while their coverage is going
to be less than they would like it to be,
that the money is - the sale of the bonds is
going to be very significant and considerably
higher than - than it was last time.
195
-2HMJr:
Good.
A preliminary report from a luncheon today
down in Quincy shows that - that - if that
an indication at all, that they have already
got pledges for over three times the quota
that would be assigned to that community.
HMJr:
I see.
R:
So that
HMJr:
Sounds good.
starts off as though New England is going
R:
to give a good account of itself.
HMJr:
Good.
R:
Is there anything going on in Washington that
HMJr:
Not a thing. Just as quiet as always.
R:
Well, that's fine, sir.
HMJr:
R:
HMJr:
R:
(Laughs) Peabody's laughing his head off.
(Laughs) Well
He and I have been through a couple of
wringers today, but otherwise it's all right.
I knew he was going through a wringer today, be-
cause he and I talked last night about the
unfortunate developments with reference to our
radio program, but on the other hand after talking to him
HMJr:
R:
No, you don't
I feel confident that it's going to be a
good show.
HMJr:
No, you don't know what happened. It can wait
until you come back. (Laughs)
R:
(Laughs)
196
-3 HMJr:
It's - over in the White House
R:
Oh.
HMJr:
on this show, but it - it worked - the
President did a - was a good trouper. He
went through with it, but
HMJr:
Did plans miscarry?
What's that?
R:
Did our plans - did the
HMJr:
Yeah.
R:
R:
.... mechanics of it break down?
HMJr:
Well, somewhere over in O.W.I. Time
R:
Oh, my goodness !
HMJr:
Some - time enough when you come back, but
R:
All right, sir.
HMJr:
But we got good results. Why, I don't know.
But it's - it's just in the day's work.
Yes, it seems that we're getting more than
our share of bad breaks.
R:
HMJr:
No, I wouldn't say that. No - I mean we got
bad breaks on this world currency and got a
wonderful press.
R:
Uh huh.
HMJr:
I had a wonderful radio last night
R:
Uh huh.
and we've got
HMJr:
R:
Oh, you'll be interested to know this, Mr.
Secretary.
HMJr:
Yes.
197
4-
I'm in the land of the savings banks now, as you
R:
know.
HMJr:
Yes.
R:
And your statement on the broad tape was a very
helpful statement.
HMJr:
Oh, well, I knew that. No, we - I don't think
we're getting - quite the contrary. I think we're
getting very good breaks.
R:
Uh huh.
HMJr:
And I think all this - no, I - I'm - as far as
our own work - I mean outside the Treasury, it's
it's the usual thing - I mean nobody helps us,
and everybody likes to throw hurdles in our way,
but I'm accustomed to that. But inside I'm - I'm
very happy the way things are going.
R:
Uh huh, uh huh.
HMJr:
So
R:
I think this one general observation, that I believe we might have been able to get a little bit
better promotional activity in certain places if
we'd - if we had loosened up on the - on the
appropriation for that purpose which was put
into New England back on the 17th of March and
HMJr:
is only just loosening up a little now.
I see. Well
R:
I think that was too bad that we waited that long,
although we still have some chances to do things
even in spite of the short time.
HMJr:
R:
Yeah. Well, I'm glad you're up there, and when
will you be back?
I expect to take the Federal, I think it is.
It's out of here after dinner tonight at eleven
o'clock. I should be in Washington and the
office early tomorrow morning.
HMJr:
You - you're an optimist.
198
-5-
R:
HMJr:
Well, if the trains come through I think it's
due in there at a reason. - 8:10 or 9:00 o'clock.
All right. Well, I - I - they used to leave much
earlier. They don't run the Boston to Washington
in eight or nine hours. There must be some mistake
on that. You better check.
R:
Well, it's the Federal.
There usually is a train - well, the Federal leaves
here at 8:00 o'clock at night.
And then it leaves up here at 11:00, I believe
HMJr:
And gets
R:
HMJr:
R:
HMJr:
R:
HMJr:
....Or thereabouts.
It'11 never get in here at 8:00.
Well, I'11 be in the office ten minutes after I
get there if the taxis are up.
(Laughs) All right. Okay.
R:
Righto.
HMJr:
Goodbye.
R:
Goodbye.
199
April 7, 1943
4:34 p.m.
HMJr:
Hello.
Operator:
Miss Tully calling you, sir.
HMJr:
Hello.
Grace
Tully:
Hello.
HMJr:
Haven't you got your bond yet?
T:
No, but I got a call saying I was to get it.
HMJr:
Well, how's that?
T:
Very - that's very good service, I'd say.
HMJr:
Right.
T:
Wonderful.
HMJr:
Yeah.
T:
Mr. Secretary, Friday morning at 9:30, hmmm?
HMJr:
Oh.
T:
No can do tomorrow morning.
HMJr:
T:
Oh, sure I can, but there was - I had a
speech that I wanted him to look at.
Oh, and you're going to use it on Friday, you
mean?
HMJr:
No, I'm not - no, I'm not giving it until
Monday. That - that's all right.
T:
All right, fine.
HMJr:
Friday?
T:
Friday at 9:30.
HMJr:
It's a date.
-2-
T:
HMJr:
Yeah.
And - you know, the President was wonderful this
morning. I mean to have all that stuff dumped
on his desk at the last minute.
T:
Uh huh.
HMJr:
Those - those scripts were over there three weeks
ago.
T:
They were over here three weeks ago?
HMJr:
About three weeks ago.
T:
Uh huh.
HMJr:
T:
And they only showed it to him today.
Uh huh. That can happen over here. (Laughs)
HMJr:
So they tell me.
T:
(Laughs)
HMJr:
T:
All right.
All right, fine, Mr. Secretary.
HMJr:
Thank you.
T:
Right. Good bye.
200
TO:
message from
Gardner Cawles.
OWI in London unable
to
findthe
thetext
leak
which
gotby
out.
apparently a breach
of confidence on the
part 8 a smaller power
The newspaper involved
refused to develope
their source
355
4/7/43
From: Mr. Fitzgerald
202
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE April 7, 1943.
Mrs. Klotz
TO
FROM
Yr. Peabody S. P.
It has been decided not to have the Secretary appear
or the Sunday show.
203
WAR DEPARTMENT
BUREAU OF PUBLIC RELATIONS
WASHINGTON
April 7, 1943.
The Honorable Herbert E. Gaston,
Assistant Secretary of the Treasury,
Washington, D. C.
Dear Herbert:
Herewith is the copy of the Secretary's
speech which was sent to ne and which is enthusiastically approved by the War Department.
Sincerely,
pc
JAMES S. COLLINS
Lt. Colonel, A.U.S.
Executive Office
PORVICTORY
BUY
STATES
WAR
BONDS
STAMPS
204
April 7, 1943
Used on the occasion of the filming at the White
House of the President selling the first bond for the
Second War Loan Drive.
Morgenthau:
Mr. President, on the
12th of April, the
Treasury Department is
offering the people of
to lend their support
to our fighting men in
America an opportunity
the offensives
by
subscribing great spring thirteen
billion dollars to the
second war loan.
4/7/43
Changes made today in the draft
prepared by Smith and Albee.
205
206
Tonight I'm going to talk about something you
might not expect the Treasury Department to discuss.
I'm going to talk about the Second Front.
The Second Front is no military secret. We all
know that, just over the horizon, we of the United
Nations are piling up the thunder-clouds of the
greatest attack in history. We are massing for that
attack, now. The planning, the patient preparation,
the bitter time when we had to take blows without
returning them, because we weren't ready - all of that
is past. Now we're ready to deal a few blows ourselves;
and they'11 be blows, I can promise you, that will rock
Nazi Germany to its rotten, bloodstained foundations.
As the Secretary of the Treasury I've been given
the job of seeing to it that money is available to pay
for this great military offensive and others to follow.
This is why we are launching the Second War Loan tonight
to raise at least 13 billion dollars before the end of
this month to buy materials and implements of war. We
must buy shells today for big guns that will be roaring tomorrow and the day after. I'm here tonight to
tell you that your help is needed. The need 1s real,
207
-urgent, pressing. Ten percent is no longer enough.
We are asking everyone to buy extra bonds this month,
even workers who are now participating in the payroll
savings plan.
In our private lives none of us deals with billiondollar figures. I know they're bewildering.
But except for the size of the figures involved
there is no mystery about financing a war. The Government of the United States is buying the best equipment
ever furnished to any army. It is paying not only for
equipment that reaches the fighting fronts but for some
equipment that never gets there. For every ship that's
sunk we must build two new ships - for every cargo
that's lost we must send out two new cargoes. And that
costs money. Where are we going to get it?
Well, there are several ways to get the money.
We can raise it through taxes. We can borrow it from
the banks. And we can borrow it from the people - and
that means you.
We are now getting more money through taxes than
ever before. And it will be necessary, I have no doubt
to ask for still more. But we cannot rely on taxes
alone to do the whole job, and I wouldn't want to because we could not tax with fairness on 80 huge a scale.
208
-We could borrow all the money from the banks.
Our credit is excellent. But for a variety of reasons,
economic and social, this is also undesirable. One
reason goes to the very heart of our system of govern-
ment. It is important to me as I know it 18 to you.
This is a people's war - so all of the people ought to
have a part in financing it.
And I know you feel the same way about it, because
5 sixths of all the people who are earning money today
have bought bonds.
As Secretary of the Treasury, I can report that
96 percent of every dollar which comes into the Treasury,
through er bonds, taxes, or anything else, is spent for
war purposes! When you buy an eighteen dollars and
seventy-five cent bond, eighteen dollars go immediately
into guns and planes and equipment. The 75 cents goes
for interest and the regular expenditures of the Government.
The cost of selling bonds is indeed very small. And
this is because you and your neighbors and hundreds of
thousands of volunteers across the country have taken
over the job of selling. I'd like to express, to all
of you, my deepeat gratitude. I should like to thank
all of those who are helping - management and labor, for
the splendid success they have made of the payroll
209
-4savings plan, under which more than 25 million working
people now regularly invest almost 9 percent of their
wages and anlaries. I'd like to thank manufacturing
and retail business firms, large and small, who have
given US, free of charge, millions of dollars worth
of advertising space and radio time, AB has the
Telephone Company tonight. And the Federal Reserve
System and thousands of banks working with them - and
all the others who are giving their time in this way
in the service of their country.
You can feel every confidence that the financial
affairs of your government are in good condition as
the United Nations go on the offensive. The situation
is well in hand. We know where we're going. We know
how much money our armed forces will need.
During this month of April we must get 13 billion
stall
dollars. to must get 21, billion bollars in the first
4 months of this year, 26 during the second 4 months,
25
and 23 in the final period of the year; a total of
70 billion dollars
I would like to assure you that we can afford it.
But 70 billion dollars is, of course, a lot of
money. It isn't going to be easy to raise it. It
210
-5means hard work. But I have every confidence, knowing the
American people, and how deeply serious they are about
this war, that we will get it. We will get it from
people who will scrimp and save if need be to buy these
bonds. Re will get it especially from those upon whom
we must depend most heavily - the men and women who are
making good money in shipyards and plane factories and
tank production; the gallant women who used to call
themselves housewives but who are working today at
lathes and drill-presses in the great WAF plants. These
are the Americans who, all together, buy bonds in amounts
that a millionaire, or even all of the millionsires
combined, could never hope to equal. And they'11 buy
more of them this year - this year when 10 percent is
no longer enough.
The boys at the front are counting on them.
.
give their lives - you land
All of U.S will buy bonds because all of us know
that this is our war and that we must win it. We must
win it so that nations with R bloody philosophy out
of the dark ages of mankind's past will never again be
able to raise a traitorous hand agai not neighbors
wanting only to live in peace and friendly good will.
211
-6An hour ago I passed through a railroad station. Standing at the iron gates, saying goodbye, were boys in
uniform with their girls, their wives - young couples
come to the heart-breaking minute when there were no
more words; when all they could do was to stand with
their hands elenched so tightly together that they
hurt. And RB I passed them I thought of all the other
young Americans whose lives have been torn into ragged
bits - young architects and engineers giving up their
studies; school-girls working in factories; farmers
sending their wives and youngsters out to work in the
fields because they can't get hired hands; business
men losing what they've spent twenty years creating,
because of the necessary curtailments.
By what right do the Germans, the Japanese,
blight our lives, shatter our homes, whirl away our
BONE to drown five thousand miles from home in a soum
of oil at sen, or bleed and cough their lives out in
a muddy, filthy ditch? who do they think they are? --Be know only too well who they think they are! They're
the supermen, the Master Races, put here on earth to
enslave the rest of us and creek the whip over our
bare backs while we do their dirty chores! - they and
212
-7their 'great' armies; their great armies of sneaks
and bullies that Jump on weak, helpless nations when
they aren't looking! The Japs, with their dreams of
empire, built on lies and treachery. The Germane,
who twice within the memory of living aen have tried,
with their Kaisers and their Fuehrers, to conquer the
rest of our world. We say: "Never again!" We of the
United Nations will show them who we are. e'11
show then some really great armies - Chinese and
Russian, British and American.
These Armies are the nightiest military machine
in all time history / But to us they are friends
and husbands, fathers and sons, They are your boys
and my boys.
They are asked to give their lives.
You are only sked to lend your money.
Shall we be more tender with our dollars than
with the lives of our sons?
I thank you.
213
APR 7 1943
Dear Henry:
I have your letter of April 5, 1943 regarding
the headline in the box on page 1 of the New York
Times of the same date.
I anticipated that objections would be raised
by the savings banks to such a statement, so I immediately announced to the press that the Treasury
does not expect persons to withdraw their savings
deposits for the purpose of purchasing new Treasury
issues. I again emphasized, as I had on a number
of previous occasions, that Government securities,
including Savings Bonds, should be purchased out
of current income and thus serve the dual purpose
of furnishing funds for our war activities and of
reducing the inflationary pressure of current income.
Very truly yours,
51 HENRY
Mr. Henry Bruere
President
The Bowery Savings Bank
110 East 42nd Street
New York, N. Y.
DWB:ew 4-7-43
Entered .. Becomin
Postoffice New
117.N.Y,
April 5, 1943
c
Savings Cut Urged
Buy War Bonds
By The United Press.
WASHINGTON April 4Treasury officials tonight were
completing plans for the second
war loan drive, starting a week
from tomorrow, in which the
government will borrow at least
$13,000,000,000.
The Treasury's appeal will be
made under the slogan "They
give their lives-You lend your
money." With that battle cry
the Treasury will ask Individuals
and other non-banking investors
to subscribe at least $8,000,000,-
000 of the goal. To make It pos-
sible for every type of Investor
to take part. the Treasury will
offer securities ranging from the
$25 war bond, which coats
$18.75. to $1,800,000 bonds of
other issues.
Furthermore, the Treasury
will urge people to-dig into all
the surplus money they have to
send their dollars to war. People will be asked to reduce their
savings accounts to just enough
to emergencies.
Treasury pointed out tonight that investment in government securities during the drive
would help fight Inflation.
Wish
THE BOWERY SAVINGS BANK
110 EAST 42ND STREET
NEW YORK
T BRUERE
PRESIDENT
April 5, 1943
Honorable Henry Morrenthau, Jr.
Secretary of the Treasury, U. S. A.
Treasury Department
Washington, D. C.
Dear Henry:
Already you've heard the cries of alarm
from our savings banks over the unfortunate
headline in the box on page one of this
morning's New York Times.
I an sorry that this type of publicity
appears now and then because it tends to
unsettle our depositors, etc.
You know the answer of course. We buy
Government bonds almost exclusively, and h
withdrawals compel us to sell them and
gains, least of all the Treasury.
The enclosed copies of advertisements with
show you that the Bowery continues its "allout" cooperation with the Treasury.
Sincerely yours,
HB-encl.
Keny
216
CONFIDENTIAL
April 7, 1943
Dear Bob:
Here is the report that I spoke to you
about over the telephone. I would appreciate
hearing from you.
Sincerely yours,
(Signed) H. Mergenthau, Jr.
Mr. Robert A. Lovett,
Assistant Secretary of War for Air,
War Department,
Washington, D.C.
Sent byd d aquit 11:15 am 4/7/43
CONFIDENTIA?
April 5, 1943.
Secretary Morgenthau
Emerson Waldman
As per your instructions I interviewed Martin Aircraft
workers in the nearest thing to a natural, home atnosphere
that is possible in Essex, Md., and in the trailer camps
about the plant. (Could not attend union meeting due to fact
that none was being held over weekend.) I "listened" to about
20 workers -- neither arguing with them nor asking any "leading"
questions which might cause them to feel that they were expected
to give certain answers. Following is a summation of their
reactions:
1) They'd rather buy Bonds themselves than through the payroll
savings plan.
2) All quoted "higher prices" as the reason for not buying
Bonds or for not buying more Bonds than they were buying.
3) They said that they were buying Bonds or -- if they were
not buying Bonds -- they should buy Bonds for their own futures
and to "help win the war."
4) All expressed a willingness to do whatever the Government
wanted them to do "to help win the war." It was obvious, from
this, that the Martin plant workers would buy many more Bonds
(their participation in the payroll savings plan is 40% at
two per cent of the gross payroll) if there was a "live"
-2-
218
CONFIDENTIAL
organization of foremen and/or management within the plant
to stimulate and direct and explain the immediate necessity
of buying Bonds with every possible dollar through the payroll
savings plan.
5) All those with whom I spoke mentioned that there were
Bond-buying booths within the plant. Only a few mentioned
that their foreman had approached them on the idea of buying
Bonds through payroll savings. Those who told of being
approached by their foreman said that he had "asked them
whether they wanted to buy Bonds through the payroll savings
plan." The foreman had not urged them to do so. The foreman
had not asked them to invest any certain percentage of their
pay. The foreman had mentioned that, if they did not want to
buy Bonds through payroll savings, they could buy their Bonds
at the Bond-booths in the plant.
6) None of the workers with whom I spoke had any realization
of or interest in inflation. None had any idea of the importance
of Bonds in helping to keep prices down. None -- as a matter
of fact -- seemed to have any idea of the importance of his
individual job in the war. strangely, none introduced the war
into the discussion other than to say that buying Bonds "helped
to win the war." In no case was there any sense of urgency
either about their jobs or in buying Bonds to aid the men in
the front lines.
7) The main thought motivating those with whom I spoke was
equality of wages with others in the plant; with other workers
in other aircraft plants.
- 3- CONFIDENTIAL219
In addition to speaking with workers of the Martin plant,
I interviewed minor executives of the CIO, in Baltimore, who
had had contact with workers in other airplane and war plants.
Also, I spoke with individuals who worked in other war industries
in the Baltimore area. Their reactions on the war and on Bondbuying were much keener than that of Martin plant workers.
1) A woman whose husband worked at the Bethlehem steel plant
in Baltimore said that her husband was a member of the plant's
that they were keeping on with their
ten per cent club
Bond-buying through the payroll savings plan even though prices
are rising and they have five children to feed and care for.
They have 25 Bonds and "no matter the sacrifices the war effort
is worth it to me." She said that foremen contact all workers
at the Bethlehem plant and contact them regularly after they
have signed up, to get them to increase their allotments.
2) Herewith some reactions and quotes, following conversation
with CIO executives: a) "I never saved any money before I
started buying Bonds. Now I haven't any money to spend but
I've got plenty of Bonds. It's a good feeling
War Bonds
give American workers another reason to fight harder and work
.
harder. They mean a better future
Speaker expressed
with
thought of shareholder in democracy idea partners
Uncle Sam idea
said "War Bonds give you a feeling that you
are a part of America that you own a hunk of these United
States." b) One of these CIO men asked about the rate of
"oash-ins" of Bonds and I gave him the figures. It seems that
-4-
220
CONFIDENTIAL
the story everywhere is that Bonds have been cashed in at a
tremendous rate. The CIO men were pleasantly surprised at
the figures I Save them. They said that they could understand why such a small percentage of Bonds was being cashed
in: "if you've got it in mind to buy something
too long to get your money out of Bonds
it takes
so you don't
bother and you don't buy that something. And there's the
moral reason, too nobody wants to think of himself as
a
cheap alacker who makes out he's buying Bonds up there with
the rest and then is cashing them on the side. And, then,
there's the idea of the future ... a guy thinks of his Bonds
for after the war is over when he'll maybe want to start up
a business of his own. A $25 Bond means a lot more than 318.75
to a worker
o) One of the CIO men said that "workers
want to buy all the Bonds possible but prices are higher,
wages are levelled off, taxes are going up... " This man spoke
as a result of his experiences in covering five states which
centered on the Maryland area. d) Another CIO executive
gave an interesting insight on why many workers are holding
onto their "cash" instead of investing every possible dollar
in Bonds. Said he: "There was a fellow named Smitty, who
worked in Glen Martin's Number two plant. He was a union
steward. Smitty saved his money. He didn't spend on anything
he didn't have to. When Smitty had saved up $500 he quit his
job. He said that his $500 was more than his father -- a
farmer -- had been able to save up in a lifetime. so, Smitty
-5 - CONFIDENTIAL 221
-
said, he was going home (to North Carolina) and buy himself
a farm with his $500. 'I'm going to retire for the rest of
my life. I won't be drafted because I'm going to be a farm
worker
IN e) Another CIO representative, who had come
to Baltimore from Buffalo (Curtis-Wright plant) only two
weeks before, said: "The workers in the Curtis-Wright plant,
where I worked as a tool-maker, don't like the payroll savings
plan. This plan is run by the financing branch of the company
and it takes anywhere from two to five months for a worker to
get his Bond, after he's paid for it. The workers feel that
the financing outfit is using the money they've paid in for
Bonds as 'loan money' -- money which this financing branch
lends back to the worker and for which the financing outfit
charges him interest ... about 2% a month." This same CIO
man -- who is attempting to organize the Martin plant workers
said that, perhaps, one of the reasons the Martin workers were
not buying more Bonds was due to the fact that their wages
were lower than the wages in Baltimore's Eastern Aircraft plant
for the same work. This DIO representative also said that
the main reason, though, for Martin workers not buying more
Bonds through payroll savings, with a higher percentage of
their pay, was lack of any systematic campaign within the
plant, lack of any organization within the plant to educate
the workers to the meaning of War Bonds, to the meaning and
workings of the payroll savings plan. Here he brought the
conversation back to the Curtis-Wright plant in Buffalo, citing
this plant where wages are essentially the same as at Martin
as an example of what he meant. In spite of feeling within the
222
-
6 - CONFIDENTIAL
Curtis-Wright plant against the handling there of the payroll
savings plan, the workers were buying Bonds through this plan:
"The foreman contacts every new worker, the day he starts
work, and asks him to sign up in the payroll savings plan
giving him a pep talk on Bonds. Three or four times a year,
the foreman contacts every one of the workers in his group
and asks for an increase in the worker's allotment for Bonds.
Following are individual reactions by Martin plant workers:
1) The wife of a Martin plant worker -- interviewed at a
trailer camp, her home, near the plant -- said "No... I'm not
buying and my husband is not buying Bonds. I wouldn't mind
if he bought Bonds out of his pay at the plant. He's just
never done it
Yes
they ask you at the plant if you want
to buy Bonds out of your pay..."
2) Husband and wife (husband works at the Martin plant):
H
They were not interested in discussing Bonds. Wouldn't say
whether they were buying or not. wife said "they have a
booth at the plant."
is buying Bonds
3) Martin plant worker from North Carolina
"with what I can afford. No ... I'm not buying on the payroll
plan. I'm buying them myself. I don't like anybody to take
,
anything 'out of my time.' I like to 'pay it out myself.
I'm buying Bonds and sending them home for my four-year-old
... and to help win the war."
son
4) In connection with the above interview it is interesting
to note that most of the workers with whom I spoke do not have
their wives and families with them -- due to housing conditions
and the high cost of living in Essex and other areas near the
- -7- - CONFIDENTIAL
plant. "Rooms For Rent" signs mean one-fifth of a room is
for rent there are five beds in most of these "rooms".
often, these rooms -- in private homes -- are fixed-over
attics.
5) A Martin plant worker -- about 40 years old -- said
"no payroll savings plan for me. I buy Bonds whan I get the
... when I have the money to spare. I got obligations
money
the wife. That comes first." Said he had been
at home
contacted by the foreman on buying Bonds through payroll
savings. Didn't like the plan because -- in addition to
above reasons -- "you got to wait from a couple of months to
five months before you get your Bonds." As this man got to
talking he "warmed" to the subject of War Bonds -- in the
abstract -- saying that he's got two brothers in service.
And he knows what War Bonds do to help them. At one point in
the conversation he said that he had "a few Bonds," at another
point in the conversation that he had no Bonds. He said that
he "wasn't going to work today ... I'm taking the wife to
Baltimore" (that was on Saturday). "When I get well I'm going
to buy some War Bonds they'11 help my brothers, I know."
6) A descendant of a man who arrived in America in 1732 was
the only one who seemed to have an understanding of the part
in the part
his job was playing in helping to win the war
his War Bonds were playing to help win the war. He said that
there was no campaign or drive in the plant to influence him
to buy Bonds through either the payroll plan or at the booth.
223
224
-8-
CONFIDENTIAL
He'd heard about the payroll plan over the radio (Almost all
the Martin workers mentioned hearing about War Bonds over the
radio. Due to dislocated housing conditions they depend on
the radio for their news as well as their entertainment.).
He was buying Bonds with five per cent of his pay. He was
paying income taxes and the Victory tax, and would pay more
and buy more Bonds "if necessary". Said he: "If we lose
the war I lose everything. Money in Bonds helps to win the
war
...
War Bonds are the best investment I can make
because if anything is good they are. If we lose the war
I'm going
everything isn't worth anything ... anyway.
back to the farm after the war. There won't be any airplane
jobs like this after the war War Bonds will give me a
stake on the farm after the war It's the only way to save
19
money
He mentioned, as the reason he was not putting more
of his pay into Bonds, higher prices. "It's so hard to save
a penny these days..."
