Full text of Diaries of Henry Morgenthau, Jr. : Volume 635 : Part 2

View original document

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

100

May 21 1943
11:29 A. M.

FitzGerald:
Operator:

Are you getting the light there?
Hmm?

FitzGerald:

Are you getting a light on the recording

Operator:

Yeah, yeah.

FitzGerald:

Okay.

Operator:

Yeah, it's on.

FitzGerald:

Fine.

Operator:

How about the loud-speaker?

Operator:

Hello.

Daniel

machine?

Bell:

We're all ready.

Operabri

You're all ready? Well, I'11 get him right on.

HMJr:

Good morning. Can you hear me?

Yes, sir. Good morning.

HMJr:

Good morning. Well, Sproul was here for a little

I see.

HMJr:

Just a minute.

over an hour.

Everything's very quiet. When he left I said
to him, "Ig there anything on your chest that

you wanted to say that you couldn't say?" He
said, "No," he said, "You were square, on the
level, and all your cards on the table the way
you always are.

That's good.

HMJr:

But, that's the end. We went all over this

thing, I pointing out to him that I felt that

I was the aggrieved person, starting with
(Cont'd.)

101

-2
HMJr:

(Cont'd)

Eccles' memorandum of March 1st, which I pointed
out was very different from what they gave me

last Friday afternoon, and we went over the thing

from soup to nuts, and - and - so I said -- after
a re-hash in which I did most of the talking -I said, "Let's talk about what we'd do if - when
we get together here." I didn't say if we got together, when we get together. I said, "Let 8 talk
about New York. And, I said, "If - when we get
together here, I would expect you to sell it to the
other twelve bank presidents and that I'm not going
to do it. I haven't got the physical energy, and
I don't think I'd have to do it." I said, Let's
start with Perry Hall. I don't want him as District
Sales Manager. "Oh," he said, "that's terrible.
And I said, "I'd want a man like either Madden
and then he didn't like Madden, and I said, "Well
what about Randolph Burgess?" "Well", he said, "He'd
be all right. N So we talked about that, and I said,
"I wouldn't want Dick Patterson in charge any more.
I don't know who the man would be, but somebody like

Pope or somebody like that." And I said, And

that

will be the kind of thing that I want to do."

HMJr:

Uh huh.

So I said, "How about - let's meet tomorrow and see
whether we couldn't set up an organization the way
I'd like it." And I said, "I'11 have Bell, Gaston
and Gamble come down." So he said, "Oh, I'm not

ready for that yet.

He said, "I'm not ready?"

HMJr:

Yeah.

I see.

HMJr:

And he said, "I'd have to think this thing over,
about getting rid of Perry Hall. See?

Yeah.

HMJr:

He said, "I'm not ready to sit down with those three

men yet." And - 80 then he said, "What about Gamble?
So he said, "We don't think Gamble's the right man,

and so forth and 80 on. And 80 I said, "Well, 80
far as Gamble's concerned", I said, "that's settled."

And I said, "How - how do you know that Gamble isn't
the right man?" I said, "You never have had a

chance to talk to him." So - hello

-3-

102

Yes.

HMJr:

so he said, "Well, I have to think this thing
over. So I said, "Well, I'm not going to have you
people tell me who I can have in Washington. I
said, "Why should you?" Well, he agreed to that.
Well, he didn't think Gamble was big enough. So I

said, "Well, that's crossed. He said, "Well, what

about Perry Hall? Have you decided you don't want
him in charge in New York under me?" He said, "I'm

going to be in charge. And I said, "Yes, I- well,

I'd very much like to have him continue selling the
banks, the corporations, on that side, but certainly
I don't want him selling on the industrial side, and
the pay-roll and all the rest of it." And I said,
"Have you stopped to think that we'd be - forty-three
out of the fifty-two weeks we'll be on the industrial

side." I said, "While Perry Hall is a swell salesman, I don't think that he' the kind of a fellow I

want." And I said, "On the other hand, you go to
Dillon Read and Morgan Stanley and they will tell
you what I did for them vis-a-vis Jesse Jones.
I said, "There's no animosity here.' And then I went
on to explain how I had asked Eccles was there any
time that in nine years that I had done anything to
encroach on the Fed. and the only thing he could
think of was that bank holding legislation. And then
I said, "Have you realized for about eight years you
fellows were entirely dependent upon me for revenue?

And did I ever try to use it, did I ever try to abuse
it, or did I ever suggest anybody when you were so
dependent upon me on the political front?" He said,

"No, you haven't Well, I said, "Well then, why

don t you people trust me?"
B:

HMJr:

I see.