7) A man who'd been working at the Martin plant for eight
months said that he had not "started buying Bonds yet. Been
sick... " (almost all of those who were not buying Bonds or
were buying very few Bonds mentioned being sick or that their
wives or other relatives were sick.) He knew very little about
War Bonds and said that nobody had asked him to buy Bonds out
of salary, through the payroll plan.
-9 - CONFIDENTIAL - 225
8) This Martin plant worker had been buying Bonds himself.
Said he didn't like the payroll plan because he liked to
see his Bond when he paid over his money. He wasn't buying
Bonds now and had cashed in all his Bonds
to pay for his
ife's illness. He'd start buying again, when his wife was
well and he'd paid all his bills. "Bonds help to win the
war. everybody is interested in buying Bonds everyone
at home is willing to put into War Bonds and taxes all that
the Government feels is necessary to do the job
He
"
had no ideas on whether a worker ought to buy Bonds with ten
or any per cent of pay
idea was "what a man can afford
"
226
EMERSON WALDMAN
Emerson Waldman is employed as a Senior Advertising Specialist,
CAF-12, $4,600 per annum, in the Radio and Press Division of the
War Savings Staff.
Waldman is 31 years of age, married, with one daughter three
years old. After completing high school, he had three years at the
University of Wisconsin, majoring in Journalism. His prior employmont was us follows:
Employer
Steve Hannagan, Associates,
New York City
National Broadcasting Co.,
Position
Length of Service
Writer and Adver-
2 years
tising Specialist
Writer, publicist,
2 years
1 year
tion, New York City
advertising spec.
Writer and
editor
Washington Daily News,
Washington, D. C.
Scripps-Howard Newspaper
Reporter
1 year
Secretary, analyst
1 year
New York City
Trans-Radio Press Associa-
Alliance, Washington, D.C.
and writer
Character investigation was summed up by the investigating agent
as follows:
"This investigation has revealed that this appointee
is a man of good character and reputation, he has never
been known to display any disloyalty to this Government,
and, in my opinion, he merits the confidence of this
Government relative to his retention in the Service."
He has been given an efficiency rating of "Very Good" by the War
Savings Staff.
Am
April 7, 1943.
227
FROM:
TO:
MR. SCHWARZ'S OFFICE
Miss Chauncey
Mr. Hemingway gave his approval
from New York at 4:30pm to our
making this letter public. After
my earlier call, he had called
St. Louis and had the letter
read to him, after which he said
we should go ahead and give it
out.
co
4/9
228
APR 7 1943
Dear Mr. Hemingway:
Receipt is acknowledged of your letter of March 29, 1943.
referring to my letter of March 11 addressed to Senator Byrd
in connection with the report of the Joint Committee on
Reduction of Non-essential Expenditures with respect to the
Regional Agricultural Credit Corporation.
I note you feel that the banking institutions of the
country believe I have no particular concern for the welfare
of the country banks and that my letter of March 11 to
Senator Byrd indicates a change in attitude regarding the
desirability of utilising to the fullest extent possible local
banking resources to supply the credit needs of the farmers.
There has been no change in my attitude and I favor the
utilisation of local banking resources to supply farm credit
to the fullest extent possible. My letter of March 11 to
Senator Byrd was occasioned principally by the form of the
proposed report of the Joint Committee, which Senator Byrd
submitted for my comments prior to its submission to the
Congress. My objections to the Committee report were based
more on the matter of its form than on the recommendations
which it contained. The production of sufficient food for
ourselves and the nations associated with us is one of the
most important problems we face today and I feel that the
Committee's recommendation for the abolishment of the RACC
should have been preceded by its recommendation for amend-
ments in existing law so as to take care of those cases of
agricultural credit of a type which involve risks that
private lending agencies should not be expected to assume.
In my letter to Senator Byrd I agreed with the proposed
Committee recommendation that consolidation of agricultural
lending agencies and the policies under which those agencies
will operate should actively be considered by the Congress.
I believe this should be done in a constructive manner. but
we should be careful and not do anything at this time which
might jeopardise the food production program.
The amendment of the Regional Agricultural Credit Corporation regulations and the instructions issued to bankers the repre-
sentatives of that Corporation under which county
associations (or the bankers in the county if there is no
229
-such association) are invited to name representatives or a committee to meet from time to time with the Chairmen of the County
War Boards and representatives of other credit agencies operat-
ing in the counties, to discuss credit problems relative to
maximum production and the types of loans made by the different
agricultural agencies, to coordinate loan policies, and to make
sure all legitimate credit requirements of farmers are not,
will go a long way in solving some of the initial objections
to the RACC credit program.
I shall be glad to discuss this matter with you when you
have an opportunity to be in Washington again.
Very truly yours,
(Signed) H. Morgenthau, Jr.
Secretary of the Treasury.
Mr. W. L. Hemingway
President, The American
Bankers Association
Mercantile-Commerce Bank
and Trust Company
St. Louis, Missouri
Photo file in Diary
File to Thompson
WTH:mlb 4-2-43
THE AMERICAN BANKERS ASSOCIATION
OFFICE OF THE PRESIDENT
MERCANTILE-COMMERCE BANK AND TRUST Co.
ST. Louis, MISSOURI
45491
L.HEHINOWAY
March 29, 1943
Honorable
Henry Morgenthau, Jr.
Secretary of the Treasury
Washington, D. C.
Dear Mr. Secretary:
Your letter of March 11 addressed to Senator Byrd, Chairman
of the Joint Committee on Reduction of Non-Essential Federal Expenditures,
which WILB published in the American Banker, and the subsequent explanation
by you of the letter, also published in the American Banker, have caused
much concern to many bankers. They fear this indicates you have no part
icular concern for the welfare of the country banks. I do not share that
feeling, for I have heard you, on so many occasions, express your interest
in maintaining the soundness of the American banking system.
I must admit, however, that we are experiencing difficulty
in explaining this to the country bankers, because it is their feeling
that your letter of March 11 and the subsequent statements emanating from
your press conferences show a change in attitude.
Had you been present at the hearings of the Byrd Committee
and heard all the testimony, I think you would have been convinced that
there is ample credit and also that enough credit facilities are now available to the farmer to take care of all production needs. It was clearly
demonstrated that credit is not the bottleneck to production. The bottle-
necks are machinery and manpower.
We are all so much engaged in plans for the April drive that
I cannot leave here at this time, but after the drive is over, I should
like very much to have the opportunity of discussing this subject with you.
We have received replies from over 10,000 members of this Association on the subject of the RACC. In recent years nothing has aroused
such resentment as the revival of this agency of government.
with kind regards,
Sincer
Themagone
President
231
Secretary of the Treasury
4/7/43
INCOME AND EXCESS PROFITS TAXES
FOR MARCH 1943
AS COMPARED WITH MAR. 1942
BY
FEDERAL RESERVE DISTRICTS
Mar. 1943
BOSTON
347,839,896.92
$
Mar. 1942
236,471,789.09
$
1,181,639,059.13
799,305,521.98
PHILADELPHIA
373,729,792.94
220,838,221.35
CLEVELAND.
544,729,375.92
349,999,089.98
RICHMOND
269,942,052.30
181,050,975.16
193,910,994.63
126,261,363.11
CHICAGO.
863,289,852.46
604,170,493.56
ST. LOUIS.
133,576,742.43
79,381,720.31
TINNAPOLIS
102,490,583.89
43,456,563.93
KANSAS CITY
167,482,001.14
85,765,837.25
DALLAS
116,352,065.80
78,067,411.92
SAN FRANCISCO.
382,513,980.74
235,900,616.18
4,677,496,398.30
3,040,689,603.82
.$
TERRITORY OF HANAII.
GRAND TOTAL
*
.S
4,094,029.12
3,039,554.84
4,681,590,427.42
3,043,729,158.66
Reports March 15, 16, 17, etc. not yet received.
$
TOTAL, FEDERAL RESERVE BANKS
$
NEW YORK
FROM:
TO:
232
MR. SCHWARZ'S OFFICE
The Secretary
In response to your suggestion this
morning, George Cullen of the AP
asks if he and Wilcox can bring
Degges up to assure you of good
will on the part of the Treasury
Correspondents. They say Degges
has not told them where he got
the copy but expresses regret
over the embarrassment he has
caused.
@
H7
3:03 you
233
PARAPHRASE OF TELEGRAM SENT
TO:
American Embassy, London, England
DATE:
April 7, 1943, 1 p.m.
NO.:
2161
THIS IS A MESSAGE FROM THE SECRETARY OF THE TREASURY
FOR MR. CASADAY.
Reference is made to the Embassy's no. 2418, dated
April 6, 3 p.m. and to the Department's no. 2144, dated
April 6, 8 p.m.
The text of the Treasury's draft proposal which was
cabled to you in the Department's telegram under reference
and also released to the newspapers represents the latest
revision thereof. Only the draft which was cable yesterday should be published in London. You are free to have
it mimeographed and given out as may be deemed fit by
the Ambassador.
HULL
(FL)
234
April 7, 1943
Messrs. Paul and Pehle
Secretary Morgenthau
In reply to your letter of April 6th, I would
like to give the President a little information about
how successful we have been in restricting importation
of currency into this country, and then draw our own
conclusion that this undoubtedly had had a great deal
to do with the fact that there has been so little
sabotage.
two
me
ruth
de
pay
235
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE APR - 6
TO
Secretary Morgenthau
FROM Randolph Paul
You may be interested in the following concorning the effectiveness of the Foreign Funds Control
activities of the Department.
Attorney General Biddle recently stated that
there has been no active sabotage during this war.
J. Edgar Hoover, who is directly responsible
for the internal security of the country, in his most
recent report states:
the widespread control over the
11
importation of United States currency into
this country, which has been imposed by the
Treasury Department, and the restrictions imposed by various Latin-imerican nations over
the transfer and use of American currency,
have reportedly resulted in placing consider-
able difficulty in the path of Axis agents at-
tempting to use United States currency in
nations in the Western Hemisphere for the
financing of subversive activities.
"The rigid control which has been exercised by
the United States Government over the funds of
individuals and corporations in the United
States which might reasonably be used for pur-
poses inimical to the internal security of
this country, has been strictly maintained and
in some instances this control has reportedly
been extended to cover funds of individuals
not previously included. 11
=
236
-2During the last war, according to George
Sylvester Viereck, the Imperial Cerman Government used
$27,000,000 for espionage and sabotage in this country.
These funds were made available by individuals and busi- -
nesses in the United States.
During this war, the eight would-be saboteurs
who came to this country from Germany found it necessary
to bring their money with them since any individual or
business likely to be sympathetic to enemy interests is
regulated by Foreign Funds Control.
R.E.P.
237
April 7, 1943
Meeting of Cabinet Group Subcommittee
on Dollar Position of United Nations
Lr. White's Office
April 7, 1943
4:15 P.M.
resent: Mr. Acheson of State Department
Messrs. Knollenberg and Denby of Lend-Lease
Lessrs. Coe and Scheuer of B.E.E.
Mr. Neff of Department
lr. White, liss Kistler and Miss Nielsen of
Treasury Department
The meeting opened with a discussion of the possibility of reciprocal aid for the pay of the troops and for Army supplies. Mr. Neff
made some corrections in previous figures given for Army pay and for
Army supplies bought locally. The revised figures showed that the amount
of the Army's petty cash purchases is too small to be of much use in rerucing Britain's balances.
The next topic of discussion was extension of reciprocal aid to cover
purchases of rew materials. Mr. Coe reported that B.E.W. would prefer a
cut in lend-lease as this method would require no new mechanism. He agreed,
however, that increased reciprocal aid would be good policy if the United
States could get the goods through a financial arrangement whereby Britain
would pay us for contracts already written. Mr. Coe and r. Scheuer were
both opposed to renegotiation of contracts because of the probable delay
in deliveries. r. White pointed out that this objection because of ad-
ministrative problems was the same as that being made by Canadian procure-
ment officials. r. Denby said that the Tar Shipping Administration has a
satisfactory arrangement under which it buys the sterling it needs in New
York and Mila ritain periodically. r. white asked iss Kistler to find
out more about this procedure.
In a discussion on transfer o stock iles, T. Scheuer pointed out
that it would be unfair to ask the British to transfer to us the 150
million stockpile of wool which the British are building u in tids country the
at our request. This is contrary to the earlier procedure under which ile
United States had purchased the wool. The transfer of the wool stock
would merely preclude future accumulation of dollars, rather than reduce
present olding S. For the latter purpose, TO might ask the Sritish to put
current sidements for prevate users of 75-100 william a year on reciprocal
lend-Lance. The onl other in ortant ritish stock pilo known to be in
this hemisphere is the digmond stockpile in Canava. r Scheuer stated
that because of sorting problems we will need to buy 5 million carats in
ingland.
238
Division of Monetary
Research
-
The possibility of putting Army pay on reverse lend-lease was
raised by Mr. Neff. He and Mr. Knollenberg both felt the Army was not
now opposed to this policy in spite of the fact that the exception of
soldiers' pay WES put into the lend-lease agreements on the Army's request.
r. Acheson pointed out that pay of soldiers had been omitted from the
very first draft of the reciprocal lend-lease agreements. Mr. Coe suggested
that actually the British would be giving us exchange to pay for the goods
bought on British soil by American soldiers. Mr. white, r. Acheson and
r. Denby thought there might be an unfavorable reaction on the part of the
Dritish public to this arrangement as American soldiers are paid more than
British and need not spend their money as conservatively. Mr. Knollenberg
agreed this would be a source of trouble unless the money were to come
out of the proceeds of food sales. Mr. white suggested that we do not
indicate tids specific purpose but make the fund for war purposes in general.
Mr. Acheson po nted out that proceeds of food sales amount to 800 million
a year and the desired reduction in British balances is only $250 willi n.
The proposal would then be made to take the whole amount. Mr. Cce suggested
that neither source nor purpose be indicated and that from time to time the
British advance us the sterling we need for war purposes. Mr. Acheson felt
that this arrangement was too big and unwieldy a weapon for the end in view
and sight reduce British balances unduly. Mr. hite thought we could resist
pressure to force British balances below the range set. Mr. Knollenberg
agreed with this and suggested that such an arrangement could be defended
both in this country and in England on the same basis as a fund from the
proceeds of food sales.
The consensus of opinion was that the order of desirability of the
three preferred methods for reducing Britain's balances is, first, reciprocal
lend-lease for strategic and other imports; second, reciprocal lend-lesse
in the form of a kitty; and third, a reduction in lend-lease aid. It was
agreed that the first and second methods night be used in conjunction with
each other. It WES also decided that it would be desirable not to discuss
the matter with the British until after the Cabinet Group and the President
have agreed to the move.
r. Knollenberg warned Mr. ..nd te of possible repercussions from a
remark by an official in the Lend-Lease Administration to the British concerning the decision on the size of Britain's gold and dollar balances.
further stated that Mr. Stettinius and he were so ewhat uncertain as to
their position concerning British balances and had not previously considered
the matter from all angles. Mr. White assured him that Lend-Lease could reopen the matter at any time by sending a letter to the Secretary
He
There was some di cussion of the advisability of restoring tobacco to
Lend-Lease as a means of reassuring the British that nothing would be done to
bring down their balances thout prior discussion. It was decided not to
do so for the present, at least, for political reasons and because of procedural difficulties.
A. L. Nielsen
239
Pending Latters on Britain's Dollar Position
1. Britain's Current Dollar Position
The British Government reports that on February 27, 1943, it held
1,080 million of gold and U.S. dollars, exclusive of the $105 million of
Belgian gold, as follows:
(In millions)
Gold
U.S. dollar balances
Total
$ 911
169
$1,080
Since the close of February, the British Government's holdings of
dollars have increased $25 million. If, as seems likely, this increase in
dollars represents an increase of at least an equivalent amount in Britain's
gold and dollar resources, then Britain's reserve is roughly $100 million
higher than the maximum figure agreed upon in the report to the President.
Unless steps are taken to interrupt the current trend, the reserve is expected to increase by roughly $130 million per quarter during the remainder of 1943 or to about $1.5 billion on December 31, 1943.
2. The Need for Action to Reduce Britain's Reserve
a. Treatment of Britain's Gold and Dollar Demand Liabilities.
The magnitude of action needed to reduce these balances and to
maintain them within the limits agreed upon by the Interdepartmental
Committee, depends upon the treatment to be accorded Britain's gold
and dollar demand liabilities.
The British claim that at the close of 1942 non-residents held
$190 million of sterling balances carrying specific rights of conversion into gold and S47 million of registered sterling accounts
convertible into dollars on demand. They assert that these liabilities
are a specific claim on $237 million of gold and dollars and accordingly must be deducted from their current holdings to arrive at a figure
showing their available gold and dollar reserve.
If this position is considered as valid and these demand liabilities are subtracted from current Fritish holdings for purposes
of implementing the Interdepartmental decision, then Britain's gold
and dollar reserve is still below the maximum agreed upon. In this
case it would be sufficient to find ways of reducing by $200-$300 million
Britain's anticipated excess of gold and dollar receipts during the
remainder of this year.
240
Division of Monetary
Research
-
This would also be the situation if the decision is to subtract
from the British reserve the $190 million of gold liabilities but
not the $40 million of registered U.S. sterling accounts. Such a
procedure could be justified on the ground that the latter are
analogous to the British private dollar balances held in this country
which are not counted as part of Britain's available dollar resources.
If the decision, on the other hand, is to use the gross figure of
Britain's gold and dollar holdings and not deduct the demand liabilities
for the purpose at hand, then measures must be taken to reduce Britain's
gold and dollar receipts by almost $500 million during the remainder
of this year.
b. Opposition of the British Government to any Reduction of Britain's
Dollar Receipts.
The British have reiterated their opposition to any action which
would reduce their accumulation of gold and dollars and have again
stressed the heavy accumulation of sterling by India, Egypt and other
Near East countries. They have also stated that there is a likelihood
of India refusing to continue to accept sterling balances. They
stressed the fact that the reluctance of these countries to continue
to accumulate sterling is likely to be less the larger the amount of
gold and dollars held by Eritain.
The British Government reports that overseas countries held
the equivalent of $6 billion of sterling balances as of the end of
1942 and that they anticipate an increase in these balances of $2.7
billion during 1943.
Held as of
12-31-42
Anticipated Increase
During 1943
(Millions of dollars)
$1,644
India
700
Egypt
Other Sterling Area
Allied Governments in London
Countries outside Sterling Area
Enemy and Occupied Countries
Total
2,540
528
516)
$1,280
320
720
120
260
156)
$6,084
$2,700
241
Division of Monetary
-3-
Research
3. Alternative Methods of Reducing Britain's Balances or Curtailing
Britain's U.S. Dollar Receipts.
There are four principal avenues by which Britain's dollar reserve
or her current U.S. dollar receipts can be reduced. Any one of the
measures or a combination of the four appear to offer sufficient scope
to accomplish the objective. The alternatives are:
a. Repayment by Britain of her short-term sterling liabilities;
b. Extension of reciprocal aid;
C. Reduction in lend-lease assistance;
d. Transfer of British stockpiles and British interests in war plants
in U.S. to the U.S. Government.
A. Repayment by Britain of her short-term Sterling Liabilities.
Sir Frederick Phillips has asked, if action is to be taken to reduce
Britain's dollar balances, whether the British should not themselves take
measures to reduce their holdings. He plans to submit a memorandum on the
subject outlining the various possibilities as the British see them. He
mentioned orally the following alternatives:
1. Payment in gold or dollars of sterling held by neutral countries
like Portugal or by the Allied Governments in London.
According to a recent dispatch, Portugal holds the equivalent
of $155 million of sterling balances. The Allied Governments hold
over $500 million of sterling.
2. Acceleration of Repayment of the R.F.C. Loan.
Sir Frederick restated the British inquiry in terms of a payment
of $100 million to the R.F.C. without destroying the framework of
the loan.
B. Extension of Reciprocal Aid.
Britain's U.S. dollar receipts could be reduced by a sufficient amount
through the extension of reciprocal aid to cover a number of different
items provided ways could be found to overcome administrative or other
difficulties. The various alternatives arranged in the order of their
apparent feasibility are as follows:
1. Spot Sterling Expenditures Made by the American Armed Forces for
Supplies Within the Sterling Area.
The Army in February estimated that it would spend roughly $130
million in British Empire and Sterling Area countries during 1943,
principally in the United Kingdom and Australia. These expenditures
are for supplies and materials procured locally.
(For a more detailed country breakdown see Appendix A.)
242
--
Division of Monetary
Research
2. Public Purchases of Strategic Materials from Sterling Area Countries.
Current expectations are for payments by the U.S. Government,
January through June 1943, of $90 million to members of the British
Empire and of $25 million to other Sterling Area countries for the
purchase of imported materials.
(Actual payments by countries for 1942 and estimated figures for
the first half of 1943 are given in Appendix B attached. Details by
area and commodity are shown in Appendix c).
3. Imports of Certain Materials now being made on Private Account.
General imports of the United States from Egypt and the British
Empire (excluding Canada), January through September 1942, totalled
$515 million. This is almost $300 million more than the aggregate
of payments made by the U.S. Government during the whole of 1942 to
these countries for purchases of materials. It is also $300 million
more than the anticipated expenditures on this account during the
first half of 1943 converted to an annual basis.
As shown by the summary table given in Appendix D, public purchases
from the United Kingdom, the Union of South Africa, New Zealand and
Egypt are negligible in amount, while they represent roughly only one-
half of our imports from British India and other British Colonies and
Dependencies.
The most important commodities which would be involved in any
extension of public purchases to cover items now being imported from
the first four areas on private account are listed below along with the
value of U.S. General Imports during the first nine months of 1942.
U.S. Imports
July-Sept.
1942
Long stable cotton from Egypt
Public purchases of cotton from Egypt
during 1942 amounted to $1.6 million. Fore-
cast purchases for the first half of 1943
total $5 million.
Diamonds and wool from South Africa
Diamonds
(South African diamonds have so far not
been included in our public purchase program).
S
11 million
18 "
Division of Konetary
-5-
243
Research
U.S. Imports
July Sept.
1942
Wool
It is our understanding that stockpiles
of South African wool in this country are
British-owned and that no South African wool
$ 40 million
has been purchased by the U.S. Government.
Wool and hides and skins from New Zealand
7"
Wool
It is our understanding that stockpiles
of New Zealand wool in this country are owned
by the U.S. Government. However, wool from
New Zealand is not listed in the preliminary
tabulation, given in Appendix C, of public
purchases from British Empire countries for
1942.
6"
Hides and skins
This item is not listed among our pub-
lic purchases for either 1942 or first half
of 1943.
Whiskey and textile manufactures from the United
Kingdom
Textile manufactures
32
11
Whiskey
21
"
(Preliminary figures of U.S. general imports from the British
Empire, by principal areas and principal commodities for the period,
January through September 1942, are given in Appendix D).
4. Pay of American Troops Abroad.
The Army estimated in February that American soldiers would spend
during 1943 from pay roughly $500 million in the Sterling Area. It
is not clear whether this figure is gross or net after deducting es-
timated expenditures to be made at the post exchanges or for remittances
to the United States. Of the total $500 million expected to be spent
by American soldiers in the Sterling Area during 1943, $400 million
is estimated will be spent in Great Britain and Australia.
(For a more detailed country breakdown see Appendix A).
5. Miscellaneous U.S. Government Expenditures Financed Through a
Sterling Kitty.
Many of the problems and disadvantages of expanding reciprocal
lend-lease aid to include the items listed above might be eliminated
by setting up a sterling kitty to finance U.S. Government expenditures further
for any of a number of purposes. Such a kitty would have the to
advantage of being extremely flexible. It could be limited an exchange amount
sufficient to effect the required reduction in ritain's dollar
244
--
Division of Monetary
Research
balances or receipts or it could be expanded to cover activities
wholly or partly financed by the U.S. Government and possibly to
cover expenditures made by the British Government for specified
purposes or to a specified amount.
If joint use were made of such a fund by both governments, one
of the greatest objections to it might be eliminated. This objection
is that one of the most feasible sources of funds for such a kitty,
and the one with greatest political value to this Government--namely,
sterling receipts of the British Government from the sale of lendlease goods--is too large for the purpose at hand and would leave the
fund with a balance at the end of the war which might create an
embarrassing post-war problem.
C. Reduction in Lend-Lease Assistance.
Lend-Lease exports of industrial and agricultural commodities to
British Empire Countries during 1942 totalled roughly $1.6 billion, of
which about $1,350 millionwere shipped to the United Kingdom and about
$250 million to other British Empire countries.
D. Transfer of British Stockpiles and British Interests in War Plants in
U.S. to the U.S. Government.
Our information is that the British Government still retains an interest
in various war plant facilities in the United States toward the cost of
which it contributed an aggregate of $133 million. It is our understanding
that it has been agreed to transfer title to this Government of some of
these facilities which have an original cost value to the British of 886
million. So far as we know, the transfer of these plant facilities has not/
yet been consumerated. The value placed upon them for purposes of transfer,
as of September 1942, was 355 million.
of the remaining 847 million of British-owned war plants in this country,
$22 million have been stated by the British Government as suitable for
transfer. The other $25 million represent the sum of capital advances
ranging in amounts from $500 thousand to $6.5 million.
lie have no information on the value of British stockpiles in this
country.
Appendix B
Preliminary Tabulation of U.S. Government Payments to Countries Receiving
Lend-Lease Assistance During 1942
(Thousands of dollars)
State
:
:
:
British Empire (excl.Canada)
United Kingdom & N.Ireland
Australia
New Zealand
South Africa
651
10,528
2,348
Total
506
696
274
427
1,824
16,474
12,000
1,675
129,455
63
12,000
130
100
British India
Other Empire Countries
55,000
60,000
3,000
2,000
1,650
3,200
100
-
-
-
-
-
-
-
6,650
3,300
Fighting French Areas
Belgian Congo and Ruandi
Urundi
-
525
-
-
-
1,000
-
-
Iraq
-
600
-
-
Iceland
Total
Other Countries
Liberated French Areas
-
193
2,290
China
864
Iran
Liberia
Turkey
U.S.S.R
Other Lend-Lease Countries
Total
Total - All Countries
-
9,000
23,225
31,000
-
150
-
3,000
161
-
2,600
-
-
-
-
-
-
-
-
-
-
-
1,468
4,622
600
-
34,200
-
21,289
186,880
6,800
5,400
4,200
391
1,723
2,681
5,500
3,100
525
20,108
16,900
600
11
1943
5,100
30,600
44,070
90,270
12,427
3,499
155,879
1,000
-
-
1942
1,016
111,602
1,563
4,634
38,303
62,263
219,381
61,851
72,628
4,504
11
150
Eastern Italian Africa,
Eritrea & Libya
::
12,063
-
-
Total*
970
Other Sterling Area
Egypt
:
Navy
Public Purchases
Estimate
Actual
Jan.-June
Jan.-Dec.
:
:
Army
:::
:::
:
Treasury checks
& U.S. currency
negotiated abroad
::
:
Transfers made on books of N.Y.F.R.R. July - Dec. 1942
9,000
23,579
36,290
1,025
2,600
-
-
40
-
-
24,512
-
10,648
-
25,540
-
12,300
40
-
-
-
900
-
3,732
2,068
42,554
3,710
2,393
621,906
638,657
2,100
3,300
522,800
540,540
7,043
222,012
882,550
656,350
178
393
178
393
-
" These figures do not include payments made through the R.F.C. Custody Department.
Treasury Department, Division of Monetary Research
March 30 1943.
CO
Preliminary Tabulation of U.S. Government Payments to British Empire Countries
other than British India, United Kingdom and the Dominions,
July - December 1942
(Thousands of dollars)
Transfers made on books of N.Y.F.R.B.
Treasury checks
& U.S. currency
State
negotiated abroad
Army
Navy
British East Africa
British West Africa
Fiji Islands
Gibraltar
:::
Total*
28
125
-
-
153
15
950
-
-
965
1,375
500
-
-
1,875
-
-
-
-
-
-
-
406
-
Bermuda
Ceylon
:
406
::
::
Public Purchases
Estimate
Jan.-June
Actual
1943
1942
9,711
1,745
6,900
-
-
-
-
-
-
31,102
23,500
-
-
-
-
-
British Guiana
-
100
-
-
100
-
-
Palestine
-
-
-
-
-
-
-
-
-
-
-
-
Arabia
Newfoundland
Bahamas
-
-
-
-
-
-
-
-
-
-
290
400
2,342
1,000
65
100
700
-
-
-
-
-
110
-
-
-
498
800
-
-
Nigeria
-
-
-
-
-
1,478
1,600
Sierra Leone & Gold Coast
-
-
-
-
-
9,476
4,900
Jamaica
Honduras
Cyprus
Strait Settlement
British Oceania
Grenada
Trinidad
Southern Rhodesia
Total
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
71
-
2,470
2,851
-
-
-
-
-
-
14
-
-
-
-
-
40
-
-
-
-
-
1,675
-
-
1,824
3,499
hese figures do not include payments made through R.F.C. Custody Department.
-
62,263
1,800
-
70
2,300
44,070
Preliminary Tabulation of U.S. Government Payments to French Areas Controlled
by the Allies
July - December 1942
(Thousands of dollars)
:::
:::
:::
:::
Total*
Public Purchases
Actual
Estimate
Jan.-June
1942
1943
:
Transfers made on books of N.Y.F.R.B.
Treasury checks
& U.S. currency
State
negotiated abroad
Army
Navy
:
:
A. Areas Controlled by the French National Comittee
New Caledonia
Madagascar
French Equatorial Africa
French Cameroon
Syria
St. Pierre & Miquelon
Tahiti
-
-
-
-
150
380
-
-
-
-
-
-
-
-
-
-
-
-
-
-
900
390
400
500
-
-
-
-
988
-
-
-
-
-
11
11
-
-
-
French Somaliland
French Oceania
New Hebrides
100
130
-
-
-
-
-
-
-
-
-
-
-
-
-
-
100
150
-
-
Total
130
324
-
-
-
-
-
-
11
391
1,300
396
-
583
-
2,681
3,100
B. Liberated French Areas in Africa
Algeria
2,290
31,000
36,290
-
3,000
-
-
-
-
-
-
-
Morocco
-
French West Africa
-
-
-
-
-
-
-
-
-
-
-
-
Tunis
-
-
-
French West Indies
Total
-
2,290
-
-
31,000
-
-
-
3,000
36,290
-
-
These figures do not include payments made through the R.F.C. Custody Department.
Surgery Department, Division of Vonetary Research
March 29,
-
-
Preliminary Tabulation of U.S. Government Payments to other Lend-Lease Countries
July - December 1942
(Thousands of dollars)
:
:
:
:
Brazil
Costa Rica
Treasury checks
& U.S. currency
negotiated abroad
1,468
Army
500
Navy
State
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Bolivia
-
-
Venezuela
-
Colombia
Ecuador
Peru
Nicaragua
Guatemala
Salvador
Chile
Cuba
-
100
-
Guiana
Haiti
Honduras
Mexico
90,693
100
452
135,200
2,700
34,400
3,500
6,900
19,700
5,700
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Panama
-
-
Surinam
Uruguay
-
-
-
-
5,500
299
500
53,540
50,400
164
200
118
400
126
2,500
-
-
-
-
-
-
-
-
600
-
-
-
-
3,787
-
-
-
3,200
7,600
7,800
68,000
152,200
16,400
378
-
-
1,468
-
-
-
-
-
-
-
-
3,083
3,666
5,664
134,341
205,150
28,143
-
-
-
36,652
3,578
2,911
35,899
4,062
-
-
Total
1,968
-
-
Actual
Estimate
Jan.-June
1943
-
-
:::
:::
Public Purchases
1942
-
-
Netherlands East Indies
Total
-
-
Dominican Republic
::
::
Transfers made on books of N.Y.F.R.B.
2,068
9,200
621,906
-
522,800
These figures do not include payments made through the R.F.C. Custody Department.
Treasury Department, Division of Monetary Research
March 29, 1943.
Preliminary Tabulation of U.S. Government Payments to Countries Receiving
Lend-Lease Assistance, January 1 - March 17, 1943
(Thousands of dollars)
Transfers made on books of N.Y.F.R.E.
:
Total
Navy
30,000
20,000
2,000
200
500
110
British India
Other Empire Countries
:
South Africa
Army
:
:
New Zealand
1,645
13,000
1,300
:
British Empire
U.K. & North Ireland
Australia
Treasury checks
& U.S. currency
negotiated abroad
-
203
6,000
2,382
18,640
500
56,700
-
110
-
-
6,203
2,882
77,840
-
-
-
2,500
-
Other Sterling Area
Egypt
3,000
-
Fighting French Areas
250
794
Belgian Congo & Ruandi Urundi
-
55
3,000
1,049
-
-
-
5
55
-
-
Eastern Italian Africa, Eritrea
& Libya
Iraq
Iceland
Total
Other Countries
Liberated French Areas
China
Iran
-
-
20
-
869
2,711
3,049
Turkey
82
-
U. .S.R
Other L.L. Countries
Total
Total All Countries
22,450
-
10,500
-
Liberia
-
2,000
5,250
-
-
5
-
-
-
132
-
-
-
-
-
-
-
30,486
94,900
2,000
6,124
-
-
-
32,950
20
-
-
5,135
10,977
-
-
-
-
Total*
33,645
33,000
2,000
-
-
-
-
State
-
2,500
-
25,161
3,181
10,500
82
90
90
101
101
323
5,135
44,250
328
128,214
-
. These figures do not include payments made through the R.F.C. Custody Department.
250
APPENDIX C
PUBLIC PURCHASE S FROM BRITISH EMPIRE - EXCLUDING CANADA
(thousands of $)
Estimated
Country of Origin
and Cormodity
Australia
January - June
1942
1943
$ 95,000
Wool
Hyoscine Hydrobromide
Bauxite
Beryllium
Lead
Tantalite
Zinc
Zirconium
Scrap F.and N.F.
Lithium 0. and C.
Platinum
Livermeal
Tallow
Total
$
--
--
8
---
56
31
14,885
--
935
1,304
2,210
26
405
25
-----
307
--
525
40
17
10
4,190
111,594
Ceylon
362
88
6,828
7,062
2,456
14,394
1,365
11,088
1,662
9,274
Graphite
Copra
Tea
Coconut Oil
Rubber
23,477
31,102
Total
Newfoundland
380
600
Copper
Fluorspar
--
203
Lead
364
Zinc
273
275
178
--
1,105
Codfish
Egypt
Cotton
Goatskins
1,036
2,342
Total
5,000
1,600
350
7
116
116
Iron Ore
Bahamas
Sisal
5,466
1,723
Total
100
65
100
65
Total
Cyprus
-71
Chrome
Total
Source: Board of Economic arfare
71
--
251
2Estimated
January - June
Country of Origin
1942
and Commodity
1943
India
Beryllium
Chrome
Ferromanganese
Kyanite
Manganese
Mica (Block)
Mica (Splittings)
Talc Steatite
Cashew Shell Oil
Castor Oil
Peanut Oil
10
$
30
$
-
450
59
1,520
88
1,815
1,342
2,339
1,563
31
61
912
2,160
506
812
---
24
65
7,062
19,000
10,080
4,500
Sunn Hemp
125
100
Goatskins
3,209
4,315
46
75
2,570
4,000
Tea
Jute
Hog Bristles
Shellac
Cattle Tail Hair
22
50
Total
30,716
38,225
Union of South Africa
Goatskins
Asbestos
Chrone
Corundum Ore
Manganese
Vanadium
499
450
65
1,053
1,187
1,970
136
221
2,250
1,170
495
232
South Rhodesia
Asbestos
5,096
4,632
Total
-
1,843
Chrome
--
Corundum Ore
--
25
--
18
Tantalite
460
-
Total
2,346
Jamaica (W. Indies)
Goatskins
Bawxite
30
Scrap F. and N.F.
80
49
660
--
Nigeria
Goatskins
709
110
Total
1,400
--
687
Mahogany
3
Palm Oil
75
768
Palm Kernel Oil
Tantalite
Total
75
--
-
12
1,478
1,562
252
-3Estimated
Country of Origin
and Commodi ty
Sierra Leone and Gold Coast
Mahogany
January June
1942
1943
$ 294
$
-9,182
Chrome
Cocoa
382
3,720
9,476
Total
Straits Settlement
Tin
Copra
Sugar
Livermeal
Tallow
Total
1,172
1,766
1,085
620
--
368
525
1,563
--
14
Total
Cocoa
20
Rubber
20
74
Total
74
40
British East Africa
2,000
9,000
380
421
3,168
1,350
290
--
6,898
9,711
-
1,745
1,745
Total
British Honduras
750
497
Mahogany
-
14
Trinidad
Coffee
893
1,563
Cocoa
British West Africa
1,792
2,851
Grenada
Sisal
Goatskins
Coffee
Eyrethrum
Total
--
2,470
Total
New Zealand
4,902
--
2,470
Total
British Oceania
800
14
Rubber
764
1
Total
United Kingdom (England)
Benzol
Cresols
Total
498
498
4,877
1,016
--
500
1,016
5,377
253
PUBLIC PURCHASES FROM LEND-LEASE COUNTRIES, OTHER THAN BRITISH EMPIRE,
INCLUDING CANADA (thousands of $)
Estimated
January June
Country of Origin
1942
and Commodity
1943
Bolivia
Cinchona Bark
57
$
Quinine Sulphate
Totaquine
Antimony
$
213
---
14
3
1,120
Lead
Tin
716
493
390
31,800
12,100
4,260
Tungsten
10
Zinc
912
346
Copper
Rubber
323
616
1,184
1,008
Total
19,666
35,899
Brazil
1,500
2,500
--
981
Burlap
Cotton Linters
Silk
Goatskins
2,500
2
620
728
Mahogany
Pyrethrum
--
430
--
90
Rotenone
15
Cattle Tail Hair
Bauxite
80
80
--
214
Beryllium
101
50
Chrome
180
58
--
Columbite
17
Iron Ore
3,991
--
2,080
1,685
Manganese
1,504
2,700
Diamonds Industrial
750
561
Mica
Quartz Crystals
Rutile
Tantalite
3,410
8,870
37
625
327
129
128
Tungsten
Zirconium
4
21
-
114
Lithium Ore
16
3,250
337
Cocoa
Coffee
Tucum Nuts
Babassu Kernels
Babassu Oil
Cashew Shell Oil
Castorseed
Castor Oil
Cottonseed Oil
59
125
63
3,750
5,870
1,232
722
2,000
--
11
Neatsfoot oil
13
Total
360
36
39
Quricury
Kernels
Rubber
1,900
1,900
Muru Muru Kernels
Citicica oil
-
97,762
57,438
-
3,863
84
3,400
90,702
4.900
135,533
254
2Estimated
James ry June
1942
and Commodity
Chile
Goatskins
Iodine
$
Nitrate of Soda
Copper
l'anganese
Mercury
Molybdenum
.
Country of Origin
-
1943
15
35
$
640
15,000
116,720
1,523
10,000
55,900
341
128
742
370
945
Total
68,018
134,341
-
Colombia
Goatskins
59
--
Mahogany
Cinchona Bark
Palsa
Mice (Block)
Platinum
200
130
16
--
45
--
23
245
490
Quartz Crystals
Scrap F. and N.F.
---
390
400
32,004
32,713
3,433
--
Coffee
Rubber
Albarco
150
--
Abaca
-
Falsa
-
111
Cocoa
56
2,365
1,715
Coffee
Rubber
34,772
36,652
Total
Costa Rica
876
400
87
169
Cuba
675
337
Einder Twine and Rope
Goatskins
840
---
1
Henequen
2,658
1,995
Total
-20
Mahogany
Cattle Tail Hair
Loofa Sponges
Chrome
Manganese
Nickel
25
25
108
--
1,350
3,250
--
1,423
--
820
50
11
Tungsten
Copper
Scrap
1,010
2,021
110
190
Foodstuffs
Holasses
Sugar
Coffee
Total
--
400
--
35,000
164,355
1,368
143,100
910
205,150
152,249
--
255
Estimated
January - June
Country of Origin
1942
and Commodi ty
1943
Dominican Republic
Goatskins
27
9
$
S
Mahogany
8
-5
Loofa Sponges
--
1,072
Cocoa
Rice
236
295
Coffee
Sugar
760
1,317
14,775
--
26,038
Miscellaneous Foods
20
Total
Ecuador
Rubber
Coatskins
Cinchona Bark
Totaquine
1,896
--
946
22
52
9
--
8
750
420
Balsa
--
Copper
Castor seed
Cohune Nuts
Coffee
495
75
21
--
50
1,147
--
1,141
78
Cocoa
Guatenala
200
43
Mahogany
Palsa
Loofa Sponges
Chrome
Vica (Block)
Quartz Cyrstals
Scrap F. and N.F.
Coffee
168
33
---
8
18
---
68
40
390
---
25
22
6
Guianas
Rubber
Coffee
7,592
3,666
Total
70
339
39
Canada
Flax
Monomeric Vinyl Acetate
Aluminum
650
--
-
144
20
Cattle Tail Hair
Cresols
Alumina
70
378
Total
18
14
2,120
35,150
--
Chrone
25
Cobalt
3,320
Copper
6,653
3,584
Rubber
Arsenic
3,532
3,578
Total
Cinchona Bark
16,419
28,143
213
45
1,395
31,400
308
480
225
4,100
.
--
256
Estimated
Country of Origin
January June
and Commodity
1942
1943
Canada (cont'd)
Lead
$
$ 1,150
7,290
Manganese
90
1
1,023
Mercury
Mica (Block)
Nickel
Zinc
1,968
126
8
117
487
1,524
3,190
Total
Haiti
Sisal
50,823
45,778
910
1,125
75
44
188
Sugar
-
140
Coffee
2,659
1,478
2,661
--
Goatskins
Loofa Sponges
Castorseed
-5
Rubber
3
Total
3,787
5,501
Honduras
Mahogany
Loofa Sponges
Antimony
200
-
9
2
--
25
Copra
40
Coffee
233
235
Rubber
17
29
Total
Henequen
Sisal
Istle
Cotton Linters
Binder Twine and Rope
Goatskins
Mahogany
Loofa Sponges
Cattle Tail Hair
Tin
Antimony
Arsenic
Rismuth
Copper
Fluorspar
Lead
Manganese
Mercury
Mica (Block)
lica (Splittings)
Molybdenum
Cuartz Crystals
Tungsten
.
Mexico
Rubber
491
299
2,097
6,261
2,316
6,300
2,564
--
1,400
1,500
3,442
-
260
-
500
197
1,000
240
--
9
50
30
--
65
-
694
503
152
78
243
1,980
--
5,040
21,195
10,900
1,040
2,940
301
250
5,311
--
112
64
8
---
232
63
39
512
257
-5-
Estimated
Country of Origin
and Commodity
January June
1942
1943
Mexico cont'd)
$11,780
--
Zinc
Strontium
Castorseed O. or C.
80
--
188
1,000
--
Alcohol
Rice
$ 7,930
Total
2,360
767
53,540
50,473
Nicaragua
98
Mahogany
400
---
Balsa
Rotenone
19
70
Coffee
2,650
2,598
Rubber
335
217
Total
3,083
3,304
Panara
Rubber
15
88
Abaca
60
150
Cocoa
89
Total
-238
164
Peru
Rubber
197
195
--
Flax
1,200
74
158
182
302
Goatskins
Coffee
Mahogany
232
93
Cinchona Bark
Rotenone Roots
Antimony
Arsenic
--
80
--
400
119
76
405
--
Lead
2,490
463
Mercury
Mica (Block)
--
43
--
45
179
--
Molybdenum
Tungsten
Vanadium
Zinc
284
213
--
32
757
1,615
12,181
Copper
--
5
Coffee
7,812
5,664
Surinam
385
118
Total
7,817
5,664
Total
Bauxite
11,323
15,092
Total
E1 Salvador
Loofa Sponges
4,400
118
385
-6-
258
Estimated
Country of Origin
and Commodity
Uruguay
Cattle Tail Hair
Neatsfoot oil
.
Wool
January - June
1942
1943
$ 100
40
$
15
2,500
11,000
Total
2,540
11,115
Venezuela
Goatskins
93
99
Mahogany
Diamonds
16
231
Cocoa
29
75
Coffee
3,717
Rubber
207
--
5,250
--
Total
French Cameroons
Rutile
Tin
Mahogany
--
63
--
50
--
400
--
Total
513
French Eq. Africa
--
390
Cocoa
--
Lead
405
Total
1,347
324
1,347
324
Total
Madagascar
405
390
French Oceania
Copra
5,655
4,062
--
Beryllium
Graphite
Mica (Block)
6
476
588
68
172
Mica (Splittings)
Sisal
47
228
270
--
867
988
Total
New Hebrides
396
Copra
396
Total
Tahiti
--
583
Copra
583
--
China
Antinony
2,125
4,260
4
2,405
5,050
Tin
Tungsten
276
289
Goatskins
Bristles
2,800
Total
5,600
10,548
12,261
-
258
Country of Origin
and Commodity
Estimated
1942
January June
1943
Arabia
Coffee
Coatskins
$ 290
--
236
$
175
Total
290
411
Belgian Congo
Palm oil
2,254
---
Coffee
Beryllium
9
Cadmium
-
Diamonds Industrial
Manganese
Tin
35
33
1,519
568
5
Columbite
-16,300
Zinc
--
Jute
--
Pyrethrum
1,500
1,736
162
11,710
324
Total
Iran
Goatskins
720
135
20,108
16,902
--
43
Total
--
Total
--
43
Iraq
Goatskins
43
Netherland East Indies
Cinchona Bark
992
Quinine Sulphate
958
Tin
Total
Netherland West Indies
Goatskins
43
--
7,250
9,200
--
4
Total
4
Russia
Cotton Linters
--
337
Goatskins
Asbestos
127
Chrome
450
311
289
266
Manganese
--
Platinum
1,325
Goose Down
500
125
830
900
225
Total
Turkey
Chrome
Copper
Antimony (1.40)
Liberia
1,880
2,210
1,500
--
150
3,500
4,500
Total
2,030
3,710
Total
Rubber
3,292
2,393
4,500
3,500
280
APPENDIX D
U.S. General Imports and Government Purchases
from British Empire Countries
during 1942
(In millions of dollars)
Public Purchases
84
5
2
Australia
1
British India
5
16
1
76
1943
5
Union of South Africa
New Zealand
Estimated
Jan.-June
:
United Kingdom
1942
:
1942
Actual
:
General Imports
Jan.-Sept.
88
38
121
112
31
4
Other Er. Empire (excluding Canada)
Total
115
500
61
44
219
90
Egypt and Anglo-Egyptian
Sudan
14
2
6
Total, Br. Empire
(excl. Canada) and
Egypt
514
Treasury Department, Division of Monetary Research
221
96
March 30, 1943.
261
Preliminary Figures of General Imports of the
United States from United Kingdom and North Ireland
July - September 1942
(In thousands)
Whiskey
Wool manufactured and unmanufactured
Flax, hemp, ramie and manufactures
Cotton manufactures
Clay and clay products
Leather and manufactures
Furs (undressed)
Iron and steel manufactures
Books, maps, pictures, etc
Industrial chemicals
Hides and skins
Paper and manufactures
Copper and manufactures
Tulip bulbs
July-Sept.
Jan.-Sept.
1942
1942
$ 5,357
3,674
$20,766
16,326
2,217
1,013
932
8,641
3,769
3,427
882
2,871
859
3,556
543
1,533
1,581
1,330
514
418
401
322
686.
1,239
299
322
298
298
Textile machinery and parts
288
821
Cotton yarn
286
970
Coal-tar products
209
1, 803
Art works and antiques
201
1,195
Burlaps, etc. (woven of jute)
190
1,917
Tracing cloth
180
444
Platinum and platinum metals
141
590
Glass and glass products
137
469
Rayon and other synthetic textile manufactures
127
488
Diamonds
124
819
Household and personal effects
Silk manufactures
124
378
115
618
110
287
76
241
72
256
Photographic (blue and brown print and similar papers)
Medicinal and pharmaceutical preparations
Pigments, paints and varnishes
Electrical machinery and apparatus
Abrasives and manufactures
Soap and toilet preparations
Rubber and manufactures
Asbestos and manufactures
All other
Total
Treasury Department, Division of Monetary Research
72
214
71
214
70
247
40
456
35
87
2,028
7,255
$22,545
$86,114
March 31, 1943.
262
Preliminary Figures of General Imports of the
United States from Union of South Africa
July - September 1942
(In thousands)
July-Sept.
Jan.-Sept.
1942
1942
$10,909
4,653
2,208
1,804
1,342
$17,977
40,264
814
495
2,372
1,584
397
484
389
1,150
Wattle bark and extract
345
952
Lead
213
213
All other
513
1,742
$24,082
$75, 791
Diamonds
Wool
Furs (undressed)
Copper
Hides and skins (except furs)
Manganese ore
Chrome ore or chromite
Tungsten and vanadium ore
Asbestos
Total
March 30, 1943.
Treasury Department, Division of Monetary Research
3, 840
1,927
3,286
283
Preliminary Figures of General Imports of the
United States from New Zealand
July - September 1942
(In thousands)
July-Sept.
Hides and skins (except furs)
Jan.-Sept.
1942
1942
$3,620
$ 6,291
3,290
7,159
Furs (undressed)
724
1,152
Meat products
487
1,126
All other
143
598
$8,264
$16,326
Wool
Total
Treasury Department, Division of Monetary Research
March 30, 1943.
264
Preliminary Figures of General Imports of the
United States from British India
July - September 1942
(In thousands)
Raw hides and skins (except furs)
Tea and spices
Jute (unmanufactured)
Burlaps and other woven fabrics
Mica, unmanufactured, films and splittings
Manganese ore
Shellac, seed, button and stick
Almonds and cashew nuts
Carpet wool
Furs (undressed)
Oils and fats
Goat and kid hair
July-Sept.
Jan.-Sept.
1942
1942
$ 2,192
$ 6,403
1,804
7,388
4,647
26,125
4,293
1,302
1,761
1,671
1,377
1,162
842
820
702
6,515
5,580
3,527
3,614
1,541
688
1, ,410
612
Drugs, herbs, leaves and roots
378
1,027
1,310
3,449
1,050
Raw cotton
263
2,008
Kadaya and talka guns
Diamonds and other precious stones
233
970
197
746
167
581
65
5,421
Leather
Jute bags
Oil seeds
All other
Total
461
452
$19,241
Treasury Department, Division of Monetary Research March 30, 1943.
$87,605
265
Preliminary Figures of General Imports of the
United States from Australia
July - September 1942
(In thousands)
July-Sept.
Jan.-Sept.
1942
Wool
1942
$26,957
$ 97,852
3,101
2,786
2,182
8,594
511
576
Copper
427
521
Sausage casings
188
693
82
307
571
2,554
$36,805
S 120,537
Lead ores, mattes, bullion, pigs and
bars
Undressed furs
Raw hides and skins (except furs)
Zinc ores (except pyrites)
Zirconium ore
All other
Total U.S. imports from Australia
5,473
3,967
Treasury Department, Division of Monetary Research March 30, 1943.
268
Preliminary Figures of General Imports of the
United States from Egypt and Anglo-Egyptian Sudan
July - September 1942
(In thousands)
July-Sept.