I said, "You people don't trust me." And I said, "I

have sold my organization - I have sold Ted Gamble on

being willing to take the Federal Reserve, going along,
and then you people come along and won't trust me.

And I said, "It isn't just one day." And I was very

quiet; he had all the time he wanted to say everything;
he didn't say anything mean; and I didn't say any thing
mean.

HMJr:

Uh huh.

But we - it gets right down to: May I have Gamble,
and I must take Perry Hall. So we might just as well
have the thing settled tomorrow.

103

-4Yeah. I see.

HMJr:
B:

HMJr:

What?

Well, he didn't insist upon Perry Hall. He said he'd
like to think that over, didn't he?
Well - he - he - before he would go one step further,

HMJr:

he wanted to think whether he would be willing to do to agree not to have Perry Hall.
Uh huh. Well, that's what I understood you to say,
that he wanted to think that over
Think that over

Yeah, before he saw anybody

and cross that bridge

HMJr:

eah.

HMJr:

then we can go on. But he didn' t want to see you
fellows - didn't want to have you down here.

I see.

HMJr:

Now

Did he ask - did he say when he would be ready to dis-

HMJr:

He's coming back at 10:15 tomorrow morning.

No, but I mean when he would be ready to sit down.

HMJr:

No.

I see.

HMJr:

He just - he asked to do the Perry Hall thing first.

Uh huh.

HMJr:

Now, if it's all going to hinge on Perry Hall, then

cuss it?

we might just as well know it. I don't know how for you

feel, but I don t want Perry Hall sales manager

this District.

Well

HMJr:

And

104

-5B:

I thought that would be a hard bridge to cross
when he got to it.

HMJr:

Well, you - we might - if we cross it successfully
here, we can cross similar Perry Halls everywhere
else.

Yes.

HMJr:

And my record with Morgan Stanley is they know I'm

a fair person, 80 it isn't any personality or anything else.

Uh huh. Well, the conference was a nice one, but...

HMJr:

A pleasant one.

HMJr:

you didn't -- and a pleasant one -- but you
didn't come out with a solution for the moment
No.

as far as personalities are concerned.

HMJr:

No.

I see. Well, what's the discussion tomorrow about?

HMJr:

He's coming in to tell the Secretary of the Treasury

oh, that's - I see. (Laughs)

HMJr:

That's the whole thing.

HMJr:

whether he d be willing not to have Perry Hall.

Well, that'
Well, you fellows talk about it, and I'm going to
call you back this afternoon.
All right. That's going to be a hard one for him
to cross.

HMJr:

You three fellows - and I'11 call you back later on

All right. Randolph wants to talk to you.

HMJr:

I can't talk now. I - I'11 just have to stop for

this afternoon.

awhile.

105

- 6B:

How is Mrs. Morgenthau this morning?

HMJr:

Much, much better.

I see. That's fine. I'm glad to hear that.

HMJr:

Randolph wants to talk to me?

Yes. He's sitting right here.

Well, you just
He wants to ask you a question, I think.

HMJr:

You - what?

He wants to ask a question. (Talks aside: Don't you?)

HMJr:

Tell you something.

HMJr:
B:

Randolph
Paul:
HMJr:
P:

HMJr:
P:

Well, it'11 have to be fast.
(Talks aside: It'11 have to be fast. He's got to go.)
I wanted to tell you that there were some unexpected
developments this morning in the committee
Yeah.

and a great deal of talk about -- from Vandenberg,
Disney and various others -- about ascertaining what
the President would accept.
Yeah.

Apparently, on account of the President's letter,
some of the Republicans feel that - or people like
Vandenberg feel that they ought to go further or
they ought to have no bill. They ought to have no

bill, or they ought to have a bill that will satisfy
the President and the Treasury

HMJr:

Yeah.

to keep us from making, what they call, in-

flammatory statements
HMJr:
P:

Yeah.

Now, I think I ought to get together right away
with Byrnes

106

-7HMJr:

Yeah.

afraid we - we ought to get, somehow, to the
President because - George may go to him. I'm

and Dan Bell and Byrnes, and I - I'm a little

not sure.

HMJr:

Well, get together, and you can get me on the
phone later on.

Okay.

HMJr:

Goodbye.

107

May 21, 1943
4:04 P. M.
Daniel

Bell:

No, I assumed he knew.

HMJr:

I don't think he does. I didn't tell him.

Oh, really?

HMJr:

Yeah.

HMJr:
B:

HMJr:

Yeah. Well, I - I assumed that he knew. He didn't
ask, and 80 I didn't tell him.
Uh huh.

That's about all that happened of any importance.

I see. Well, I have nothing. Has anybody else got
anything?

HMJr:
B:

( Talks aside: Anybody got anything? Ted Gamble.