Raw cotton, staple 1 1/8" and over
Jan.-Sept.
1942
1972
S 8,411
S 11,462
Arabic or senegal (acacia gum)
449
913
Flax
115
507
Sausage casings
100
123
27
58
Floral essences and concretes
All other
Total
Treasury Department, Division of Monetary Research
621
1,061
$ 9,723
$14,124
March 30, 1943.
267
U.S. General Imports from British Colonies and
Dependencies other than British India
July - September 1942
(Principal sources are given in parentheses)
(In thousands)
Rubber (Malaya, Ceylon, W. Indies)
Coffee and tea (E.Africa, Malaya & Ceylon)
Sisal, jute and henequen (W.Indies, E. Africa)
Ore & concentrates (W.Africa, Southern Rhodesia)
Hides and skins (E. & W. Africa)
Cane sugar (Oceania, Palestine & Cyprus)
S 2,516
1,844
1,549
1,468
927
747
Copper.(Southern Bhodesia)
735
Industrial diamonds (W.Africa, Palestine & Cyprus)
703
Cocoa & Cacao beans (W. Indies & W.Africa)
Asbestos (Southern Rhodesia)
Graphite (Malaya & Ceylon)
Spices (W. Indies, E.Africa)
Copra (Oceania, Malaya & Ceylon)
Coconuts & coconut oil (W. Indies, Malaya & Ceylon)
Mahogany (W. Indies)
Oil seeds (E. Africa)
Bawxite (Guiana)
Pyrethrum (E. Africa)
Essential & distilled oils (Malaya & Ceylon)
Tin (Malaya & Ceylon)
Lily bulbs (W. Indies)
Bitters (W. Indies)
Steel fanks (Malaya & Ceylon)
Bananas (W. Indies)
664
609
589
529
396
302
258
204
194
190
155
119
109
86
71
64
58
Lime oil (W. Indies)
45
Rum (W. Indies)
32
Cinnamon leaf oil (E. Africa)
Ginger root (W. Indies)
Fuel oil (W. Indies)
All other
31
18
1,262
$16,474
Total
March 31, 1943.
Treasury Department, Division of Monetary Research
Treasury Department
Division of Monetary Research
268
April 7, 1943
Date
To: Memorandum for the Files:
Sir Frederick Phillips handed this letter to
Secretary Morgenthau when he came in for a conference
on some other matter on April 5th. Secretary
Morgenthau said that the information seemed curicus
and asked me to check up to make certain that the
report had not been garbled.
Secretary Morgenthau also asked me to inform
Feis about the message. I sent a copy to Feis and
he said they were very interested in it and would
make further investigation.
H.D.W.
MR. WHITE
Branch 2058 Room 214
19
269
THE BRITISH SUPPLY COUNCIL IN NORTH AMERICA
Box 680
BENJAMIN FRANKLIN STATION
TELEPHONE EXECUTIVE 2020
WASHINGTON D.C.
Hohillips
BRITISH SUPPLY COUNCIL IN NORTH AMERICA
Box 680
NE EXECUTIVE 2020
BENJAMIN FRANKLIN STATION
WASHINGTON D. c.
April 7th, 1943.
SECRET
Dear Dr. White:
as follows:
The gold and dollar figures for March, 1943 are
Mch. 5
Total Gold
Official dollar balance
Total Gold and Dollars
Mch.12
Mch.19
Mch.27
1035
905
906
906
170
169
177
195
1205
1074
1083
1101
--
Less: Belgian Gold
105
--
Scattered Gold
109
122
122
115
10
10
10
10
981
942
951
976
Gold Reserve against
immediate liabilities
AVAILABLE GOLD AND DOLLARS
You will remember that the Belgian Gold was paid
off on March 9th.
Yours sincerely,
A.T.K. Grant.
H.D. White,
Director of Monetary Research,
United States Treasury,
Washington, D. C.
Treasury Department
Division of Monetary Research
271
O
Date April 7, 1943
To:
From:
19
Secretary Morgenthau
Mr. White
Subject: German Gold Movements.
1. believed to have plenty
of gold. Germany
paying for imports
in
In is gold,
Germany relieves the strain on production.
Within the three-month period, December 1942February 1943 Germany disposed directly of
about $51,200,000 worth of gold as follows:
Germany to Portugal
Germany to Sweden
Germany to Switzerland
Germany to Rumania
$8,000,000
7,400,000
3,760,000
32,000,000
: 51,160,000
2. In addition $12,300,000 worth of
gold sold by Switzerland to Spain is stated
+ be almost certainly of German origin.
(F.F.C. Despatch Analysis, 4/6/43)
Hause
272
BRITISH FINANCIAL CENSORSHIP SUMMARY ON
GERMAN GOLD TRANSACTIONS AND HOLDINGS
DATED MARCH 20, 1943:
GOLD TRANSACTIONS AND HOLDINGS
From confidential telegrams and M.E.W. 's periodic Financial
Intelligence Reports it is shown that during the period December 1942
to February 1943 Germany disposed directly of about $51,200,000 worth
of gold and that an additional $12,300,000 worth sold by Switzerland
to Spain is almost certainly of German origin. The total for the
three months of 363 million is made up as follows
(a) Germany to Portugal
(b) Germany to Sweden
(c) Germany to Switzerland
(d) Germany to Roumania
(e) Switzerland to Spain
$8,000,000
7,400,000
3,760,000
32,000,000
$51,160,000
12,320,000
$63,480,000
(a) Germany/Portugal
The gold is sold direct by the Reichsbank to the Bank of
Portugal against Escudos and is deposited in Switzerland to account
"C" at the Swiss National Bank. The Escudos no doubt are used to
pay for German purchases of goods and other services.
(b) Germany/Sweden
Reichabank, Berlin places the gold at the disposal of
Riksbanken, Stockholm with the Swiss National Bank, Berne. This
covers dues for German troops and material sent across Sweden to
Norway and Finland.
(c) Dermany/Switzerland
In this case the metal (about 3 tons) accompanied by Reichsbank officials is reported to have passed through Basle on 1st December,
presumably to be sold to the Swiss National Bank.
(d) Germany/Roumania
It is reported that the German Government have shipped 30
of gold (approximate valud $8,000,000) to the Roumanian National to be
tons Bank in order to enable Roumanian exporters of goods to Germany
CC: 4/3/43 Messrs. Pehle, Schmidt, Fox, Richard, E.M. Bernstein,
Delman (Control), Bray, White, Fuxford
273
-2-
paid. imports This from is Roumania tantamount in to saying that Germany is
relieves the strain gold, which should suit her paying forplenty
her
of gold. If Germany on production and she is believed very to well. It
gold presumably
orthan
is blocked
unwilling
to goods,
have then
appeals tocannot
Roumania more
supply marks.
(e) Switzerland/Spain
(10,000 The Instituto kilos) from Espanol de Moneda Extranjera, Madrid
gold bable that they paid the Swiss National Bank, Berne boughtthethis
German Swiss francs sources. by sales It is for of probable it gold. with that Swiss Germany francs originally accrued to and acquired them it from is pro-
274
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE
TO
FROM
Secretary Morgenthau
Frances McCathran
April 7, 1943
CONTROVERSIAL ISSUES BEFORE CONGRESS
1. Farm Parity - Descite Senator Bankhead's claim in Senate
debate yesterday that his bill to include all government
subsidies in parity calculations had been "misrepresented"
by Administration forces to the effect that it would raise
all food prices, every indication points to failure by the
farm bloc to override the President's veto when the Senate
.eets today at noon. Yesterday, opening the first day of
debate on the President's veto, SBW the supposedly air-tight
coslition welded together by the farm bloc crumble with
amazing rapidity under pressure from Administration and
labor sources. Chiefly responsible for the sudden split,
according to Senator Bankhead, is Stabilization Director
Byrnes who had been "actively contacting Senators for the
last 48 hours. 11 Mark Sullivan in his column this morning,
however, explained the about-face on the grounds that many
Senators "felt that having expressed their reproof to the
President by the original passage, they were now free to
consider the bill in the light of its effect on cost of
living and inflation." But whatever the cause, Senator
Bankhead yesterday conceded SO many votes that he moved the
bill be recommitted to the Senate Agriculture Committee in
a maneuver to prevent its complete defent. This motion,
which has been made the first order of business when the
Senate meets today, will be fought by Administration subporters headed by Majority Lender Barkley as "2 shotgun
behind the door, it a weapon always at the disposal of the
form bloc whenever it finds itself displeased ith Executive hostponed
policy. Meanwhile, hearings on the Pace Bill were
until tomorrow by a chagrined Senate Agriculture Committee
yesterday when the first three witnesses, Food Administrator Davis, Price Administrator Brown, and Secretary Wickard,
failed to appear because of a "comedy of errors."
2. Civilian Supply - WPB Chairman Nelson yesterday testified
before the Senate Banking and Currency Committee against
275
the Maloney Bill to create an independent Office of Civilian
Supply instead of the agency now under the WPB. While ad-
mitting that essential civilian goods were "just as neces-
sary" 8.8 military supplies, Nelson claimed one agency should
have control over both. He added that enactment of the
bill would "merely add to the confusion" by super-innosing
a new materials claimant agency to "cut across all others.
3. American History - The Senate heard with some amusement and
alarm yesterday of the "pitiful ignorance" of the vital
facts of United States History on the part of college fresh-
men as revealed in a survey made by the N.Y. Times. Senator
Guffey introduced a resolution, which was referred to the
Committee on Education and Labor, providing for the creation
of a subcommittee to study methods by which the Federal
Government could promote more adequate instruction of the
subject.
276
Her
NOT TO B. Re-TRANSMITTE
if
COPY NO.
BRITISH MOST SECRET
U.S. secret
13
OPTEL No. 114
Information received up to 7 , 7th April, 1943.
1 NAVAL
The SUEZ CANAL was accidently blocked from 4th to 6th due to the
Inding of ontoon 6 miles north of SUEZ. Attacks by a pack of U-boats riguinet
0 homeward convo/ south east of GREENLAND started on morning of 5th and aircraft
from ICELAND (c) reported sighting 3 U-boats. During 5th/6th 16 unsuccessful itkots were made and several U-boats are considered damaged by the escorts. Aircraft
so side 5 attacks. At 7 p.m. 6th 55 ships were present, 3 had been sunk and there
ero 3 stregglers. in 7,000 ton merchant ship bound from CANADA for AFRICA and
ADIA, lorgedoed south of VALFISCH PAY on 2nd. Ship is nground with back broken.
12 missing out of 315 on board.
MILITARY
TUNISIA. To 3 p.m. 6th. 8th Army. At 1:15 N.C. 6th, 13th Corps
in complete darkness without soon and supported by 450 uns attacked the centre
to position on the WADI AKARIP. he resust was completely successful, all
this objectives were captured by 6:30 B.M. Enemy resistance on the orgunized
1033 tion appoars to have collapsed and at 11 c.m. move of 10th Corpo started with
... Zenland Division leading. Many orisonora have been taken and heavy fighting in
continuing.
U.S. Sector. On 5th evening on onemy foree including 75 tanks was
sean moving westwards .long the road south of DAESL BERDA (fosture about 10 miles
southerst or EL GUETTAR). Infantry was seen debussing at n point 5 miles along
this road from BIR OU. L. An attack on 6th by U.S. forces south of the G.FSA-
G.B.S rond failed to make progress.
3. AIR OPERATIONS
WESTERN FRONT. 6th. Mosquitos and Typhoon attacked railary centro
it NAMOR, an airfield at ST. OHER and a stool orks at CASI.
6th/7th. Aircraft despatched - sea mining 47 (2 missing); Intruders
3; onti-shipping 3.
TURISIA. 4th/5th. Vollingtons and H lifaxes dropped 76 tons of H.
on SFAX. Other Hellingtons attacked the docks at TH PANI.
SICILIAN CHANNEL. On 5th 20 U.S. Lightnings intercopted about 90
enemy aircraft mainly JU 52's. 16, including 11 JU 52's, were destroyed and others
demeged l'or the loss of 2 Lightnings. Escorted U.S. Mitchells attacked is convoy
north of CAPE BON. 1 destrofor nunk, 3 chipa loft in flames and 2 bargos damaged.
itchell missing.
277°
April 8, 1943
10:10 a.m.
"SECOND WAR LOAN" SPEECH
Present: Mr. Gaston
Mr. Lindow
Mr. Peabody
Mr. Schwarz
Mrs. Klotz
H.M.JR: I thought this: I will know by tomorrow
noon when I see the President, when I get a clearance, but
we did get this - OWI has cleared it. I wasn't satisfied
and got a note from the "ar Department. "Here is a copy of
the Secretary's speech which was sent to me. 10 It has the
enthusiastic approval of the War Department."
MR. PEABODY: Fine.
H.M.JR: So we cleared that. what I thought I would do
is this. I thought that we could put this out over the
Federal Reserve wires to the twelve Federal Reserve Banks,
and ask them to see that it gets publicity in Tuesday morn-
ing's paper in their locality. You could even get it in
their hands Saturday morning if you wanted to. It would go
out of here Friday night and be in their hands Saturday
because they would have to mail it out.
You see, the Federal Reserve has altogether a hundred
and two or a hundred and four branches. what do you think
of that?
MR. PEABODY: I think it is fine. I think also-H.M.JR: On the wire to the twelve presidents - you
have your publicity men there?
278
2-
MR. PEABODY: I want those.
H.M.J.: That is why I got you in here.
MR. PEABODY: This is really our basic document, Mr.
Secretary. This is the keynote of the whole thing.
H.M.JR: That is what I worked SO hard on it for.
MR. PEABOLY: Therefore it should not only go out on
the wires. I was wondering if we here shouldn't send out
multigraphed copies of it in quantities to the publicity
men. Of course, they could do that - they could nick it
up from the wires and do it themselves, and probably would
on instruction.
Mr. GASTON: If you got it out today we could probably
get it everywhere by mail to the publicity men.
H.M.JR: No, I am seeing the President tomorrow morning
and when I come back we will know yes or no. The worst
thing in the world is to send it out and recall it.
MR. PEABODY: Furthermore, I would be a little bit
afraid, with all of these publicity men, if this thing gets
there. even though you have a release date of Tuesday morning,
somebody is apt to break over the traces and give out a part
of it. So I wouldn't want it to get to the publicity men in
that form before Monday, at the earliest. Would you, Chick?
H.M.JR: After what we have been going through - I
think the Federal Reserve should be on the wire Sunday night.
Somebody should come down here - not give it to them until
Sunday night, and then ask them to put it on the wires Sunday night.
MR. SCHWARZ: In addition to that, if your Federal Reserve too
publicity men make too many copies, you are going to have
many errors along the line. We have one correct version.
PEABODY: AS far as the publicity directors - I am
thinking nov, not of local releases in the papers - they basis are
regarding this as a basic document and using it as a
for other things they will do. For that purpose they don't
need to have it until Tuesday.
279
-3H.M.JR: No, but that-MR. GASTON: I think they ought to have it on Monday
because I think in many cases they can get the full text
in a local paper, or substantial quotes, that the AP and UP
will not carry.
MR. PEABODY: I didn't make myself clear. I think
that ought to be done, but I am talking about, again,
a mimeograph of this that they might send. The publicity
men from here want the full speech which they can then use
with their people.
H.M.JR: There isn't a Federal Reserve that doesn't
have a mimeograph outfit.
MR. SCHWARZ: They all have their own.
MR. PEABODY: That would be all right.
H.M.JR: You send then instructions.
What about these statistics? these are to go with it the statistical background?
MR. PEABODY: I don't know about that, sir.
H.M.JR: Didn't you-MR. GASTON: Lindow worked on that thing. We ought
to get it out - we ought to get it out by tomorrow.
H.M.JR: Bell should be satisfied with - look, can I
pin this on you - this whole business of handling this?
MR. PEABODY: Yes, sir.
H.M.JR: Will you take the responsibility?
MR. PEABODY: That is to see that it gets on the wire?
H.M.JR: Yes.
280
-4MR. PEABODY: And again, this statistical background -
I don't know the story of that.
H.M. JR: Do you know it?
MR. SCHWARZ: No.
H.M.JR: Herbert, you go to your meeting, and when you
come back have these two men come to you and explain it.
will you, when you come back? Let's place the responsibility
for getting this out with Peabody.
100. GASTON: Both of them?
H.M. JR: The whole business. I mean, this is the thing
which should set the tone of the whole thing.
(Mr. Gaston left the conference.)
MR. SCHWARZ: Fundamental subject matter.
Mr. PRABOLY: Incidentally, I haven't read it yet.
H.M.JR: haven't you?
MR. PEABODY: No, sir. I don't suppose we have many
copies.
H.M.JR: I tell you what I will do.
MRS. KLOTZ: Have it copied.
H.M.JR: At ten-thirty I will send my copy down to you
and after - I will have the messenger wait there while you
read it, and then he can bring it back. From now on I am
not going to let any copies of my stuff go out. I mean,
I am just going to - you know what I went through with all
the press boys. You see, my statement I read Monday on the
hill, which wasn't for release, through some very mysterious
way it appeared at eleven o'clock in the Washington News.
I will send this down to you. You read it and the messenger
will wait and it will come back.
281
-5- -
(Mr. Lindow entered the conference.)
H.M.JR: Lindow, neither Peabody nor Schwarz seem to
know anything about this statistical stuff which is to go
back of this speech.
MR. LINDOW: 1 am working on that right now.
H.M.JR: Don't keep it a secret.
MR. PEAFODY: Wasn't Ted handling this thing?
H.M.JR: No, not that I know of. Gamble hasn't, has
he?
MR. LINDOW: No.
MR. PEABODY: The point I was going to make is there
isn't any particular point why Lindow should have to come
to me with this.
H.M.JR: Gaston-MR. LINDOW: Gaston knows about it.
H.M.JR: When he comes back, Mr. Gaston will send for
the three of you. Be sure Mr. Bell knows about it and is
happy about this, because up to now he hasn't been.
The idea was, these men, Smith and Albee - it was their
idea that if this could go out and get into the hands of the
financial writers, and so forth, they would get the basic
material which this speech is based on, or, in other words,
Lindow's sales talk - the basic material. It was to go out
and get in the hands of these men sufficiently in advance
so that they could have it. I think what we ought to do is
call all of this association - appointed Treasury men - the
War
men the Press Association appointed to help us with the
Bonds, and I think in addition to sending it out there
should be a press conference for them, at which Lindow
should explain this stuff.
282
-MR. PLABODY: I think that would be splendid. That
will stimulate an awful lot of other stories.
H.M.JH: And they ought to have that. They ought to
give that to them Friday afternoon. I will tell them so
at my press conference.
MR. SCHWARZ: Fine, because all of them have assigned
more than one man to work on it.
H.M.JR: I would give it to them Friday afternoon -
the basic material.
MR. SCHWARZ: I want to send out the speech to editorial
writers and the labor and farm press. There is a question
about the weeklies.
H.M.JR: If you are going to do that, then you might
just as well show them the whole thing Friday afternoon.
MR. SCHWARZ: They wouldn't get that in the mail
until Monday.
HM.JR: I mean you might as well give them my speech
plus the basic material. I mean these men here - they
don't want to be scooped. Talk it over. Talk it over with
Gaston. The three of you see Gaston this morning and work
the thing out.
What is Frank Tripp and his organization doing?
MR. PEABODY: They are working on more or less the
business end of the thing, Mr. Secretary. In other words,
currently their activity is getting their newspapers to
get sponsored ads; also they are doing some work on stimulat-
ing features, and carrier-boy activity. That is, I think -
we have to handle that - I don't think that Frank Tripp,
frankly, is going to do very much effective work on the
editorial straight news end of it.
MR. SCHWARZ: I don't see how he can, but he has gone
around to see these people and stimulated them.
283
-7 MR. PEABOLY: And he has gotten their interest up
through all sectors of the newspaper plant. I think he
has done that, but we have to restimulate certain of those
sectors ourselves.
H.M.JR: Well, he got these various press associations
appointed.
MR. PEABODY: that is right, but they are right here.
They are men who are working with Chick.
H.M.JR: I sent you a little note as to who - you will
get it in time - I mean, those two paid ads. Yesterday I
was curious about who wrote them and who sponsored them.
MR. PEABODY: Yes, in washington?
H.M.JR: Yes, they are very good.
MR. PEARODY: We got a good picture this morning on
the front page, didn't we, after the orgy over at the
White House.
H.M.JR: O.K.
MR. PEABODY: Mr. Secretary, our date with Stouffer at
three - in other words, do you expect to read that (indicating
speech) this afternoon?
H.M.JR: Yes.
MR. PEABODY: I don't need that, because I will hear
it this afternoon.
H.M.JR: No, no - I am going to work with him entirely
alone.
MR. PEABODY: All right, that is fine.
H.M.JR: If I am going to go through with it, I am
going to do it quite alone. He will be here at--
284
-MR. PEABODY: He will be here at three o'clock.
H.M.JR: I am going to have him quite alone.
MR. LINDOW: air. Secretary, you spoke of sending
copies of the speech up to Smith and Albee. I think we
ought to do that today so they have it by tomorrow, don't
you?
H.M. JR: Better wait now until the resident sees it,
because I wouldn't change it for anybody now anyway, except
the President of the United States. I mean, I am not going
to change it for anybody now.
L
285
April 8, 1943
10:21 a.m.
HMJr:
Hello.
Operator:
Mr. Cowles.
HMJr:
Hello.
Operator:
Go ahead.
HMJr:
Hello.
Gardner
Cowles:
Good morning, Mr. Secretary.
HMJr:
How are you?
C:
Fine, sir.
HMJr:
Say, here's another funny one. You've been
sending over somebody the last time or two
to my press conference, which is quite
acceptable to me. In fact, I'm a little
flattered. But our Treasury press boys don't
like it. Some row that you ve had about the
food - but I personally don't see why any
Government employee that wants to come
shouldn't come to my press conference. Do
you know anything about this?
C:
HMJr:
(Laughs) No, I don't. I'll check into it.
Because we're having one at 10:30. It has
something to do about - have you people done
anything about saying that they can't cover
this - this food conference?
C:
No, the President did that.
HMJr:
Oh.
C:
Elmer and Steve Early and Byron Price have
been swinging him around to the other point
of view, and they've got him about two-thirds
swung around.
HMJr:
C:
I see.
So it's going to be opened - about to become
quite an issue with the press, however.
286
-2HMJr:
Well, I mean just because this fellow happens
to be somebody that's not very important, I'm
not going to let them pick on him.
Well, they just don't want him in the room, is
that it?
C:
HMJr:
So I understand.
C:
That seems a little silly to me.
HMJr:
It seems silly to me, and I think it's - I was
C:
Hell, no !
HMJr:
going to ask your advice, but I don t see why
I should buckle under on a thing like that.
What?
I - I would say you could have anybody present
C:
HMJr:
that you wanted. Be entirely up to you, not
to the press, as to who is present.
I wanted
Well, that's what it seems to me. But
to talk to you about it.
C:
It is not important to us though, one way or
HMJr:
No, I'm flattered that he comes. (Laughs)
the other, 80
C:
It makes me feel very important.
(Laughs)
C:
I say it makes me feel very important.
Fine, fine.
HMJr:
All right.
HMJr:
C:
Thank you, Mr. Secretary.
HMJr:
You're welcome.
2872
April 8, 1943
10:58 a.m.
Operator:
Go ahead.
HMJr:
Peabody?
Stuart
HMJr:
Yes, sir.
How did you like the - the talk?
P:
I think it was splendid.
HMJr:
Do you
P:
I took the liberty of reading it to Mr.
Peabody:
Gamble and Mr. Robbins and Mr. Buffington
and Mr. Bell.
HMJr:
Oh.
P:
I was in a meeting here when it came in.
HMJr:
Oh, I see.
P:
And everybody here was tremendously en-
thusiastic about it. I think it's a - a
marvelous job, Mr. Secretary.
HMJr:
Well, I had mighty good help.
P:
Well, it really is - for our purposes
(Laughs) and, of course, I always think
about our purposes
HMJr:
P:
HMJr:
P:
That's right.
....of getting this money, it couldn't it simply couldn't be better.
Well, that's - that's what I wanted to know,
and there's no reason for you to say it
if you don't believe it.
I - I wouldn't. I wouldn't, and I believe
it thoroughly. I think it S a magnificent
job.
HMJr:
Good. Now I'd like to make this suggestion -
well, I - I like it. I think it's the best
I've ever done.
288
-Yes.
P:
HMJr:
I have in my hand here an ad, a full-page ad, in
the Chicago Daily Tribune.
HMJr:
Yes, sir.
"A Call to Every American."
P:
Yes, I've seen it.
P:
HMJr:
Now I think it would be rather effective when we
go up on The Hill -- whenever it is, Tuesday or
Wednesday -- to explain this thing to the House,
that if on some of these boards we could have
some of this advertising and - say, pinned up
on some boards and let
P:
HMJr:
P:
Well
them look at it?
here's what we're doing on that. Ted Gamble
has arranged 80 that on that day we are going to
have an exhibit showing ads that appeared the day
before.
HMJr:
Wonderful.
P:
In other words, this happened just yesterday
HMJr:
Yes.
P:
HMJr:
you see? He - he's got that thing set up so
I think it 8 going to be a very good show.
Well, have you - you've seen this Daily Tribune
ad.
P:
Yes, sir, I have. It's a corker.
HMJr:
Oh, I - now would you mind finding out who - who
prepared that?
P:
HMJr:
No, I'11 be very glad to. It's the boy with the
bugle, isn't it?
That's the boy with the bugle.
289
-3P:
Yeah.
HMJr:
Right.
P:
I think our people out there - I can find the you mean the agency?
HMJr:
Yes.
P:
Yeah.
HMJr:
Yes.
P:
Yeah, I'11 do that, Mr. Secretary.
HMJr:
Thank you.
P:
Righto, sir.
230
April 8, 1943
11:43 a.m.
HMJr:
Hello.
Operator:
Mr. Welles will not be available for about
HMJr:
All right. Thank you.
Operator:
They'11 call you.
HMJr:
Well, all right, thank you.
Operator:
Right.
five minutes.
11:52 a.m.
Sumner
Welles:
Good morning, Henry.
HMJr:
How are you, Sumner?
W:
I'm fine, thanks.
HMJr:
Summer, the newspaper boys at my press con-
ference told me that at 2:30 this afternoon
Sir Federick Phillips is holding a press
conference.
HMJr:
Oh, really?
Now I have all week gotten the press to play
down the fact that there's competition between
these two plans.
W:
Yes.
HMJr:
And the American press has been awfully good
W:
W:
HMJr:
W:
about it.
Very.
And I think that they've - if it weren' for
these damn stories always coming out of London
that it would be all right.
Yeah.
291
2-
HMJr:
W:
HMJr:
And I was going to suggest to you, if you
thought well of it, that you might call up
Halifax and caution him on this thing.
He won't be back until Saturday, but I'11 get
hold of the - I'11 get hold of Campbell.
And - that's No. 1 - and I mean it's sort of
unusual for Phillips to hold a press conference but
Yes.
W:
that's that
HMJr:
W:
HMJr:
Yes.
and the stuff - I don't know whether it
W:
was you that told me, this paper which did
print the thing was the paper which was
I told you
HMJr:
Oh, you did.
W:
I told you, yes.
HMJr:
All right.
W:
Yes.
HMJr:
Then, the other thing, you know, after months -we've circulated it around and Hull's signed
it and the President and everybody -- that when
the English balance has reached a certain level
we'd begin to cut down on them, you see?
W:
Yes.
HMJr:
Well, Phillips has been doing regular lobbying
W:
Hmmm.
all over Washington
against this
HMJr:
W:
HMJr:
Hmmm.
and I understand that Stettinius now 18
thinking of changing his mind. Well, we told
(cont.)
292
-3HMJr
him if he does, he'd better put it in writing.
(cont. )
Yeah.
W:
HMJr:
W:
HMJr:
But it was Stettinius who raised the thing in
the first place before he got his bill through.
Yes.
Because he was so worried that if the British
dollar balances were too high, he couldn't get
his legislation through.
W:
I remember very well.
HMJr:
Well, if - if - it isn't just a - I don't think
it' 8 a day-to-day - proposition, and I - I just
don't like - I mean I try my damndest to all
the time keep these little things from getting
big, but I think what the British have done this
last week - it - it strains one's sense of
humor, if you can say that.
W:
HMJr:
W:
HMJr:
W:
Well, that's putting it very mildly.
I mean it isn't funny.
No, it's not.
And
It'e not only not funny, but it's singularly
shortsighted.
HMJr:
Yes, and 80 - you know what - I mean Hull's
signed it - you most likely - it passed over
your desk too.
W:
Yes, yes.
HMJr:
Well, if it - just bear it in mind, and I
thought some time you might say something to
Halifax when you see him.
W:
HMJr:
I will. I will.
Yes.
293
-4. -
W:
I'11 do both things, and I'll get hold of the -
HMJr:
Yeah, and the other one.
W:
first point you mentioned immediately.
But I think that particular man is about the
most difficult person to handle that I've come
in contact with.
HMJr:
W:
Well, up to now, of course, he's always been
very cooperative, and when I've met anybody who's
over here, Cabinet people, they always says, "Well,
how about Phillips?" and I always say, "He's fine.
Yes.
HMJr:
And I think it's - I'm the only person who ever
W:
(Laughs)
HMJr:
says he is fine.
And I think his whole tenure of office is based
on the fact that he's supposed to get along with
me
W:
HMJr:
W:
(Laughs)
which he has up till now.
Yes, well
HMJr:
But he's kind of pushing me around now.
W:
Hmmm. Well, I mean - he better learn caution.
HMJr:
Pardon?
W:
HMJr:
W:
He'd better learn caution.
I think so.
Yeah. I'll take care of it at once.
HMJr:
Thank you, Sumner.
W:
Thanks, Henry. Goodbye.
2942
April 8, 1943
12:06 p.m.
Sir Fred.
Phillips:
Is that Mr. Morgenthau?
HMJr:
Speaking.
P:
Oh, Phillips at this end.
HMJr:
Yes.
P:
Look here, Mr. Morgenthau, it does - it looks
HMJr:
Yes.
as though I can't escape seeing some of these
press fellows
but I'll keep off any discussion of the -
P:
any comparison of the two plans.
HMJr:
Yes, I
I'11 simply give them details - give them
P:
more details of ours if they want it.
HMJr:
Yes, I've tried terribly hard to stop this
sort of a building up of competition between
the two plans.
P:
Yes.
HMJr:
And our American press has been very good
P:
Yes.
HMJr:
And I heard you were going to have a press
P:
it.
Well, I wasn't too certain, but the last news
HMJr:
I see. And - well, as I say, 80 far I think
P:
Yes, there's some queer bits in it. That
about it.
conference, and I was a little worried about
makes it clear we've got to - got to see them.
the American press has treated it very well.
New York Mirror seems to have got a rather
295
-2HMJr:
I - I don't take the Mirror. I don't - I don't
P:
(Laughs)
HMJr:
Well, what do they say?
P:
Oh, a general interference with national sovereignty
HMJr:
Oh. Well, that's Hearst, you know.
P:
Yeah.
HMJr:
and so on.
That's - that's Hearst's paper. I - I - that's
one of those papers that don't come to my desk.
P:
Yes.
HMJr:
Okay.
P:
Righto. Thank you.
TO:
the while
296V
This is from office
of Cenver ship
1/8/23
From: Lieut. Stephens
297
CONFIDENTIAL
information was taken from private communications, and its extremely confidential character must be should preserved. it be
NOTICE-Tha attached to those officials whose knowledge of it is necessary to presecution of the war. in no case
FILED & COPIED 4/6/43
PASS G 9
BYRON Director.
information
strated must of be copies confined made, only or the information used in legal proceedings or is any other public way without express consent PRICE, of the
@GODMAN
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26006 FOLLOWING FROM TREASURY FOR PHILLIPS MY IMMEDIATELY PRECEDING TELEGRAM THE FOLLOWING NOTES ARE FOR THE GUIDANCE OF THE PRESS ONLY THEY MUST
NOT BE QUOTED AS OFFICIAL
INTERNATIONAL CLEARING UNION
THE FOLLOWING NOTES INDICATE THE CHIEF PURPOSES OF THE SCHEME:
FOR AN INTERNATIONAL CLEARING UNION WHICH HAS BEEN PUT FORWARD BY
DIRECTION OF HIS MAJESTYS GOVERNMENT FOR DISCUSSION BY THE UNITED NATIONS
AND SOME OF ITS ADVANTAGES AS SEEN BY THE EXPERTS BY WHOM THE SCHEME WAS
DRAWN THE CHIEF PURPOSES MAY BE SET OUT AS FOLLOWS (1) TO PROVIDE A
GENERALLY ACCEPTABLE MEANS OF PAYMENT BETWEEN NATIONS (2) TO ENSURE THAT
ANY ALTERATIONS WHICH TAKE PLACE IN THE EXCHANGE VALUES OF NAT IONAL
CURRENCIES ARE MADE AS THE RESULT OF AN ORDERLY INTERNATIONSL PROCEDURE
AND NOT BY UN L ATERAL ACTION (3) TO RELIEVE FROM EXCESSIVE STRAIN ANY
NATION WHICH IS SUFFERING FROM TEMPORARY DIFFICULTY IN MEETING ITS
(CONTINUED)
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OBLIGATIONS TO MAKE PAYMENTS ABROAD WHILE AT THE SAME TIME SUBJECTING IT TO
A GRADUAL PRESSURE TOWARDS RESTORING A POSITION OF BALANCE ALL THESE PURPOSES ARE OF COURSE SUBSIDIARY TO ONE MAIN PURPOSE THE PROMOTION OF A
STEADY EXPANSION IN THE FLOW OF INTERNATIONAL TRADE AND SO OF AN IMPROVEMENT IN THE S TANDARD OF LIFE OF THE PARTICIPATING COUNTRIES THE PREFACE
TO THE SCHEVE NOW PUBLISHED IN THE WHITE PAPER EMPHASISES THAT THE PLAN
MUST OPERATE NOT ONLY TO THE GENERAL ADVAN TAGE BUT ALSO TO THE INDIVIDUAL
ADVANTAGE ON EACH OF THE PARTICIPANTS AND MUST NOT REQUIRE A SPECIAL ECON
OMIC OR F INANCIAL SACRIFICE FROM CERTAIN COUNTRIES IT IS NOT THE PURPOSE
OF THE CLEARING UNION TO TAKE OVER EITHER THE TASK OF FINANCING RELIEF
AND RECONSTRUCT ION AFTER THE WAR OR THE LONGER TERM PROBLEM OF FI INDING
MEANS FOR DRAWING OFF THE PERMANENT SURPLUSES OF CREDITOR COUNTRIES TO
PROVIDE RESOURCES FOR RAISING THE STANDARDS OF UNDEVELOPED AREAS THESE
(CONTINUED)
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ARE THE TASKS OF OTHER BODIES IN A SENSE THE INTENTION OF THE CLEAR ING
UNION IS REMEDIAL RATHER THAN POSITIVE TO AVOID DEFECTS AND FREQUENT BREAK
DOWNS OF THE PREWAR MONETARY ARRANGEMENTS FOR F INANCIAL I INTERNATIONAL TRADE
IT IS IN EFFECT AN ATTEMPT TO APPLY THE BANKING PRINCIPLE LONG FAMILIAR IN
THE DOMESTIC FIELD TO THE INTERNATIONAL FIELD BEFORE THE 18TH CENTURY PAYMENTS BETWEEN INDIVIDUALS AS WELL AS BETWEEN COUNTRIES WERE CHIEFLY MADE
BY MEANS OF GOLD AND SILVER WHEN A CREDITOR WAS PAID THE CURRENCY THE RECEIVED DI SAPPEARED FROM CIRCULATION UNTIL THE TIME CAME WHEN HE HIMSELF
CHOSE TO RESPEND IT THIS TENDENCY TOWARDS THE WITHDRAWAL OF THE AVAI LABLE
MONEY FROM USE HAD PROVED THROUGHOUT THE RECORDS OF CIVILISATION A GREAT
CAUSE OF HINDRANCE TO THE GROWTH OF TRADE AND ENTERPRISE IT WAS THE
GRADUAL EVOLUTION OF THE BANKING PRINCI PLE WHICH MITICATED IN THE COURSE
OF THE NEXT TWO CENTURIES THIS RETARDING FORCE FOR WHEN PAYMENTS ARE
MADE BY THE TRANSFER OF BANK DEPOSITS THAT IS TO SAY BY BOOK ENTRIES IN
-3-
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THE RECORDS OF THE BANKING SYSTEM THERE NEED BE NO WITHDRAWAL OF LOANS
FROM ANY DEBTOR INASMUCH AS THE OUTSTANDING BANK ADVANCES REMAIN BALANCED
THROUGHOUT WI TH THE DEPOSITS THE SURPLUSES OF THOSE WHOSE SALES FOR THE
TIME BEING EXCEED THEIR PURCHASES CONTINUE TO BE AVAILABLE TO FINANCE
THOSE WHOSE PURCHASES FOR THE TIME BEINC EXCEED THEIR SALES FURTHER THE
TOTAL VOLUME OF BANK ADVANCES AND BANK DEPOSITS CAN BE EXPANDED IN HAR
MONY TO MATCH THE SECULAR GROWTH IN POPULAT ON AND TRADE BOTH THESE ADVANTAGES NEEDED THE DEVELOPMENT OF CENTRAL BANKING TO BRING THEM TO
FULL FRUITION AND THE TECHNIQUE OF MAINTAINING A STEADY V OLUME OF PURCHASING POWER IN CIRCULATION IS NOT EVEN YET COMPLETE BUT IN THE INTERNAL
ECONOMY OF COUNTRIES THE SIGNIFICANCE AND ESSENTIAL VALUE OF THE BANKING
PRINCIPLE ARE NOW RECOGNISED BEYOND ANY QUESTION INTERNATIONALLY HOWEVER
APART FROM A FEW TENTATIVE EXPERIMENTS AND SPECIAL RELATIONSHIPS THE
WORLD HAS STILL CONTINUED IN THE MAIN WITH THE PRACTICES WHICH NATIONALLY
-4-
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WE AND OTHERS BEGAN TO GIVE UP AT THE END OF THE 17TH CENTURY SETTLEMENTS
BETWEEN COUNTRIES WERE STILL BEING MADE BEFORE THIS WAR IN TERMS OF THE
PRECIOUS METALS WHICH ONCE THEY HAD BEEN RECEIVED WERE ENTIRELY WITHDRAWN
AS A MEAN S OF CARRYING ON INTERNATIONAL TRADE UNLESS AND UNTIL THEY WERE
SUBSEQUENTLY RELEASED TO MEET A DEB IT PAYMENT THE APPLICATION OF THE
BANKING PRINCIPLE BY THE PROPOSED INTERNATIONAL I INSTITUTION ALLOWS IT TO
OPERATE WITHOUT ANY FINANC IAL CONTRIBUTION FROM THE PARTICIPANTS A PRIVATE C ITIZEN WHO HAS A BANK DEPOSIT DOES NOT REGARD HIMSELF AS SUBSCRIBING
TO A FUND FROM WHICH SOME OTHER INDIVIDUAL WHO HAPPENS TO BE BORROWING
FROM THE SAME BANK CAN DRAW IF HE HOLDS HIS MONEY UNSPENT THIS IS A VOLUNTARY ACT ON HIS PART DONE TO SUIT HIMSELF HE CAN SPEND HIS BALANCE AS
SOON AS HE WISHES TO DC SO IN THE SAME WAY A MEMBER OF THE CLEAR NG UNION
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IS NOT ASKED TO HOLD A CREDIT BALANCE IN THE BOOKS OF THE UNION IF THERE
IS ANY PURCHASE OR INVESTMENT IT WISHES TO MAKE NOR DOES IT SUFFER ANY
LIMITATION OF ITS POWER TO SPEND THE MONEY SUBSEQUENTLY THE CLEARING UNION
AS PRESENTED HERE REQUIRES NO CONTRIBUTION FROM THE BUDGET OR FROM THE TAX-
PAYERS OF ANY COUNTRY AN INSTITUTION WHICH IS ONLY REQUIRED TO MAKE TRANSFERS WITHIN ITS OWN BOOKS FROM ONE ACCOUNT TO ANOTHER NEEDS NO SUBSCRIBED
CAPITAL FOR ITS ASSETS WILL ALWAYS BE EQUAL TO ITS LIABILITIES WITHOUT
THIS ADDED SUPPORT THERE ARE HOWEVER IMPORTANT RESPECTS IN WHICH THE ANALOGY WITH A DOMESTIC BANKING SYSTEM BREAKS DOWN THE MEMBERS ARE SOVEREIGN
STATES AND ARE AT THE SAME TIME BOTH THE GOVERNORS OF THE INSTITUTION AND
POTENTIAL BORROWERS FROM IT BESIDES WHICH THERE WILL BE A WANT OF BA LANCE
UNLESS DEPOSITORS QS WELL AS BORROWERS ARE DISCOURAGED FROM BUILDING UP A
LARGE POSITI ON FOR EXCESSIVE CREDIT BALANCES NECESSARILY COEXIST WITH EXCESSIVE DEBIT BALANCES OF SOME OTHER PARTY THE PROBLEMS OF MAN AGEMENT AND
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OF DISCIPLINE WHICH ARRIVE INTHIS WAY ARE THE MOST DIFFICULT TO SOLVE SATISFACTORILY IN THE PRESENT TENTATIVE SCHEME IT IS PROPOSED THAT WHEN A
CERTAIN STAGE OF INDEB TEDNESS HAS BEEN REACHED A COUNTRY WILL BE ENTITLED
TO EASE ITS OWN POSITION BY A MODERATE ADJUSTMENT IN ITS RATE OF EXCHANGE
WHEN A FURTHER STAGE HAS BEEN REACHED IT WILL BE OBLIGED TO TAKE FURTHER
REMEDIAL MEASURES IF REQUIRED TO DO SO BY THE GOVERNING BOARD OF THE UNION
THE WIND IS TEMPERED TO SH ORN LAMBS BUT THEY ARE NOT EXEMPTED FROM THE
OBLIGATION TO GROW NEW WOOL AND THERE ARE PROVISIONS FOR EXTRUDING THEM
IN EXTREME CASES FROM THE FOLD SO LONG AS SOME COUNTRIES ARE EXERCISING
THEIR BORROWING RICHTS IT IS INEVITABLE SINCE THE UNIONS BALANCESHEET MUS
BALANCE THAT OTHERS SHOULD BE ACQUIRING CREDIT BALANCES AND THE SMOOTH
WORKING OF THE PLAN REQUIRES THAT THEY SHOULD BE WILLING TO DO SO AT THE
SAME TIME THE PLAN RECOGNISES THAT THE HOLDING OF A LARGE BANCOR BALANCE
WHILE BETTER THAN PULLING IN GOLD IS NOT AN IDEAL WAY OF CONTRIBUT ING
-7-
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304
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TO INTERNATIONAL STABILITY ANY COUNTRY WH ICH OWNS SUCH A BALANCE CAN ALWAYS REDUCE IT (THUS ENABLING OTHER COUNTRIES TO REDUCE THEIR OVERDRAFTS)
EITHER BY SPENDING MORE ABROAD OR BY LENDING MORE ABROAD AND THERE IS A
PROVISION OBLIGING IT IN CERTAIN CIRCUMSTANCES TO EXAMINE VERY SERIOUSLY
THE POSSIBILITIES OF DOING SO IN THE MANAGEMENT OF THE PLAN SPECIAL CARE
HAS BEEN TAKEN TO SAFEGUARD THE INTERESTS OF SMALLER POWERS AND TO PROVIDE
A DEMOCRATIC VOTING SYSTEM WHICH DOES NOT AL LOW PREPONDERANT POWER TO ANY
COUNTRY OR GROUP IN DETERMINING THE QUOTAS OF INDIVIDUAL STATES AN D HENCE
THEIR SHARE BOTH IN THE G OVERNMENT OF THE UNION AND IN ITS BORROWING
FACILITIES THE VOLUME OF THEIR INTERNATIONAL TRADE WILL IN MO ST CASES BE
THE PREPONDERANT CONSIDERATION THOUGH THIS PRINCIPLE WILL BE SUBJECT TO
EXCEPTION THE GOVERNING BOARD WILL REPORT TO AN AN.UNAL ASSEMBLY ATTENDED
BY REPRESENTATIVES OF ALL PARTICIPATING STATES ON NEITHER BODY WILL
UNANIMITY BE REQUIRED FOR ARRIVING AT AN EFFECTIVE DECISION IF THERE W LL
-8-
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BE NO QUESTION ON WHICH A SINGLE STATE CAN EXERCISE A VETO UPON THE WILL
OF THE MAJORITY THE QUOTE CLEARING BUS NESS UNQUOTE OF THE UNION IS CONDUCTED IN TERMS OF QUOTE BANCOR UNQUOTE THIS IS AN INTERNATIONAL CURRENCY
ONLY IN THE SENSE THAT IT IS A UNIT OF MEASUREMENT FOR EXCHANGE VAWES AND
A UNIT OF ACCOUNTING IN THE BOOKS OF THE UNION THE MAN IN THE STREET WILL
REMAIN QUITE UNAWARE OF THE EXISTENCE OF THE NEW I INSTITUTION SO FARAS HIS
DAILY BUSINESS IS CONCERNED IT IS LIMITED TO PROVIDING A MEANS OF SETTLEMEN
BETWEEN CENTRAL BANKS MEMBER STATES WILL ONLY EXERCISE SUCH EXCHANGE CON-
TROLS AS THEY MAY DECIDE TO IMPOSE FOR THEIR OWN PURPOSES THE PRIVATE
BANKER OR TRADER WILL CONTINUE TO DO HIS F OREIGN BUSINESS IN TERMS OF POUNDS
OR FRANCS OR DOLLARS BUT THE FACT THAT HIS GOVERNMENT CAN BORROW BANCOR
FROM THE UNION WILL ENABLE IT TO PROVIDE HIM WITH FOREIGN EXCHANGE AT A
STABLE PRICE WHEN OTHERWI SE IT WOULD HAVE BEEN UNABLE TO ID SO THUS ALL
EXCHANGE FLUCTUATIONS DUE TO SPECULATION WILL BE GOT RID OF ONE OF THE
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THINGS THAT MAY BE REQUIRED OF A COUNTRY WHICH IS DRAWING ON ITS QUOTA
TOO FAST IS THAT IT SHOULD INTRODUCE IF IT HAS NOT ALREADY DONE SO CONTROL
OF THE OUTWARD MOVEMENT OF CAPITAL THERE IS LITTLE DOUBT THAT A COUNTRY
WHICH EXPECTS TO HAVE TO MAKE USE OF THE BORROWING FACILITIES OF THE PLAN
WOULD BE WISE TO INSTITUTE SUCH CONTROL FROM THE START NOT NECESSARILY WITH
A VIEW TO PROHIBITING ALL FORMS OF FOREIGN INVESTMENT (STILL LESS OF DEBT
REPAYMENT) BUT IN ORDER TO PREVENT THOSE DISORDERLY FLIGHTS OF PRIVATE
FUNDS MOTIVATED BY GREED OR FEAR WHICH GAVE SO MUCH TROUBLE IN THE DECADE
BEFORE THE WAR THE PLAN PROVIDES THAT THE UNIT OF BANCOR SHALL BE DEFINED
INITIALLY IN TERMS OF A GIVEN WEIGHT OF GOLD BUT THAT THIS WEIGHT SHALL BE
ALTERABLE IF NECESSARY IN THE LIGHT OF EVENTS IT GIVES TO EVERY COUNTRY THE
RIGHT TO OBTAIN BANCOR FROM THE UNION IN EXCHANGE FOR GOLD BUT NOT THE RIGHT
TO OBTAIN GOLD IN EXCHANGE FOR BANCOR EVERY COUNTRY WILL BE UNDER OBLIGATION
NOT TO ATTEMPT TO ACCUMULATE GOLD BY PAYING MORE FOR IT THAN ITS AGREED
PRICE IN TERMS OF THE NATIONAL CURRENCY BUT WILL OTHERWISE BE FREE TO MAKE
-10-
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307
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AS MUCH AS OR AS LITTLE USE OF GOLD AS IT THINKS FIT BOTH IN ITS DOMESTIC
AND IN ITS INTERNATIONAL DEALINGS THUS THE PLAN RECOGNISES CERTAIN FACTS
THE HICH PRESTICE VALUE STILL ENJOYED BY GOLD AND ITS CONVENIENCE FOR CERTAIN
PURPOSES BUT IT DOES NOT PUT THE FATE OF THE INTERNATIONAL MONEY AT THE
MERCY OF THE VICISSITUDES OF THE WORLDS GOLD SUPPLY NOR GIVE ANY COUNTENANCE
TO THE IDEA THAT THE VALUE OF THAT MONEY IS DERIVED FROM THE POSSESSION OF
A QUOTE GOLD BACKING UNQUOTE A NEW AND AMBITIOUS PROJECT OF THIS KIND CANNOT
BE ADOPTED UNLESS AFTER FULL PUBLIC DISCUSSION IT COMMENDS ITSELF TO THE
INSTRUCTED OPINION OF THE WORLD IT IS FOR THIS REASON THAT EARLY PUBLICATION
HAS SEEMED ADVISABLE BEFORE ANY GOVERNMENT HAS BECOME COMMITTED TO A SPECIFIC
PLAN THE PRESENT PROPOSALS ARE NOT PUT FORWARD DOGMATICALLY OR IN COMPETITION
WITH ANY OTHER PROPOSAL THEY ARE INTENDED ONLY AS A CONTRIBUTION TO A HIGH
DEBATE WHICH IN SPITE OF ITS TECHNICAL CHARACTER IS CAPABLE OF CONTRIBUTING
GREATLY TC THE AMITY AND PROSPERITY OF NATIONS THEY WILL DOUBTLESS BE MODIFIED
-11-
(CONTINUED)
308
FILED & COPIED 4/6/43
PASS G 9
BRAUN
118 TWF LONDON BGOVT 6 515P
MMEDIATE PRODROME WASHINGTONDC
OR AN ALTERNATIVE SCHEME IN A DIFFERENT DRESS WILL BE SUBSTITUTED FOR THEM
THE CHIEF OBJECT SHOULD BE THAT SOME SUFFICIENT AND COMPREHENSIVE PLAN
SHALL BE ADOPTED IT WILL PROBABLY BE FOUND THAT THERE IS A STRONG FAMILY
RESEMBLANCE BETWEEN ALL PLANS HAVING THE SAME MAIN PURPOSES IN VIEW
PRODROME
-12-
308
April 8, 1943
2:06 p.m.
HMJr:
Hello.
James V.
Forrestal: Yeah.
HMJr:
Jim?
F:
Yes, Henry.
HMJr:
Henry talking. We send people around to the
various industries to check up on how we're
doing on War Bonds. Hello?
F:
Yeah.
HMJr:
And we just had a man over in Baltimore at
Glenn Martin talking to the people, and the
situation over there - this - you may know all
about this - is there's great unrest and dis-
satisfaction amongst the employees, with one the result that we have about the poorest
showing of War Bonds anywhere
F:
HMJr:
Uh huh.
and one of the things which are bothering
them is that they say that -- this - I'm just
reporting -- that there are several hundred,
I gather, Navy planes over there which have
been around for about six months, and the men
and women can't understand why these planes
stay there and aren't out to use.