Have you got anything, Harry? With him? Is that
important? Okay.) Ted Gamble wants to talk to you,
I think. Don't you, Ted?

All right.
All right.

Ted

Gamble:

Hello, Mr. Secretary.

HMJr:

Hello, Ted.

Why, we had a talk here following your talk this
morning and I have an idea that it might not be bad
to compromise on Perry Hall. I tell you the way I

feel about it -- I feel that Hall has a ton of
abilit ty.

HMJr:

Yeah.

I don't think that he has an understanding of our

HMJr:
G:

program - of the - I - I'm sure that he's one of
those fellows that needs a little
I was out off.

I'm sure he's one of those fellows that needs

a little training in social consciousness

-HMJr:
G:

HMJr:
G:

108

Yeah.

but I do think that he's done a swell job up

there
Yeah.

and I think that the same situation is true

with this fellow, Fleek
Yeah.

but I think that the plan that we've set forth
under which we can operate, that there's a protection
to the State organizations to see to it that they
can carry through with the program.

HMJr:
G:

HMJr:

HMJr:
G:

Yeah.

and it wouldn't disturb me to have a fellow like

Hall in charge of it.
Wait a minute. I can't hear. They've got a boat

going by here. Wait a minute. What's that?
I say it wouldn't - it wouldn't cause me any concern
to work with a fellow like Hall. I - I would rather
work with a fellow that has ability and a fellow that
has some intelligence than I would to work with a
fellow that couldn't carry out that job up there.
Yeah.

I think, too, that New York is a situation where we
have to -- of all the places in the country -- we have
to make certain that our relations are right with the
financial crowd, and if the use of Harry - Perry Hall

1s going to cause Allan Sproul to approach that job
enthusiastically, I think maybe we ought to compromise
with him on that.

HMJr:

Well, I'm sorry, I can't go along with you. I mean
we - we might just as

Yes.

HMJr:

Perry - I mean I made my speech this morning and the.

Yes.

109

-3HMJr:

more I thought of it - and since then I was

quiet - well, I mean, he said I was perfectly fair
Yes.

HMJr:

and I suggested a man just like Madden, but
he didn't like Madden, and I suggested Randolph
Burgess. Now, after all, if it's going to be
Perry Hall or nobody else, see?
Yes.

HMJr:

Well, then it gets down to their telling me

whom I can take. I can't even have the veto power.

Yes.

HMJr:

And I'm not going to do business that way, Ted.

Yeah. Well, I don't - I - I don't for a minute think
that - in my thinking I wouldn't accept this as a

precedent for letting them make the decisions for other
sections of the country.

HMJr:

For the whole country.

But

HMJr:

I told him when we got through that if - when - I

said, "When we' ve agreed. - why, I was very
quiet, as I first said, And I know Madden isn'

big enough." I said, Well, what about Randolph
Burgess? And he said, "He'
G:

HMJr:

Yes.

"Now this is the Treasury", and I said, "We have to

control it in the other countries."

Yes.

HMJr:

Now, then, Perry Hall is just as good for an example

Yes.

HMJr:

And it's - it's - I can't recede now, and if - if I

as we'll find, and I said, "I wanted him; I wanted
him to work for the banks and the other institutions.

had been unreasonable I'd recede, but I haven't.

110

-4Yes. Well, I don't think you've been unreasonable,
but I did want you to know how we felt - how I

personally felt about it.

HMJr:

Who's we?

Well, I'm talking about Mr. Gaston and Mr. Bell and
myself, but particularly myself. I don't - if - if
I wouldn't feel that we had agreed to do anything

HMJr:

that....
Well, I - if you don't mind my saying, Ted, I think
that that's scared.

No, that's - I was afraid that you would think that
and I-I. - I didn't put it on that basis in my talk
with Mr. Bell and Mr. Gaston and it isn't that, Mr.
Secretary. I think the man has ability. There's
some of these fellows that you couldn'

HMJr:

oh, Ted!

give me on a bet.

HMJr:

But, Ted, if - if I want those kind of people, see...

Yes.

HMJr:

to handle the thing, then - then all of this

HMJr:

stuff that I've been talking about is meaningless.
Yes. Well, of course, it would be contingent on
setting up the proper organization.
Oh, no. There - there's no contingency left.

Yeah.

HMJr:

There's no ground left.

Yeah.

HMJr:

But I told this to Sproul

Yes.

HMJr:

I said, "Anybody who talks to me in terms of
selling wads of bonds
Yes.

-HMJr:

F and G Bonds and ones of a hundred dollar
denomination, that he can sell wads."

Yes.

HMJr:

I said, "Granted he can sell wads, but I'm not here
to sell wads.