F:
Yeah.
HMJr:
I wondered if you knew that.
F:
Well, I didn't know - I didn't - I don't know
HMJr:
Yeah.
the number. I know there have been a good
many because we ve been - we've had a lot of
trouble with them
fairly continuously.
F:
HMJr:
Yeah.
310
-2-
F:
It's a
HMJr:
Would you
F:
He, as you know, is an
HMJr:
Yeah.
egomaniac, and
F:
HMJr:
Yes. I spoke to Bob Lovett about it and asked
him whether he couldn' t give me a report, and
he said it was both Army and Navy, and he said
he would ask their inspectors - hello?
F:
Yeah.
HMJr:
Would you care to let me know
F:
Sure.
HMJr:
are
F:
HMJr:
just how many planes - Navy planes there
Sure.
and - I mean is it true they've been there
for six months and 80 forth and 80 on?
F:
Yeah, we'll have a report on it, Henry.
HMJr:
Would you care to read the report on the bonds
F:
Yeah.
or not?
HMJr:
Because it gives the employee attitude.
F:
Yeah, because I think it's very well - worthwhile having.
HMJr:
I'11 send it over to you.
F:
All right. Thank you, Henry.
HMJr:
Thank you.
311
April 8, 1943
Dear Jim:
see
I am enclosing herewith Emerson Waldman's (4-5-43)
report which I mentioned to you on the telephone.
Sincerely yours,
(Signed) Henry
Mr. James V. Forrestal,
Under Secretary of the Navy,
Washington, D.C.
Sent by Mess. Harmon 5:37
4/8/43
(Envelope marked "confidential
File in Diary
312
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE April 8,
1943
TO
Mrs. Klotz
FROM Secretary Morgenthau
Remind me that I went to send Forrestel a copy of
Emerson Weldmen's report and also telephone him what's
roinz on over et Glenn Mertin, because I don't want him
to think that I'm having the Army check un on the Nevy.
THE UNDER SECRETARY OF THE NAVY
WASHINGTON
8 April 1943
Dear Henry:
I have looked into the matter of the Navy
planes at the Martin Plant in Baltimore and
I find that we have 68 PBM-3's which are undergoing a necessary modification. By the end
of the month this number will be reduced to
30.
The circumstance surrounding this situation is
that the planewas originally designed for a
load of approximately 45,000 pounds. In the
light of battle experience, certain changes
such as leak-proof tanks, armor, etc., increased
the load to around 55,000 pounds. With this
load the engines heated and it has been necessary
for the planes to be so modified as to get the
proper cooling for the engines.
We have the matter under close observation and
I feel that although it is unfortunate at present,
it will rapidly clear itself as soon as modifications can be made in these planes.
Sincerely,
Forestal
James Forrestal
Honorable Henry Morgenthau, Jr.
The Secretary of the Treasury
314
April 8, 1943
2:20 p.m.
Operator:
HMJr:
Go ahead.
Hello.
Gordon
Rentschler: Hello, Henry. How are you?
I'm fine. How are you?
HMJr:
R:
Oh, I'm just getting cleaned up from a lot of
HMJr:
Oh.
bronchial pneumonia
R:
I had about six weeks ago, but otherwise
I'm fine.
HMJr:
Why didn't you go down to Cuba and get rid of
R:
Oh, I'd love to, but I haven't dared get away,
HMJr:
The reason I'm calling you is I wanted to tell
R:
HMJr:
R:
it?
Henry. There's been too much going on.
you personally how nice Mr. Pulford has been
to - to my son, Bob.
Well, he's enjoyed having Bob with him.
And Bob has been sick and he had him at his
house for five days, and
I knew that Bob had had an operation, didn't
he?
HMJr:
Well, it wasn't really an operation, but
R:
Just a clean-up?
HMJr:
He had a - no, he had some kidney stones.
R:
Oh.
HMJr:
And he'd been in a hospital; it was very
crowded; and then Pulford took him in, and
I write Pulford each time but I thought I'd
like to let his boss know that I appreciate
it.
315
-2-
Well, that's very nice of you, Henry, but I've
R:
had a number of letters from Pulford, and he
and his wife have enjoyed ever 80 much having
these boys in and out.
HMJr:
Well
R:
And I think the boys have rather liked to have
a place that was a little bit different and more
like home.
HMJr:
Well, I know that (laughs) as Bob said that -
R:
Yeah.
HMJr:
just having some home cooking
and - and - well, anyway, 80 if you - you
know that we - we appreciate very much what
he's done.
R:
Well, I'm delighted, Henry. And - only thing
just remember, whenever he writes about it, you
tell him that whenever he gets to any of the
places where our boys are, they '11 all be expecting him.
HMJr:
Good.
R:
Because they'd love to have him come.
HMJr:
Well, I don't think he gets to very many places.
R:
Yeah, he don't get to many, but every now and
then they turn up.
HMJr:
Right.
R:
How have you been, Henry?
HMJr:
I'm all right.
R:
HMJr:
The last I heard of you in Cuba they told me
that you didn't look BO husky.
Well, I - I didn't, but I'm - I'm, I think, as
good as I ever was, whatever that means.
R:
No, I think that's all right then, if that's I'11 if you say you're as good as ever, why,
give you 100%
316
-3HMJr:
The - your local manager there of the bank
R:
Yes, the little Cuban.
HMJr:
Yeah, from Cardenas - from the Cardenas branch.
R:
Yes.
HMJr:
came around to see me.
And I went in and had my picture taken in - in
your bank there.
oh, my goodness! Then they'11 have you up on
R:
the wall with the rest of the rogues.
HMJr:
R:
(Laughs) On the wall rather than on the limb.
Yeah. (Laughs) Yeah, well, they'11 - they
love the picture game.
HMJr:
R:
HMJr:
R:
And then we went through that distillery which
I understand is one of your best clients.
Yes, they've been a very - that's been a very
constructive job.
And 80 he was - he was very nice, and I enjoyed
going over there.
The only thing I regretted was that you didn't
take time to go over to Mary's place or on down
to the - some of our other sugar properties.
HMJr:
Well, I was there just to rest, and
R:
They said you needed to rest, and that's the
reason we didn't press it. But the next time if you ever go down there again, that's the
thing to do.
HMJr:
Thank you.
R:
All right, Henry. Well, it was nice to talk
HMJr:
Thank you.
R:
Right.
to you and good luck to you.
317
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE April 8, 1943
Secretary Morgenthau
TO
Mr. Peabody
FROM
Attached is the background letter to the newspapers
accompanying your speech.
318
MEMORANDUM TO EDITORS,
PUBLISHERS AND COMMENTATORS
FROM HENRY MORGENTHAU, JR.,
SECRETARY OF THE TREASURY
On April 12th, at Carnegie Hall in New York City, I shall officially
launch our Second War Loan drive.
I am taking this opportunity to give you some background. We are very
anxious that you, and through you the American people, should under-
stand the problems of war finance, and why it is that we want them to
help finance the war.
There is no mystery about war finance. There are many problems, however,
and it is difficult to explain some of them to the people.
We need your help
I feel strongly that we are going to have to find new ways of explaining
the situation to the American people: and I hope that you who are
closest to the people, and who spend your life explaining things to
them, will turn your hand to seeing that this job is done.
The job ahead
During the calendar year 1943, the Treasury is going to spend about 100
billion dollars. Present taxes will cover about 30 billion dollars of
this, leaving about 70 billion dollars to be raised.
-
People ask, "Where will the money come from? Where will we find the
money to pay for such a costly war?" The answer is simple. We will
have the income. When we produce munitions or peacetime goods or anything
else, we likewise produce income. For every dollar of production,
there is a dollar of income. This income may find its way into the
hands of individuals, into corporation profits or reserves, or it may
be turned over to the Government as taxes. The important thing to
remember is that somebody gets a dollar of income for every dollar of
goods produced. This point ought to be put across to the American
people -- every dollar that is spent on war equipment finds its way
to American business and the American worker.
The problems of war finance arise mainly with respect to the whereabouts
of this income. If individuals and businesses receive more income
after taxes than there are things produced for them to buy, then
excess funds arise. At the same time, the Government will necessarily
be receiving less in taxes than it is spending. It boils down to the
fact that the Government deficit is matched by the combined surplus
of everybody else.
How should we raise the $70 billions?
There are several ways to get the money we need. We can raise it
through taxes. We can borrow it from the banks. And we can borrow it
from the people.
Limitations of taxes
We are now getting more money through taxes than ever before - and it
will be necessary, I have no doubt, to ask for still more. But we
319
-cannot rely on taxes to do the whole job, and I would not want to because we could not tax with fairness on so huge a scale. For
example, we all know of family groups where there are extra workers
profitably employed at this time; and certainly it is not fair to
base a tax upon what these people are able to pay and force into
near bankruptcy the average many workers whose income has increased
little if at all.
Bond sales are mounting
We could borrow all the money from the banks. Our credit is excellent.
But for a variety of reasons, economic and social, this is also
undesirable. One reason is that we would then sacrifice what we
believe to be our greatest dam against inflation. Another is that
this is a peoples' war, and the people should finance it. Our
experience in the past has proved that the people want to finance it.
The sales of savings bonds have mounted consistently since Pearl Harbor.
The redemption of bonds, about which there have been many rumors, has
been relatively small. In March, because taxes had to be paid,
redemptions were at a peak of $131 millions; but during this same
month the sale of 954 million dollars in savings bonds established a
record which has been surpassed in only three months since Pearl Harbor.
I am very arrious that the American people be given credit for their truly
excellent participation to date, and that we attack this new campaign
with the idea that the people will not let us down if we deal with them
honestly and frankly - if we tell them why we need the money, how much
we need, and where we must get it.
320
-
Borrowing Plans for 1943
Your Treasury Department has the financing for the calendar year 1943
well organized. The know where the money is going to be; we know how
much we need to borrow from civilians and how much from bankers. with
the greatest invesion in history just around the corner-our invasion
of enemy-held territory--we feel confident that the American people will
live up to our expectations.
Last December we conducted the first war loan drive. Our goal was $9
billions. We surpassed it by about 84 billions. More than half of the
total funds came from non-banking sources.
This year we are planning to conduct a series of drives-beginning with
the Second War Loan which opens on April 12th. This drive is for $13
billions, with at least $8 billions from non-banking sources. Later
drives will probably be for higher aggregate amounts with even larger
proportions from non-banking investors. We also expect to increase the
participation in the payroll savings plan during the year and raise the
average investment under that plan. This work will go on independently
of the periodic drives.
A tentative program
Let me tell you something about the tentative program we have set down
for ourselves for the year.
The details are of course subject to change from time to time. My
purpose here is to illustrate how we are planning for the year. First
of all let's divide the $70 billions which we must raise during the year
321
-into three financing periods of four months each. The job for the first
period comes to about *20 billions; for the second period to about
$25 billions, and for the third period, assuming no new taxes, to another
$25 billions. Sales of the continuing types of securities such as
savings bonds and tax notes will, of course, go on month by month
throughout the year. In addition, our present plans call for a drive
during the last month in each period to make up the remainder of the
funds which will be required.
Analysis of savings and accumilations
If our deficit is going to run to $20 odd billions in each financing
period this year, then current savings and accumulations by individuals
and businesses will also run to about this same magnitude. This follows
from the fact that the Federal deficit is matched by the combined surplus
of everyone else. For each period, we have analyzed these current
savings and accumulations and classified the funds by investor groups.
Personal savings
In the case of personal savings, we know that people will put a certain
amount into life insurance, into savings bank deposits and into the
payment of debts. We can also estimate the amount of personal savings
which will be left in the hands of individuals and which may be said
to be available for investment in Federal securities. Of this reservoir
available for Federal securities in the last six months of 1942, we found
that 47 percent was actually so invested. (The remainder went largely
into currency and commercial bank deposits.) As a tentative program
322
-for this year, we have set our sights so that this percentage would
be successively increased in each of the three financing periods to
55, 65, and finally to 75 percent in the last four months of this year.
Corporate accumulations
For corporations other than banks and insurance companies, we made
a similar analysis. In the last six months of 1942, 72 percent of
the newly available accumulations of these corporations was invested
in Government securities. For this year, we assumed that this
percentage could be increased in each of the financing periods to
75, 80, and finally to 85 percent in the last four months.
Insurance companies and mutual savings banks
We also estimated the amount of securities which might be absorbed
by insurance companies and mutual savings banks as a result of the new
funds flowing to them, and other funds which would probably be released
for new investment during the year.
Governmental investment accounts
Similar estimates were made as to the amount of savings going to govern-
mental investment accounts -- Federal, State, and local - and of the
amounts of securities which might be absorbed by them.
323
324
-Summary
Adding together the scheduled sales to each of these non-banking investor
groups provides us with a total for each of the three financing periods of
the year. The remainder of our requirements we will have to fill by going
to the commercial banks.
The tentative schedule for the year calls for total borrowing of $48 billions
from non-banking sources, and $22 billions from banking sources. Borrowing
from banks for the year would be held to approximately the same figure as
in 1942, although the amount of total Federal borrowing required will be
much higher. This means that the tentative program would call for financing
the entire increase in the deficit this year over last year from non-banking
sources.
Getting $25 billions from the people
1
In order to sell $48 billions of securities outside of the banks this year,
the tentative schedule calls for selling $25 billions to individuals. If
we expect to do this, it will be necessary to adopt a widespread campaign
to reach all income groups. Our own economists and consulting economists
point out that the bulk of the money which we must get in 1943 must come
from those people earning from $1,000 to 25,000 net. They will have three
quarters of the current incomes after taxes; and we must urge these people
to do much better than the 10 percent we have asked them for up until now.
325
-IT IS OBVIOUS THAT EVERY PERSON RECEIVING INCOME ABOVE THE BAREST SUBSISTENCE LEVEL WILL HAVE TO BE REACHED IN OUR CAMPAIGNS IF WE ARE TO
SUCCEED IN OUR GOAL OF RAISING $25 BILLIONS FROM THE SALE OF SECURITIES
TO INDIVIDUALS THIS YEAR.
Inflation
I am not sure that the American people really understand the relationship
of war bonds to inflation. Certainly it is not enough simply to tell them
that they have a great amount of excess cash which must be siphoned off if
prices are not to be bid up out of sight, when as a matter of fact the
average person never thinks of himself as holding "excess" cash. Moreover,
he -- personally -- never actually "bid" against anybody for a porterhouse
steak in his life. But when you take all of these average Americans as a
group, it is a different story.
It is very important that the total excess money should be saved rather
than used collectively to bid up prices. Ideally it should be invested to
a very large extent in Government securities to close the circuit between
the matching deficit of the Government and the surplus of everyone else.
I am hoping you can help to explain this difficult idea to the American
people.
A final remark
Before I close, I want to tell you how much I appreciate the wonderful
cooperation we have been receiving in connection with the selling of our
--
326
bonds. You know that there may be some feeling that Washington, D. C.,
is so filled with people on the Government payroll that a significant
part of the money represented by a war bond must be detoured into the
maintenance of a bond selling bureau.
Actually, this is not the case. The cost of selling bonds is very small.
This is because hundreds of thousands of volunteers across the country
have taken over the job of selling. Management and labor have pulled
together to put over the payroll savings plan, under which more than
25 million working people now regularly invest almost 9 percent of their
wages and salaries. Manufacturing and retail firms, large and small,
have given us, free of charge, millions of dollars worth of advertising
space and radio time. The Federal Reserve System and thousands of banks
working with them have worked hard in this bond-selling job. You know,
of course, how much the press has been doing.
xxxx
I trust that you will forgive this unusual means of reaching you. These
are unusual times and we need your help. To help us to the full extent
of your capacity you should know the facts, and this is the best way I
know to get them to you. Although this memorandum is not intended for
publication, please feel free to use any of the material included as you
see'fit. I extend, for the Treasury Department, our thanks for the help
you have already given us in selling War Bonds. I know very well that as
good Americans you will continue it.
(Signed)
Henry Morgenthau, Jr.
327
D
Copy of speech with emphasis marks
by Mr. Stauffer of OWI who coached the
Secretary on delivery.
4-8-4)
Tonight I'm going to talk about something you
might not expect the Treasury Department to discuss.
I'm going to talk about the Second Front.
The Second Front is no military secret. We all
know that, just over the horizon, we of the United
Nations are piling up the thunder-clouds of the
greatest attack in history. We are massing for that
attack, now. The planning, the patient preparation,
the bitter time when we had to take blows without
returning them, because we weren't ready - all of that
is past. Now we're ready to deal a few blows ourselves;
and they'11 be blows, I can promise you, that will rock
Nazi Germany to its rotten, bloodstained foundations.
As the Secretary of the Treasury I've been given
the job of seeing to it that money is available to pay
for this great military offensive and others to follow.
This is why we! are launching the Second War Loan tonight
to raise at least 13 billion dollars before the end of
this month to buy materials and implements of war. We
must buy shells today for big guns that will be roaring tomorrow and the day after. I'm here tonight to
tell you that your help is needed. The need is real,
209
328
329
-2 urgent, pressing. Ten percent is no longer enough.
We are asking everyone to buy extra bonds this month,
even workers who are now particip ting in the payroll
savings plan.
In our private lives none of us deals with billiondollar figures. I know they're bewildering.
But except for the size of the figures involved
there is no mystery about financing a war. The Government of the United States is buying the best equipment
ever furnished to any army. It is paying not only for
equipment that reaches the fighting fronts but for some
equipment that never gets there. For every shin that's
/
sunk we must build two new ships - for every cargo
that's lost e must send out two new cargoes. :And that
costs money. Where are we going to et it?
Well, there are several ways to get the money.
We can raise it through taxes. We can borrow it from
the banks. And we can borrow it from the people - and
that means you.
We are now getting more money through taxes than
will be memory I have no doubt,
ever before. And it has already been necessary to ask
for still more. But we cannot rely on taxes alone to do
the whole job, and I wouldn't want to - because we could
not tax with fairness on so huge a scale.
220
330
- -3 -
We could borrow all the money from the banks.
Our credit is excellent. But for a variety of reasons,
economic and social, this is also undesirable. One
reason goes to the very heart of our system of govern-
ment. It is important to me as I know it is to you.
This is a people's war - so all of the people ought to
have a part in financing it.
/
And I know you feel the same way about it, because
5 sixths of all the people who are earning money today
have bought bonds.
/
As Secretary of the Treasury, I can report that
as
96 cents of every dollar which comes into the Treasury,
through war bonds, taxes, or anything else, is spent for
wer purposes! When you pay eighteen dollars and seventy-
five cents for a bond, eighteen dollars FO immediately
into guns and planes and equipment. The 75 cents goes
for the regular expenditures of the Government.
The cost of selling bonds is indeed very small. And
manged
this is because you and your neighbors and hundreds of
thousands of volunteers across the country have taken
over the job of selling. I'd like to express, to all
of , you, my deepest gratitude. I should like to thank
all of those who are helping - management and labor, for
the splendid success they have made of the payroll
228
331
-savings plan, under which more than 25 million working
people now regularly invest almost 9 percent of their
wages and salaries. I'd like to thank manufacturing
and retail business firms, large and emall, who have
given us, free of charge, millions of dollars worth
of advertising space and radio time, as has the see
System
Telephone Company tonight. And the Federal Reserve
System and thousands of banks working with them - and
all the others who are giving their time in this way
in the service of their country.
You can feel every confidence that the financial
,
affairs of your government are in good condition 8.8
the United Nations go on the offensive. The situation
is well in hand. We know where we're going. We know
how much money our armed forces will need.
During this month of April we must get 13 billion
dollars. We shall then have borrowed about 20 billions
in the first 21 months of this year. We will need to
borrow about 25 billions during the second Ly months, and,
any
without (new taxes, another 25 in the final period of the
year; a total of about 70 billion dollers for the year.
I would like to assure you that we can afford it.
But 70 billion dollars is, of course, E lot of
money. It isn't going to be easy to raise it. It
231
332
-5- means hard work. But I have every confidence, knowing
the American people, and how deeply serious they are
about this war, that we will get it. We will get it
from people who will scrimp and save if need be to buy
/
these bonds. We will get it especially from those upon
whom we must depend most heavily - the men and women who are
making good money in shipyards and plane factories and
tank production; the gallant women who used to call
themselves housewives but who are working today at lethes
,
and drill-presses in the great war plants. These are
the Americans who, all together, buy bonds in amounts
that a million.ire, or even all of the milliongires
combined, could never hope to equal. And they'11 buy
more of them this year - this year when 10 percent is no
/
longer enough.
The boys at the front are counting on them. They
are counting on you. 1 They give their lives - you lend
your money.
All of us will buy bonds because all of us know
that this is our war and that we must win it. We must
win it so that nations with a bloody philosophy out
of the dark ages of mankind's past will never again be
able to raise a traitorous hand against neighbors
209
333
-wanting only to live in peace and friendly good will.
An hour ago I passed through a railroad station. Standing at the iron gates, saying goodbye, were boys in
uniform with their girls, their wives - young couples
come to the heart-brocking minute when there were no
/
more words; when all they could do was to stand with
their hands clenched so tightly together that they
hurt. And as I passed them I thought of all the other
young Americans whose lives have been torn into ragged
bits - young architects and engineers giving up their
studies; school-girls working in factories; farmers
sending their wives and youngsters out to work in the
fields because they can't get hired hands; business
men losing what they've spent twenty years creating,
because of the necessary curtailments.
By what right do the Germans, the Japanese,
/
blight our lives, shatter our homes, whirl away our
boy
sone to drown five thousand miles from home in a soum
of oil at sea, or bleed and cough their lives out in
---
a muddy, filthy ditch? Who do they think they are?
We know only too well who they think they are! They're
/
the supermen, the Master Races, put here on earth to
enslave the rest of us end crack the whip over our
bare backs while we do their dirty chores! -
they and
2 25
--
334
their 'great' armies; their great armies of sneaks
and bullies that jump on weak, helpless nations when
they aren't looking! The Japs, with their dreams of
empire, built on lies and treachery. The Germans,
who twice within the memory of living men have tried,
/
with their Kaisers and their Fuehrers, to conquer the
rest of our world. We say: "Never again!" We of the
United Nations will show them who we are. We'll
show them some really great ermies - Chinese and
Russian, British and American.
These armies are the mightiest military machine
x
in all the history of earth. But to us they are friends
/
and husbands, fathers and sons. They are your boys
and my boys.
They are asked to give their lives.
You are only asked to lend your money.
Shall we be more tender with our dollars than
with the lives of our sons?
I thank you.
143
, PM april 7
335
APR 8 1943
My dear Mr. Stodghill:
No activity of the war financing program
has been more heartening to me than the performance of the newspaper boys of the country
whose efforts to date have resulted in the
sale of approximately $69,000,000 in ten cent
stamps.
To the publishers and circulation managers
of the 930 newspapers, who have participated in
this plan, I extend my personal thanks and the
thanks of the Treasury Department. I am
impressed by the fact that full participation
on the part of all daily newspapers would increase
sales to nearly $100,000,000.
The fact that over 20,000,000 homes in the
United States can be reached consistently only by
newspaper boys is an indication of the tremendous
impetus which can be given to our War Savings
program by these loyal young Americans and their
newspaper organizations they represent.
Sincerely,
(Signed) H. Mergenthan, Jr.
Mr. Howard W. Stodghill,
Chairman, Newspaper Advisory Committee,
Philadelphia, Pennsylvania
TG:vm
Copy in Diary
Copies to Thompson
336
APR 8 1943
Dear Mr. Scofield:
I would like to suggest that you confer with your State Committee
handling the sale of War Stamps to see if they will make the following
test in the State of Texas and keep a record of the results and report
monthly to the Treasury. If this works out in Texas, as we have reason
to believe it will, it would then furnish a pattern for a similar
operation on a national scale:
What we would like to do is to conduct a test in Texas to determine
the possibility of increasing the sales of War Savings Stamps by enlisting the help of wholesalers and jobbers of all trades. The idea would
be to have wholesalers and jobbers carry a supply of stamps just as they
do other merchandise for delivery to their retail customers. The
retailer would, of course, reimburse the jobber's representative on a
cash basis at the time of delivery.
If agreeable to your committee, will you please proceed with this
undertaking on the basis discussed in Washington at our recent conference?
Because wholesalers contact all of their retailers at frequent
intervals, they are, no doubt, in a better position than any other group
to immediately report the number of retail merchants in the State of
Texas who are now selling War Savings Stamps or who are willing to do so
beginning at once. Would it be possible to have then make such a check,
again keeping in mind that the plan you develop may become the basis of
a similar survey in other states. It is very desirable, at the same time,
to have wholesalers also report on retailers who are acting as issuing
agents for Bonds or taking applications for Bonds.
Please convey to your organisation the Treasury's appreciation for
undertaking this very important assignment.
Sincerely,
(Signed) H. Morgenthan, Jr.
Non. Frank Seefield,
State Administrator,
War Savings Staff,
800 Lavasa Street,
Austin, Texas.
Copy in Diary
Copies to Thompson
STM/jh
337
April 8, 1943
Dear Bob:
I am sending you another report by Mr. Bartelt,
Commissioner of Accounts, on his trip to Chicago.
Would it be possible for Mr. Bartelt to see
100 letters of complaint from soldiers whose dependents have not been receiving their allowance
checks and also those who are complaining about
slowness in receiving their bonds.
Yours sincerely,
(Signed) Henry
Honorable Robert P. Patterson,
Under Secretary of War.
Sent by Mess. Brown 9:00 4/9/43
File in Diary
Copy of reply to Bartelt 4/9/43
338
April 5. 1943.
TO THE SECRETARY:
In accordance with your instructions, I proceeded to
Chicago, Illinois, on March 31st for the purpose of inspecting
the facilities established by the War Department to issue Var
Savings Bonds to officers and enlisted personnel of the Army,
commencing with deductions made from their pay after March 31,
1943. These deductions are known as Class B alletments and relate to officers and enlisted men of the Army, WAACS, and civilian
personnel outside the continental limits of the United States,
except Alaska, Hawaii, Panama, and Puerto Rice.
As you know, the bonds purchased with deductions made
on or before March 31, 1943 will be issued by the War Bond Office
in Washington (Note: Since my nemorandum of March 25, 1943. it
has been decided by the War Department to transfer this work to
Chicago).
SPACE
The Army Var Bond Office is located in the Carson-PirisScott Building, an 8-story brick building, at 366 Vest Adams Street,
Chicago, Illinois, All of the second floor and about half of the
first floor, consisting of about 100,000 square feet, are occupied
by the Bond Office. This would be ademute for about five million
accounts. Additional space would be available if needed. The space
appears to be well suited for the work, Only part of it is now
being used, allowing for considerable expansion. I was unable to
obtain any information as to what protection is provided for this
building in the way of anti-aircraft guns.
MANAGEMENT
The management is under Lt. Colonel Henry M. Burnett,
assisted by Lt. Colonel L. D. Hall. Both officers are well quali-
fied for the task and seem to be fully aware of the size and nature
of the problems ahead.
339
-2ORGANIZATION
The organisation is composed of three major divisions: vis.,
Examination Division, Central Registers Division, and the Bond Division.
There are also three sections, viz., Audit Section, Planning and Procedure
Section, and Office Service Section.
The Examination Division is composed of a Correspondence Branch
and an Examining Branch, The Central Registers Division is composed of
three branchesAllotment Branch, Accounting and Recording Branch, and
Abstract Branch.
The 3ond Division is composed of a Graphotype Branch, and a Bond
Inscription Branch.
PERSONS SUBJECT TO THE PLAN
As previously indicated, the plan applies to (a) all military
personnel (including WAACS) irrespective of their location, and (b) all
civilian personnel of the War Department who are located outside the continental limits of the United States, except Alaska, Panana, Hawaii, and
Puerto Rico.
EFFECTIVE DATES
For military personnel the effective date of the plan is April
1, 1943: and for civilian personnel, January 1, 1943.
PLANS
(1.0. options, based on amounts
of monthly deductions)
There are eleven plans, each of which is an aliquot part of the
purchase price of a bond:
Plan
No.
1
-
-
-
un
-
-
8-
7
.
.
9
10
.
.
11
$ 3.75 buys one $25 bond in 5 months
6.25 buys one $25 bond in 3 months
18.75 buys one $25 bond in 1 month
12.50 buys one $50 bond in 3 months
37.50 buys one $50 bond in 1 month
25.00 buys one $100 bond in 3 months
75.00 buys one $100 bond in 1 month
150.00 buys two $100 bonds in 1 month
- 225.00 buys three $100 bonds in one month
- 300.00 buye four $100 bonds in 1 month
- 375.00 buys one $500 bond in 1 month
It will be noted that these eleven plane fall into three groups,
341
-
Bond every months It will be noted that the addressograph
plates for a "bond every month" are for $25, $50. $100, and $500
denominations, these plates, being arranged in separate rows accord-
ing to denomination. For convenience of identification, the $25
plates have a steel-colored top: the $50 plates have a yellow top:
the $100 plates, a red top: and the $500 plates, a blue top. All of
the plates in this unit will be run monthly in the issuance of
bonds. Each of these rows of plates is filed in three divisions:
(1) bonds issued to military personnel for mailing to home addresses;
(2) bonds to be delivered to the Federal Reserve Bank of Chicago for
safekeeping. and (3) civilian bonds, Behind these three major di-
visions, the plates are filed as follows: military, according to
the soldiers' serial numbers; civilian, alphabetically.
Bond every 3 months: The second unit contains the plates
for the issuance of a "bond every 3 months." These relate to $25.
$50 and $100 bonds. The denominational arrangement is the same as
that described with respect to the "bond every month." However, in-
stead of filing the plates strictly in accordance with the soldiers'
serial numbers, they are further subdivided according to the months
in which the bonds are to be issued. For instance, soldiers whose
monthly deduction of $6.25 begins in April, would be entitled to
their first bond in June, their second bond in September, the third
bond in December, and so on. Soldiers enrolling in the plan in May
with a $6.25 monthly deduction, would receive the first bond in July,
the second in October, the third in January, the fourth in April, and
so on. After the June bonds have been issued, the same plates will be
used for the September bonds, December bonds, March bonds, and every
three months thereafter. Similarly the July plates will be used for
October, January, April, and every three months thereafter. The
August plates will be used for November, February, May, and every three
months thereafter. This arrangement is illustrated in the table shown
below:
Month of bond issue (every 3 months)
Month of first
First series
Second series
Third series
June
September
December
October
November
December
January
February
March
January
February
May
deduction
April
May
June
July
August
September
July
August
September
October
October
November
December
November
December
January
February
January
February
March
June
April
July
March
May
March
June
April
July
May
August
Note: The months stated above are the months as of which the
bonds will be dated. Delivery will be made within 15
days after close of the month in which the last deduction was made.)
April
August
September
October
November
342
-5Bond every 5 months: The third unit contains the plates
for the issuance of bonds every 5 months." These relate only to
$3.75 alletments for the purchase of $25 bonds. The plates are
filed in numerical sequence according to the soldiers' serial
numbers. A soldier alletting $3.75 monthly commencing in April
1943 would be entitled to a bond every 5 months, visi September,
February, July, December, May, and so forth. Allotments com-
mencing in May would purchase bonds in October 1943, March 1944,
August 1944, January 1945. and so forth.
PROCEDURE
The procedure involves the use of three basic forms
which are received from the soldier's personnel officer, as follows:
(a) allotments, (b) changes in alletments, and (e) cancellations.
Since the issuance of bonds is automatic, after an allotment
has been made, no change or cancellation can be made effective until
it has been cleared through the Chicago Bond Office.
The Office Service Section classifies the mail, puts 11
into bundles and sends the alletments to the Examining Branch of the
Examination Division. The soldier's serial number must be shown.
If the serial number is not shown, 11 is rejected. Further comment
will be made on the rejection procedure later.
After the alletment has been examined and found acceptable,
they make a graphotype (addressograph) plate, showing the form of
inscription to be placed on the bond. The plate shows the soldier's
serial number, the plan number (1.e., $3.75, $6.75. etc.): the purchase price of the bond (1.0., $18.75. $37.50, etc.): and the month
of issue (1.0., June, July, etc.). After the addressograph plate has
been embossed, it is reproduced on a 3 by 5-inch card for verification
purposes, The information on the card is examined against the soldier's
allotment authorisation to see that it is in exact agreement. This
insures against discrepancy in the form of inscription to go on the
bond. Having been examined for correctness, the plate is then repreduced on the soldier's alletment authorisation so that the allotment
itself will show exactly how the bond is to be inscribed, the plan
number, the purchase price of the bond, and the first month of issue.
These allotment cards are filed exactly like the plates and, therefore,
play a part in the control of the plates. The 3 by 5-inch cards made
from the plates are filed alphabetically by soldiers' names and without
regard to the sequence of serial numbers except in those cases where
two or more soldiers would have identical names.
343
-VOLUME OF BUSINESS
As of April 1, 1943, there had been received 846,000 allotments, of which about 46,000 were rejected because they were not in
conformity with the regulations. There have been about 700 changes,
and about 1,500 cancellations, There was a little backlog in the
processing of the allotments and the embossing of the plates, but
General Heuper of the Office of the Chief of Finance informed me over
the telephone this morning that he had made arrangements to bring this
up to date through outside contract. The Chicago Bond Office indicated
that they would issue bonds within two weeks from the time they are
paid for, and I believe they will be able to accomplish this.
New allotment authorisations are being received at the rate
of 45,000 a week, Employees are working "around the clock," in 3
shifts embossing the plates to be used for inseril bing the bonds.
REASONS FOR REJECTING ALLOTMONTS
There are several reasons for rejecting allotments, the more
important of which area (1) omission of soldier's serial number.
(2) omission of effective date of allotment, (3) where it is not clearly
indicated whether the second person is to be co-owner or beneficiary,
(4) where the co-owner or beneficiary is shown as, for example, Mrs.
John Jones, instead of Mrs. Mary Jones, (5) failure of Army Field offloor to show that the allotment has been entered on the soldier's ser-
vice record or pay card, (6) failure of Army Field Officer to certify
allotment, (7) omission of soldier's signature or illegible signature,
(8) address omitted or illegible, and (9) disposition of bonds omitted
or uncertain.
It was observed that the original allotments, when not accapiable, are returned to the Field Personnel Officer from whom redelived with a form indicating the nature of the imperfections, a salmoncolored card being placed in the file where the authorisation would
normally be. At this point the Chicago Var Bond Office relieves itself
of further responsibility until a corrected allotment form has been recoived. Meanwhile, the Army Paymester nevertheless will continue to
deduct the amounts involved from the soldier's pay. In view of the
possibility of loss of these original allotment authorisations in the
mails or failure to receive prompt handling by the Army Personnel of-
ficers in the field, coupled with the fact that the soldier, in the
meantime, may have been transferred to another place, all resulting
in confusion and mi sunderstanding, 11 seemed to me that there was grave
danger in this practice, particularly in view of the fact that 46,000
of such authorisations have already been rejected and returned.
344
-7Accordingly, I suggested for the consideration of the Chicago Bond
Office a change in procedure whereby these original allotment atthorisations would not be returned (running the risk of loss in the
sails, or otherwise) but that they would be sent to a special desk,
under competent supervision, for close follow-up. Instead of returning the allotment authorisation itself, I suggested that they adopt
a self-addressed postal card appropriately designed to indicate the
nature of the correction to be made, such as to supply the soldier's
serial number, effective date of the allotment deduction, form of
inscription, etc. This card should be so designed that it would be
easy to supply the deficiency and remail 11 to the Chicago Bond of-
fice. It should carry in large bold-face type a word of caution to
all personnel officers that 18 must be handled promptly. It would
be the duty of the person in charge of the rejection desk to thumb
through the applications daily for the purpose of following up on
those which have not been returned within a reasonable time.
MONEY CONTROLS
The procedure for automatic issuance of bonds from addressograph plates, based upon allotment authorizations, rather
than upon evidence of actual pay-roll dednotions is, of course, an
innovation. Its main purpose is to facilitate the issuance of bonds.
Heretofore it has been the practice to maintain a formal account with
each person, which account was credited with the amount of deductions
taken from certified pay rolls. In Chicago, the bonds will be issued on the basis of the allotment authorisations prior to actual
checkup on pay-roll deductions. Avoidance of improper issuance of
bonds under the Chicago plan will be dependent, in a large measure,
upon careful compliance by field officers in making the deductions
as indicated on the soldier's allotment authorisation. If this
should not be done, it is readily apparent that bonds will be issued
to persons who are not entitled thereto. This is important to the
Treasury for the reason that there must be no question concerning
the integrity of our public debt: that is to say. the Treasury must
be certain that all public debt obligations issued are represented
by an equal amount of money having been received into the public
Treasury.
Under the procedure established in the Chicago office,
provision has been made for the receipt of what is called an
abstract of deductions taken from the pay rolls. This abstract
shows the soldier's serial number. his name, the amount of deinetions, and is signed by an authorised finance officer who made or
has knowledge of the deductions. These abstracts will be used by
the Chicago office to make an audit of the addressograph plates from
which the bonds are issued, Because of the tremendous number of
345
-
items involved, it is not the intention to make what is known as
a detailed item-by-item audit. Rather, what they will do is to
select at random the plates in different sections of the files and
run them against the abstracts. There will, of course, be good
cross sections of selection, and there will be a staff continuously
engaged in this type of audit work. If discrepancies are noted,
they will be run down. Also, they intend to establish controls for
the purpose of proving total deductions on the abstracts against
total bonds issued.
Your special attention is called to the fact that the
procedure as set up for the Chicago Bond Office, however, does
not contemplate that the office will have anything to do with money
itself. Moreover, the amount of the deductions would remain in
the Army appropriations until the money is needed to actually pay
for the bonds issued to the soldiers. This is basically wrong as
I explained orally to General Carter and General Loughry. as well
as to Colonel Burnett, the Officer in Charge of the Chicago Office.
The procedure can be corrected without taking away any of the simplicity of the detailed procedure and at the same time there night
be avoided criticism which is bound to arise if the officer responsible for issuing the bonds has no responsibility for tying the
issues into the cash accounts. Accordingly, I recommended consideration of a procedure under which the amount of bond deductions would
immediately be taken out of the appropriations involved and deposited
in a special account with the Treasurer of the United States to be
used for the payment of the bonds as and when they are issued.
Preferably, this account should be kept in the name of the responsible
finance officer of the War Department. At the end of each day he would
draw a single check*against this account in favor of the Treasurer of
the United States, depositing the proceeds in the general account of
the Treasurer as public debt receipts. This would not only be in the
interest of better accounting but is also essential if the Daily
Statements of the United States Treasury are currently to reflect
the true expenditures of the Army from day to day and month to month.
If such an account should be maintained, there would not be the same
basis for criticism later on that the Government issued bonds without
reference to the question of proof that an equivalent amount of
money was received in payment for the bonds. The balance in the
special account would, if there are no errors, represent the amount
of deductions from pay for which bonds had not been issued.
I also suggested for consideration the advisability of
establishing something in the nature of progressive accounting controls which would work about as follows: A separate control would
be established for each plan, class, or unit, according to the month
For the purchase price of bonds issued.
.
346
-9in which the bonds are to be issued: the deductions (supported by
a check) relating to the bonds covering such plan, class, or unit
would be credited to this account and the bonds issued would be
charged to the account; the abstracts received from the Army finance
officers showing the amounts deducted would be verified against the
credits entered in the accounts; if no errors have been made with
respect to the bonds to be issued for a plan, class, or unit, for
a particular month, when all the work has been done, the amount of
the bonds issued should exactly equal the amount of the deductions
entered on the credit side of the account. The balance in the
account would indicate either discrepancies or bonds still to be
issued. In other words, each progressive controlling account would
balance out as the bonds are issued, thus enabling them to localize
discrepancies, if any.
SAFEKREPING OF BONDS
Arrangements have been made with the Federal Reserve Bank
of Chicago to hold bonds in safekeeping when requested by the
soldiers in their allotment authorisations. Upon receipt of such
bonds, the Federal Reserve Bank will send a notice of receipt to
the address indicated by the soldier. officials of the Federal
Reserve Bank advised me that they are prepared to handle this part
of the work satisfactorily.
CONCLUSION
My conclusions are: (1) that personnel, space, and facilities in the Chicago Bond Office appear to be adequate to do a good
job; (2) that the addressograph procedure should enable the delivery
of bonds within 15 days from the date the pay-roll deductions accumu-
late to the purchase price of the bond; (3) that a change in proce-
dure for handling rejected allotment authorizations should be made
as indicated above; (4) that there should be established a money
control over the pay-roll deductions and bond issues: (5) that an-
propriate instructions should be issued to all personnel officers
of the Army with a view to reducing to a minimum the number of allthorisations which must be returned; and (6) that consideration should
be given to the assignment of a promotional officer with headquarters
in the War Bond Office at Chicago. One of this officer's principal
duties should be to make arrangements so that there is a last minute
checkup at ports of embarkation with a view to (a) procuring allotment authorisations from soldiers who have not executed one, and
347
- 10 (b) to advise enlisted men with a view to increasing the amounts
of their allotments. In this connection, it would aeen advisable
to saire an effort to encourage enlisted nen to out as such money
as
they can afford into Mar Savings Bonds through the pay-roll
allotment plan.
I recommended that the following warning be printed on
envelopes somewhat similar to the one used on Dependency Benefit
envelopes.
WARNING
Whoever obtains or receives this bond
without being entitled thereto, with
intent to defrand is sunishable by
fine of not more than $2,000.00 or in-
prisonment for not more than one year,
or bath,
This envelope is not to be opened by
any person other than the one to whom
it is addressed.
S. F. Bartelt,
Commissioner of Accounts
EFBihbw 4/7/43
348
IMMEDIATE RELEASE
FOR THE PRESS
APRIL 8, 1943
2579
STATEMENT BY THE PRESIDENT
E.O. 9328
The Executive Order I have signed today is a Hold-the-Line
order.
To hold the line we cannot tolenate further increases in
prices affecting the cost of living or further increases in general
wage or salary rates except where clearly necessAry to correct sub-
standard living conditions. The only way to hold the line is to stop
trying to find justifications for not holding it here or not holding
it there.
No one straw may break a camel's back, but there is always
a last straw, We cannot afford to take further chances in relaxing
the line. We already have taken too many.
On the price front, the directions in the Order are clear
and specific.
All items affecting the cost of living are to be brought
under control. No further price increases are to be sanctioned unless
imperatively required by law. Adjustments in the price relationships
between different commodities will be permitted if such adjustments
can be made 'without increasing the general cost of living. But any
further inducements to maintain or increase production must not be
allowed to disturb the present price levels; such further inducements
whether they take the form of support prices or subsidies, must not be
allowed to increase prices to consumers. Of course, the extent to
which subsidies and other payments may be used to help keep down the
cost of living will depend on Congressional authorization.
Some prices affecting the cost of living are already above
the levels of September 15, 1942. All of these cannot be rolled back.
But some of these can and should be rolled back. The Order directs
the reduction of all prices which are excessively high, inequitable,
or unfair. The Stabilization Act was not intended to be used as a
shield to protect prices which were excessively high on September 15,
1942.
On the wage front the directions in the Order are equally
clear and specific.
There are to be no further increase in wage rates or
salaries' scales beyond the Little Steel formula, except where
clearly necessary to correct substandards of living. Reclassifications and promotions must not be permitted to affect the general
level of production costs or to justify price increases or to forestall prico reductions.
The Order also makes clear the authority of the Chairman
War Manpower Commission to forbid the employment by an
of employer the of any new employee except in accordance with regulations at a
the Chairman, the purpose being to prevent such employment his
of higher or salary than that received by the employee in in the
last employment wage unless the change of employment will aid
prosecution of the war.
349
2
It further calls the attention of all agencies
of the federal government and of state and municipal authorities concerned with the rates of common carriers and
public utilities to the stabilization program in the hope
that rate increases will be disapproved and rate reductions ordered so far as may be consistent with federal
and state laws.
For sometime it has been apparent that this action
must be taken because of the continued pressure for increased wages and increased prices. I have heretofore
refrained from acting because of the contention of the
supporters of the Bankhead bill that under the Act of
October 2, 1942, I had no authority to place ceiling
prices on certain commodities at existing levels. My
views on that question were set forth in my message of
April 2, vetoing the Bankhead bill.
The Senate did not vote upon the question of passing the bill over the veto. Its author moved to recommit
the bill to the Committee on Agriculture, stating that
there were not sufficient votes to override the veto.
I am advised that weeks or months from this
date the bill may be reported for consideration. I em
also advised that in the history of the Congress no bill
vetoed by a President and recommitted to 8 committee has
ever become law.
I cannot wait to see whether the Committee at
some future date will again report the bill to the Senate.
cannot permit & continuance of the upward spiral of
prices.
Some groups have been urging increased prices
for farmers on the ground that wage earners have unduly
profited. Other groups have been urging increased wages
on the ground that farmers have unduly profited. A
continuance of this conflict will not only cause inflation
but will breed disunity at a time when unity is essen-
tial.
Under the Act of October 2, 1942, Congress
directed that so for as is practicable, wages, salaries
and prices should be stabilized as of the level of September 15. Under that direction inflation has been slowed
up. Now we must stop it.
e cannot stop inflation solely by wage and
price ceilings. We cannot stop it solely by rationing.
complete the job, Congress must act to reduce and hold
To in check the excess purchasing power. te must be prepared to tax ourselves more, to spend less and save more. out
The details of new fiscal legislation must be worked
by the appropriate committees of the House and the
Senate. The executive departments stand ready to submit
suggestions whenever the committees desire.
I am exerting every power I possess to preserve
our stabilization program.
I am sure the Congress will cooperate.
350
IMMEDIATE RELEASE
FOR THE PRESS
April 8, 1943
2579
EXECUTIVE ORDER
By virtue of the authority vested in me by the Constitution
and the statutes, and particularly by the First War Powers Act, 1941,
and the Act of October 2, 1942, entitled "An Act to Amend the Emergency Price Control Act of 1942, to Aid in Preventing Inflation, and
for Other Purposes," as President of the United States and Commander
in Chief of the Army and Navy, and in order to safeguard the stabili-
zation of prices, vages and salaries, affecting the cost of living
on the basis of levels existing on September 15, 1942, as authorized
and directed by said Act of Congress of October 2, 1942, and Executive
Order No. 9250 of October 3, 1942, and to prevent increases in wages,
salaries, prices and profits, which, however justifiable if viewed
apart from their effect upon the economy, tend to undermine the basis
of stabilization, and to provide such regulations with respect to the
control of price, wage and salary increases as are necessary to main-
tain stabilization, it is hereby ordered as follows:
1. In the case of agricultural commoditios the Price
Administrator and the Administrator of Food Production and Distribution (hereinafter referred to as the Food Administrator) are directed,
and in the case of other commodities the Frice Administrator is
directed to take immodiate steps to place coiling prices on all com-
moditios affecting the cost of living. Each of them is directed to
authorize no further increases in ceiling prices except to the
minimum extent required by law. Each of them is further directed
immedictely to use all discretionary powers vested in them by law to
prevent further price increases direct or indirect, to prevent
profiteering and to reduce prices which are excessively high, unfair
or inoquitable. Nothing herein, however, stall be construed to prevent
the Food Administrator and the Price Administrator, subject to the
general policy directives of the Economic Stabilization Director, from
making such roadjustments in price relationships appropriate for
various commodities, or classes, qualities or grades thereof or for
seasonal variations or for various marketing areas, or from authorizing such support prices, subsidios or other inducements as may be
authorized by law and doomed necessary to maintain or increase of living. produc-
tion, provided that such action dous not increase the cost AgriculThe power, functions and duties conforred on the Secretary 1942 of
ture under section 3 of the Emergency Price Control Act of
(Public Law 421, 77th Cong.) and under section 3 of the Act of
October 2, 1942 (Public Law 729, 77th Cong.) are hereby transferred
to, and shall be exercised by the Food Administrator.
2. The National War Labor Board, the Commissioner of
Revenue and other agencius exercising authority conforred regulaby Internal Executive Order No. 9250 or Executive Order 9299 and the are
tions issued pursuant thereto over wage or salary increases salaries
directed to authorize no further increase in wages or of living, except such as are clearly necessary to correct substandards such
that nothing herein shall be construed to prevent
provided from making such wage or salary readjustments as to may compan- be
agencies deamed appropriate and may not have horetofore been made heretofore
in accordance with the Little Steel Formula as in the cost
sate, the National War Labor Board, for the rise shall anything of
defined between by January 1, 1941 and May 1, 1942. Nor to the general
hervin living be construod to prevent such agencies, subject Director, from
and directivos of the Economic Stabilization in case of
policios authorizing reasonable adjustments of wages and incentive salaries wages or
reclassifications, marit increases, increase the level
promotions, the like, provided that such adjustments do not either to
costs approciably or furnish the basis reductions
of increase production prices or to resist otherwise justifiable in
prices.
351
-3. The Chairman of the War Manpower Commission is
authorized to forbid the employment by any employer of any new
employee or the acceptance of employment by a new employee except
as authorized in accordance with regulations which may be issued
by the Chairman of the Mar Manpower Commission, with the approval
of the Economic Stabilization Director, for the purpose of preventing such employment at a wage or salary higher than that received
by such now employee in his last employment unless the change of
employment would aid in the effective prosecution of the war.
4. The attention of all agencies of the Federal Government,
and of all State and municipal authorities, concerned with the rates
of common carriers or other public utilities, is directed to the
stabilization program of which this order is a part so that rate in-
creases will be disapproved and rate reductions effected, consistently with the Act of October 2, 1942, and other applicable federal,
state or municipal law, in order to keep down the cost of living and
effectuate the purposos of the stabilization program.
5. To provide for the consistent administration of this
order and Executive Order No. 9250, and other orders and regulations
of similar import and for the effectuation of the purposes of the
Act of October 2, 1942, the Economic Stabilization Director is
authorized to exercise all powers and duties conferred upon the
President by that Act, and the Economic Stabilization Director is
authorized and directed to take such action and to issue such
directives under the authority of that Act ns he deeme necessary
to stabilize the national economy, to maintain and increase produc-
tion and to aid in the effective prosecution of the war. Except
insofar as they are inconsistent with this order or except insofar
as the Director shall otherwise.direct, powers and duties conferred
upon the President by the said Act and heretofore devolved upon
agencies or persons other than the Director shall continue to be
exercised and performed by such agencies and persons.
6. Except insofar as they are inconsistent with this
order, Executive Order 9250 and the regulations issued pursuant
thereto shall remain in full force and effect.
FRANKLIN D. ROOSEVELT
THE WHITE HOUSE,
April 8, 1943.
352
FROM:
TO:
MR. SCHWARZ'S OFFICE
The Secretary
This information I have just
received from Mr. White provides
an adequate answer, I think, to
the critical assertion in TIME.
With an introductory paragraph,
I could readily use it as a
letter to the editors of TIME,
providing there is no objection
to the disclosure of all these
facts. Will you send for me to
talk about it whenever you are
ready?
es 4/9
Deey paid forget about this
353
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE April 8, 1943
TO
FROM
Mr. Schwarz
Mr. White
Since June, 1940, some individuals, business organizations and
banks of Metropolitan France have been quietly transferring whatever
assets they could to other sections of the French Empire, in order to
avoid the effects of German occupation. Such transfers were made from
Metropolitan France to French North Africa. It is likely that these
transfers may have been accentuated before the landing of American
troops on November 8th. Owing to the political situation that prevailed within the area following the events of November 8, it was not
possible to segregate the accounts of businesses, banks and individuals
resident in North Africa, which may have been pro-Vichy in their attitudes. Moreover, under the political arrangements made, all financial
control measures had to be taken by the French and not by us. In fact,
however, the U.S. Treasury representatives with the occupying forces
at once urged upon the French and the military the desirability of
instituting strict internal and external economic and financial controls.
On November 16, the French Governmental authorities issued "Instructions
to Banks", which, amongst other things, provided for the blocking of
all bank accounts belonging to European nationals, including people
resident in Metropolitan France.
On December 20, the Treasury representatives were instrumental in of
signed a "Trading With The Enemy Ordinance", under the terms
which having severe penalties were laid down for any trade or communications which
with the enemy, or enemy-occupied areas, and under the terms of
a black list would be issued - the French authorities have subsequently
issued black lists for several European countries and their colonies.
Control over Dakar and French West Africa by the French North
African authorities was delayed for some weeks following the events
of November 8. It was not until December 7 that French West Africa the
allied itself with French North Africa on the side of financial United
Nations. formally During this interim, it would have been possible for this
transactions and communications to have been carried on between
and Metropolitan France. When French West Africa finally on came such
within area the sphere of influence of French North Africa, it than was those
favorable political terms that financial controls other
indicated above could not be insisted upon.
true that a flight from the French franc to the French out of African France.
It is have benefited those people who got their funds African
territories accruing from the present strength of the French limited to
The franc benefits due to the presence of Allied forces is not, however, a
354
Division of Monetary
-
Research
group of speculators, but is a benefit that accrues to all of the
people in French Africa. The holding of French African francs
does not necessarily mean that the owners can secure dollar credits
at the rate of fifty francs to the dollar: actually the franc
profits so far accumulated are paper profits and can be translated
into actual profit only by transference into dollars. The transfer
of dollars to and from French African accounts held in the United
States are strictly controlled, in accordance with Treasury freezing
regulations in effect here.
355
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE
APR & - 1943
TO
FROM
Secretary Morgenthau
J. W. Pehle
You inquired today through Miss Chauncey
whether the attached article by Johannes Steel
relative to North African financial manipulations
is accurate.
A report is in the course of preparation
which will outline the financial manipulations in
North Africa of the French collaborationist groups.
It is probable that we will be able to show that
the allegations which Steel makes can be supported
and the situation may be worse than Steel has
indicated.
you
NEW YORK POST, Tuesday, April 6, 1943
Steel Filings
How the Treasury Halted
A Peyrouton Dollar Deal
By Johannes Steel
It may yet be too early to draw the balance sheet for
the first fiscal year of collaboration in North Africa, We
have never been told when the first fiscal year of collaboration began.
We do not know when the first
deal was negotiated and the first
transaction consummated Yet
there are ample indications that
German as well as French big
business knows the precise dates.
The question now is whether we
will eventually be able to pay
dividends on the business of collaboration in which we have engaged in North Africa.
Let us therefore strike an in
terim balance. What did we get?
Certain military concessions
which, it is insisted, saved Ameri-
can lives. Considering what has
happened in North Africa since
we first landed there, it remains
extremely doubtful that any lives
have been saved by negotiation
In fact, it may very well be that
we would have long been in Tunis
and Bizerte had we not negoti-
a loan of fifty million dollars
upon which the American banks,
tual cash. Somehow, during the
last two weeks before the Allied
of course, will earn their usual
4 per cent commission
money, according to the latest
information amounting to 25 bil
said the representatives of the
Banque Nationale Pour le Com-
But-and this is a beauty-
landing in Africa, a sum of
merce et l'Industrie to the Ameri-
lion francs in cash and securities
can banks: "All you have to do
is underwrite this loan. We will
take it up in North Africa ourselves. North African French
business will subscribe to this
loan because we believe in the
future of Giraud and France.
But, of course, you must enable
was transferred from the Con
tinent to North Africa. This
was done with the permission of
the Vichy Government and the
German economic control of
France. The 25 billion franes
represented assets and moneys
jointly held by German and
us to convert our franes into dol-
French interests.
jars so that we can subscribe to
this fifty million dollar loan. Will
you get the Treasury to buy our
25 billion francs at the rate of
fifty francs per dollar?"
This plan was being worked
The transaction in the main
was carried out through the
Banque Worms and their North
African correspondents, the
Banque Nationale Pour le Com
merce et l'Industrie. Now, it is
out neatly in New York and
important to note here that these
ated with Darlan long enough
to give the Germans time to
French francs which were trans
ferred to North Africa were purchased in France at the rate of
Washington last week until the
Treasury got wind of It and politely but firmly said "No!" This
forcements into Tunisia. If we
dollar. Meanwhile however, the
boys have stopped trying. Here
is one for the Senate to investi-
had given Darlan the alternative
of being shot within two hours
or delivering Tunis and Bizerte
within that time, we would prob-
ably be there now.
The Fortune Hunters
We also got Giraud and that
band of sinister international op
erators, headed by the ubiquitous
Marcel Peyrouton, who see this
phase of the war as nothing but
an opportunity to amass gigantic
fortunes and control over a con
tinent-wide European industrial
and financial cartel.
We also got Gen. Nogues who
In fact, is still actively sabotag-
ing our efforts at every step of
the way. Further on the debit
side is the unparalleled loss of
American diplomatic and politi
cal prestige among the peoples
of Europe in particular and the
peoples of the world in general.
Now let us take a look at what
this has cost us already and
what we are proposing to pay
out in the future-I mean in ac-
does not mean, however, that the
approximately 200 francs per
American Administration in
North Africa has obliged the
gate. A really hot potato!
holders of these funds by ex
changing these francs for dol
lars with the one difference that
we have been giving them $4 for
200 francs, or fifty francs to the
dollar.
Peyrouton Finds a Way
Of course, it has been physically impossible for Marcel Pey
routon and his principals to un
load altogether the total of 25
billion francs and obtain dollars
for them. Apparently there were
not enough dollars in North
Africa. Now, however, Marcel
Peyrouton and his French and
German principals apparently
believe they have found a way
of doing it.
Representatives of the Banque
Nationale Pour le Commerce et
l'Industrie have convinced
group of three American banks
that it would be a good idea to
grant the Giraud administration
a
throw really important rein-
New York Post
APR-6 1943 -
Steel Filings
How the Treasury Halted
A Peyrouton Dollar Deal
By Johannes Steel
It may yet be too early to draw the balance sheet for
the first fiscal year of collaboration in North Africa. We
have never been told when the first fiscal year of collabo-
business knows the precise dates.
of course, will earn their usual
money, according to the latest
information amounting to 25 bil
said the representatives of the
Banque Nationale Pour le Com-
landing in Africa, a sum of
lion francs in cash and securities,
was transferred from the Con
dividends on the business of collaboration in which we have en
gaged in North Africa.
was done with the permission of
the Vichy Government and the
Let us therefore strike an in
terim balance. What did we get?
Certain military concessions
which, it is insisted, saved Ameri-
can lives. Considering what has
happened in North Africa since
we first landed there, it remains
extremely doubtful that any lives
have been saved by negotiation
In fact, it may very well be that
we would have long been in Tunis
and Bizerte had we not negoti-
ated with Darlan long enough
to give the Germans time to
throw really important rein
forcements into Tunisia. If we
had given Darlan the alternative
of being shot within two hours
or delivering Tunis and Bizerte
within that time, we would probably be there now.
The Fortune Hunters
We also got Giraud and that
band of sinister international op
erators, headed by the ubiquitous
Marcel Peyrouton, who see this
phase of the war as nothing but
an opportunity to amass gigantic
fortunes and control over a con
tinent-wide European industrial
and financial cartel.
We also got Gen. Nogues who,
in fact, is still actively sabotaging our efforts at every step of
the way. Further on the debit
side is the unparalleled loss of
American diplomatic and political prestige among the peoples
of Europe in particular and the
peoples of the world in general.
Now let us take a look at what
this has cost us already and
that we are proposing to pay
out in the future- mean in ac
upon which the American banks,
tual cash Somehow, during the
last two weeks before the Allied
The question now is whether we
will eventually be able to pay
a loan of fifty million dollars
tinent to North Africa. This
German economic control of
France. The 25 billion franes
represented assets and moneys
jointly held by German and
French interests,
The transaction in the main
was carried out through the
Banque Worms and their North
4 per cent commission.
But-and this is a beauty.
merce et l'Industrie to the Ameri-
can banks: "All you have to do
is underwrite this loan. We will
take it up in North Africa ourselves. North African French
business will subscribe to this
loan because we believe in the
future of Giraud and France,
But, of course, you must enable
us to convert our franes into doliars so that we can subscribe to
this fifty million dollar loan. will
you get the Treasury to buy our
Banque Nationale Pour le Com
25 billion franes at the rate of
fifty franes per dollar?"
This plan was being worked
important to note here that these
French franes which were trans
ferred to North Africa were purchased in France at the rate of
Washington last week until the
Treasury got wind of It and politely but firmly said "No!" This
African correspondents, the
merce et l'Industrie. Now, It is
approximately 200 francs per
dollar. Meanwhile however, the
American Administration in
North Africa has obliged the
holders of these funds by ex
changing these francs for dol
does not mean, however, that the
boys have stopped trying. Here
is one for the Senate to investi-
You also may listen to news
analyses by Johannes Steel over
Station WMCA daily at 7:30 p. m.
lars with the one difference that
we have been giving them $4 for
200 franes, or fifty franes to the
dollar.
Peyrouton Finds a Way
Of course, it has been physically impossible for Marcel Peyrouton and his principals to un-
load altogether the total of 25
billion franes and obtain dollars
for them. Apparently there were
not enough dollars in North
Africa. Now, however, Marcel
Peyrouton and his French and
German principals apparently
believe they have found a way
of doing it.
Representatives of the Banque
Nationale Pour le Commerce et
l'Industrie have convinced
group of three American banks
that it would be a good idea to
grant the Giraud administration
out neatly in New York and
gate. A really hot potato!
a
ration began.
We do not know when the first
deal was negotiated and the first
transaction consummated Yet
there are ample indications that
German as well as French big
miss cheaning 358
TREASURY DEPARTMENT
OFFICE OF THE SECRETARY
April 8. 1943
CONFIDENTIAL
Received this date from the Federal Reserve
Bank of New York, for the confidential information
of the Secretary of the Treasury, compilation for
the week ended March 31. 1943. showing dollar
disbursements out of the British Empire and French
accounts at the Federal Reserve Bank of New York
and the means by which these expenditures were
financed.
(Init.) E.M.B.
imc:4/9/43
359
C
0
P
Y
FEDERAL RESERVE BANK
OF NEW YORK
April 7. 1943
CONFIDENTIAL
Dear Mr. Secretary:
Attention: Mr. H. D. White
I am enclosing our compilation for the week ended
March 31, 1943, showing dollar disbursements out of the
British Empire and French accounts at this bank and the
means by which these expenditures were financed.
Faithfully yours,
/s/ L. W. Knoke
L. W. Knoke,
Vice President.
The Honorable Henry Morgenthau, Jr.,
Secretary of the Treasury,
Washington, D. C.
Enclosure
Copy:ime:4/9/43
(113 Willions of Dollars
BANK OF ENGLAND (BRITISH GOVERNMENT
DEBITS
Gov't
PERIOD
Total
Debits
First year of war (g) 1,793.2
War period through
December 1940
Second year of war (h)
2,782.3
2,203.0
Third year of war (1) 1,235.6
Expenditures
(a)
Transfers to
Official
Canadian
Account
605.6
20.9
1,425.6
1,792,2
20.9
3.4
904.8
CREDITS
7.7
Other
Debits
1,166.7
1,335.8
407.4
223.1
or
shim of
Total
Credits
Gold
1,828.2
(official)
(b)
1,356.1
2,793.1
2,189.8
1,361.5
BANK OF FRANCE
THE
the 04.4 Aus-
trailian
Account
Other
Credits
(c)
let Inor A
or Decr. (-)
Kn $ Funds
Total
Debita
(d)
Total
Credits
Oct. 1 Oct. 28
Oct. 29 Dec. 2
Dec. 3-= Dec. 30
Dec. kied Feb.
Fab. L- Mar.
Mar. 4 - Mar. 31
3
3
19.0
56.1
46.7
37.1
96.6
35.5
-
30.4
13.3
-
168.6
20.9
87.2
35.3
17.8
6.3
3.7
8.1
12.2
8.7
3.6
-
2.5
-
3.1
-
27.4
-
19.3
61.1
-
866.3(f)
1,095.3(f)
878.3
1,098.4
+220.1
8.8
- 30.1
bak
$74.1
0.4
.03
0.1
52.0
416.2
2,109.5
1,193.7
108.0
274.0
561.1
705.4
- 13.2
21.8
5.5
14.5
16.7
57.4
35.0
10.8
1,276.8
+125.9
38.9
18.5
60.6
45.5
+ 25.5
10.1
-
83.7
-
17.1
51.9
125.0
22.7
58.9
-
37.7
31.7
120.8
64.4
22.4
-
-
-
12.9
0.5
-
-
-
-
-
-
-
20.5
+10.8
12.0
5.5
78.2
8.0
43.9
12.9
+21,5
8.0
50.9
-109.7
15.0
5.0
105.8
59ml
+33.6
+29.1
in $ Funds
(e)
3.9
81.6
57.5
or Door. (-)
(e)
1942
Sept. - Sept. 30
Net Incr. ()
(d)
$299.0
- 9.7
0.3
0.2
0-3
+
-
-
-
-
-
-
-
-
-
-
-
-
TOOK ENDED:
24
31
2.6
8.1
4.5
9.2
5.6
12.6
31.2
Average Weekly Expenditures Since Outbreak of War
France (through June 19, 1940) 119.6 million
England (through June 19, 1940) $27.6 million
England (June 20, 1940 to March 12, 1941) $54.9 million
$23.4 million
England (since March 12, 1941)
12.0(1)
-
-
-
-
-
-
-
8.1
+1.8
-
12.6
+ 4.5
5.0
26.7
519.5
12.061
+3.3
-
17
-
-
March 10
-
-
-
-
-
-
-
-
-
See attached sheet for footnotes.
(a) Includes payments for account of British Ministry of Supply Mission, British Supply Board, Ministry of Supply Timber
Control, and Ministry of Shipping.
(b) Estimated figures based on transfers from the New York Agency of the Bank of Montreal, which apparently represent the
proceeds of official British sales of American securities, including those effected through direct negotiation. In addition
to the official selling, substantial liquidation of securities for private British account occurred, particularly during the
early months of the war, although the receipt of the proceeds at this Bank cannot be identified with any accuracy, According
to data supplied by the British Treasury and released by Secretary Morgenthau, total official and private British liquidation
of our securities through December, 1940 amounted to $334 million,
(c)
Includes about $85 million received during October, 1939 from the accounts of British authorised banks with New York banks,
presumably reflecting the requisitioning of private dollar balances. Other large transfers from such accounts since October,
1939 apparently represent current acquisitions of proceeds of exports from the sterling area and other accruing dollar
receipts.
(d) Reflects net change in all dollar holdings payable on demand or maturing in one year,
(e) For breakdown by types of debits and credits see tabulations prior to March 10, 1943.
(f) Adjusted to eliminate the effect of $20 million paid out on June 26, 1940 and returned the following day.
(g) For monthly breakdown see tabulations prior to April 23, 1941.
(h) For monthly breakdown see tabulations prior to October 8, 1941.
(1) For monthly breakdown see tabulations prior to October 14, 1942.
(j) Includes $3.3 million deposited by British Ministry of Supply and $3.0 million received for credit of U. S. Army.
306.4
477.2
16.6
460.6
460.4
32.4
181.7
707.4
534.8
20.9
110.7
462.0
246.2
3.4
123.9
525.5
566.3
198.6
7.7
41.0
80.5
360.0
46.3
44.9
53.6
13.2
40.4
56.5
48.2
-
1923
52.5
3
35.1
36.2
BIRED
-
March 10
3.3
12
17.1
24
31
3.4
12.400
-
-
3
31
-
Feb.
52.5
35.1
-
Deg. n - Peb.
51.5
£0.8
43.9
36.2
101.2
51.6
3.3
19.1
17.1
9.5
11.6
3.4
12.4
16.6
14.4
2.9
217.1
-
-
-
125.0
-
37.2
-
-
-
11.4(b)
, Total Debits Since Outbreak of War
8.0
*For
breaking
breakdown
see
tabulations prior to April 23. 1941.
outor
1941
tabulations prior
October
see
breakdown see stabulations prior to October 52. 1912.
(a)Beflacta changes in all dollar holdings payable on demand or naturing in one year.
breakdown
Debita
38.7
-
48.2
30
Fundsal
20.9
-
-
56.5
2
Dec. 3-Doc.
-
Oct 29 - Dea.
14.9
Total
Official
British
412.7
504.7
-
46.3
Oat 1- Oct. 28
-
Other
Credits
A/C
-
Sept. 3 - Sept. 30
0.3
For French
-
525.8
A/C
-
460.4
For Own
to
(+) or
Decr.(-)
to
(b)Does not reflect transactions in Treasury bills.
(c) Includes $7.1 million deposited by War Supplies, Ltd.
A/C
Proceeds
of
Other
Debits
31.2
3.9
27.3
230.2
57.9
14.5
1.6
72.2
16.7
40.5
107.2
7.3
Total
Credits
43.4
62.4
50.1
12.3
55.5
G1.2
112.2
10.3
57.4
49.8
62.9
17.2
95.0
20.5
7.5
16.1
2.3
14.6
4.7
9.4
9.4
O.B
6.1
11.7
11.7
2x4
17.3
16.0
28.0
14.3
66.4
24.3
10.2
12.0
5.5
4.3
14.1
8.0
164.6
16.2
8.0
8.2
17.3
66.1
15.9
15.0
0.9
16.0
15.4
7.1
5.0
63.5
51.6
+
+
+
n Punds(a)
30.0
6.6
92.1
Other
Credits
Net Incre
(+) or
Dear. (-)
36.1
34.9
1.0
Gold
Sales
2.1
15.8
0.7
0.7
2.7
9.5
7.6
-
11.6
1.3
8.2
1.3
3.3
5.1
5.0
0.1
11.4(c)
0.3
1.0
-
0.4
-
6.1
9.9
0.3
6.2
-
-
4.5
9.0
5.0
14.6
-
2.7
-
499
18.1
6.7
19.1
-
-
-
16.6
Gold
Sales
Net Incr.
-
323.0
Total
Credits
-
-
Third Year of warth
Other
Debits
-
December 1940
sound Year of waree
A/C
-
STATE
British
of
+
Total
Debits
official
Transfers
Transfers from official
British A/C
and Australian overnment
CREDIT
3.3
-
Proceeds
to
BESTS
-
Transfers
PERIOD
BANK OF AUSTRALIA
CR UTTS
+
(and Canadian Government
OF
Confidential
+
BANK
Week Ended March 31. 1943
+
(TM Millions of Dollars)
1-2
+
+ 0.1
.04
+2.0
+2.0
0.3
- 4.
0.4
+0.4
363
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE
TO
Secretary Morgenthau
FROM
Frances McCathran
April 8, 1943
CONTROVERSIAL ISSUES BEFORE CONGRESS
1. Tax: Pay-As-You-Go - Demands for immediate reconsideration
of pay-as-you-go tax legislation were revived yesterday
in a letter addressed to Chairman Doughton of the House
Ways and Means Committee by Representative Änderson, Demo-
crat of New Mexico. The letter, now being circulated for
signatures, deplored the fact that the House had been given
no opportunity to vote on any of the compromise measures
between the complete forgiveness of the defeated CarlsonRuml Plan and the no abatement provisions of the Ways and
Means Committee proposal. The letter went on to urge the
Committee to act promptly in sending the tax issue back to
the House for reconsideration. Meanwhile, Chairman Doughton,
when informed of the letter, indicated that the Committee
would consider the request and House Majority Leader McCormack said he hoped the House would be able to complete
action on a pay-as-you-go tax bill before their planned
Easter recess starts on April 17.
2. Farm Parity - Despite Senator Barkley's warning in Senate
debate yesterday that holding the Bankhead Bill in committee
as a "club" over labor demands for higher wares might prove
a boomerang instead, the Senate, by a vote of 62 to 23, sent
the measure back to its Committee on Agriculture and Forestry.
By this desperate maneuver the farm bloc thus averted complete defeat and prevented a clear-cut decision on the
measure. After the vote, Senator Bankhead observed to re-
porters, "We'll let it simmer for a while. After all we
still have that cugel behind the door." But Senator Barkley, regretting the fact that "a straight out and out vote
would have disposed of it,' remarked laconically, "Sometimes
that cugel can be taken away by the other fellow, too.' In
the debate yesterday, however, Senator Vandenberg voiced
the opposing view and urged the Senate to pass the recommital
motion as an "ultimatum" to the President to "hold inflation
on the wage front" or Congress would reconsider the Bankhead
364
C
Parity Bill. Meanwhile, the Senate Agriculture Committee
again scheduled the opening of its hearings on the recommitted Pace Bill to include farm labor costs in parity with
Price Administrator Brown and Agriculture Secretary Wickard,
who failed to appear Tuesday, as the first witnesses.
3. Labor - Close on the heels of the Bankhead Bill in the Senate
yesterday, Senator Byrd introduced a resolution requiring
the War Labor Board to keep Congress currently informed of
every wage increase they grent and the reasons each was
authorized. Byrd submitted the resolution in an attempt,
he said, to get to the bottom of "this inflationary spiral"
and added he considered wage increases far more inflationary
than the Bankhead Bill would be. Meanwhile, on the other
side of the Capitol, the Hobbs Anti-Labor Racketeering Bill,
shorn of softening amendments by the Judiciary Committee,
is expected to come up in House debate today.
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NOI TO RECTRANSPATTED
COPY NO.
13
BRITISH MOST SECRET
U.S. SECRET
OPTEL No. 115
Information received ubPit .M., April, 1943.
IS
1. NAVAL
On the 7th in the vicinity of the homeword convoy south of ICELAND (c)
5 U-boats were sighted and 3 attacks were mode. No further attacks upon the convoy
have been reported. The British Consul ni LAS PALMAS, CHAARY ISLANDS, reports that
35 crow of n German U-boat, somo of them wounded, landed on the GRAND CANARY on the
6th and that the U-bont was suni by the crew having been damaged by circraft attack.
2. MILITARY
TUNISI.. To 07/2000. 8th Army. Further details of our attack on
6th indicate th fighting was very fierce and determined countorettacks took place
-11 day. During the afternoon 4th Indian Division holding AJEBELTERIGA FATNASSA on
the left successfully withstood a dotermined counterettack but on the DJEBEL ELMEOUMANA in the centre another fierco onomy counter attack was partially successful.
Fighting in this aren become confused but later the rituntion was rostored by our
infantry. The gap in the enomy defences hap not been consolidated and ermoured
formations have started to move forward. 6,000 prisoners have been captured and
much equipment. The enomy is withdrawing northwards followed by 30th Corps antrido
GABES-SFAX road and 10th Corps further vest. Our fighter bonbers have attacked anny
targots along the Constal road. 2nd U.S. Corps. Axis forces holding heights notride GAFSA-GABES rond soom to be fighting stubbornly. In on unsuccessful attack
by U.S. infantry division on & hill south of the min road heavy casualties voru
suffered. To the north of the road U.S. forces, both infentry and armour, succeeded
in advancing.
On
7th Eighth Army forward patrols made contact with 2nd U.S. Corpe
30
milos east of
I GUETTAR.
BURMA MAYU PENINSULA. On the 5th our forces withdrawing from their
positions north of DONBAIK successfully attacked Japanese who had infiltrated through
the M.YU Hills from the east and cut the constal road north of INDIN (12 miles north
of DONBAIK). Japanose infiltrated southoest of INDIN holding up the attack for n
time but the situation WCA cleared up and by the 6th our main forces in this nron
had runched KYAUKPANDU, four miles north of INDIN, without further trouble. All
wounded were evacuated safely. Considerable casunltion word inflicted on the
Japanesa in this action. Further north our troops onst of the MAYU HILLS moving
southwards had reached a point 2 miles southwest of OKTHEMA (about 9 miles northeast of INDIN)
3. AIR OPERATIONS
WESTERN FRONT. 7th. 13 enemy aircraft crossed the south and southbest
coast.
Two
ME
109's were destroyed. Typhoons also destroyed a Gorman bomber
off CALAIS.
TUNISIA. 5th. Allied heavy, light and Sighter bombers attacked
BIZERTA and TUNIS airfields and 3 others destroying or damaging many sircraft on
the ground. 6th. 17 U.S. Mitchells bombed ENFIDAVILLE while fighters and fighter
bombers
attacked enomy concentrations north of WADI AKARIT and M.T. retiring up the
constal road.
SICILY. 5th. A total of 86 U.S. Fortresses and Mitchello bombed
3 enemy Airfields destroying many grounded aircraft. U.S. Liberators dropped 46 tons
of bombs on PALERMO Harbour. 6th. U.S. Fortrussos dropped 48 tons on TRAPANI
dirbour and hit several ships.
MEDITERRANEAN. 6th. 23 U.S. Fortresses and 5 Lightnings attacked
enomy shipping in the SICILIAN CHANNEL. A 6,000 ton ship was seen to explodo and
another was loft burning. 2 other 4,500 ton ships wore also hit. 15 M.E. 109'1
wore destroyad and 3 damaged. 10 Fortresses woro damaged.
4. HOME SECURITY
7th. NEWPORT ISLE OF "IGHT WOS bombed and machinogunned in the
early morning. The contro of the town WILS badly damaged and 15 persons killed.