Yes.

HMJr:

"I want them to stay sold; I want the person to
make up his mind and his wife that that's what they
want; and I'm more interested in how they're sold
than in how much and I'm not interested in selling
wads. "

Yes.

HMJr:

I said, "If I want somebody to sell wads, there

Yes. Well, be assured of one thing

HMJr:

isn't a better man in the country to do it."

And I - and I said, "He isn't the type of man."

And he said, "Why?" And he said, "I'm over him."

I said, "I know, and that's all right. and I said and then I didn't know - but if the whole thing is

going to hang - and I - a thing that you don't know. He's a member of the firm of Stanley Morgan and I
I did them a great service down there in Washington
when they were being unfair to them.
G:

HMJr:

Yes.

They can't say that - I can send for Mr. Stanley
and they can't say that I'm prejudiced against them
No.

because I stood right up. Bell knows about it.

HMJr:
G:

Yes.

HMJr:

And if - you can ask Bell. Hello?

HMJr:
G:

Yes, I'm listening.
Well, look at Bell. He knows about it, doesn't he?
Yes, we talked about it this morning, as a matter of
fact.

111

112

-6- HMJr:

You can't say I'm prejudiced against them.
Yes.

HMJr:

I asked what' s-his-name - Sproul - whether at any time
during the nine-and-a-half years while he had been
there - have I ever - when they have needed our money
desperately to keep themselves going, have I ever used

that to an advantage? They said, "No". I said, "Have
I ever played politics in the nine-and-a-half years?"
He said, "No". I said, "Why, in God's name should
you think I'd start now?"

eah.

HMJr:

No, I - I'm upset now, because you've really upset me.

Well, I didn't - I - I - quite the opposite of the

impression that you' ve gotten is true, Mr. Secretary.
The thing I want you to know is that I'm not afraid to

take the fellow and I - I agree

HMJr:

I am.

Well, then I go along with you, if you are.

HMJr:

I a.m.

But I don't want you to get the impression that this
is any weakening on our part to carry forward the kind
of a program you want.

HMJr:

I - I - I don't know - I don't know what's come over
you fellows down there.

HMJr:

Yeah. Well, that is not
I mean - if - if we're going to take the Perry Hall

Yeah.

HMJr:

HMJr:
G:

HMJr:

and - and have a man like him say, "I don't want

Ted Gamble in Washington
Yes.

and I insist on having Perry Hall in New York."

Yes.

Then there's no place for Morgenthau.

-7- -

113

Yes. Yeah. Well, I - I have felt all along, Mr.

Secretary, that we had a problem in two sections of

the country. One in

HMJr:

There's no place
Cleveland

HMJr:

There's no place for Morgenthau and what he stands

Yeah.

HMJr:

And I might just as well have it out with the financial

for.

community

Yeah.

tomorrow. I might just as well have it out with

HMJr:

them.

Well, we're completely in your corner. You can be
sure of that.

HMJr:
G:

HMJr:

Well, by God, you'd better be!

(Laughs) I see.
I don't know what's the matter with you fellows down

there. Good God! I haven't begun to fight yet.
Well, we're all for you. The thing that I wanted to
get across to you

HMJr:

Herbert

Let me - let me talk to Gaston. What the hell's the
matter with Gaston?

All right, sir. Just a minute.

Gaston:

Hello.

HMJr:

What's the matter with you, Herbert?

Well, I - I thought that you ought to know that Ted

felt that he could get along with this fellow - with
this fellow, if we had to. If it comes to a point if you got to a point of trading with - with what 8his-name - Sproul - that you wouldn't feel that you
were selling us or him out - if you - if you accepted
it.

114

-8HMJr:

Selling who out?
What?

HMJr:

Selling who out?

Well, the - the people down here. That 18, that
you weren't creating an impossible situation.

HMJr:

That doesn't create

if you were to do it.

HMJr:

I mean - Sproul got himself now in an impossible
situation.
Yeah.

HMJr:

He's going to tell me that the Federal Reserve won't
go along because I won't take Perry Hall. Well, I - he's
he's got himself now in a beautiful position.
Uh huh. Yeah. Well, he probably won't tell you that.
He'11 probably come around tomorrow and say that, "All

right, if you feel that way, we'll - e'll get somebody else.

HMJ:

HMJr:

God, I get out of town one - one day and you fellows
all go to pieces down there.
Oh, I don' t think we've quite gone to pieces yet.
Well, good God! I mean, how can we ever have a - have
a man - how can we ever decide this thing on a better
symbol than Perry Hall.

Well, I just don't know enough about Perry Hall.

You know
HMJr:

I take it what you fellows are trying to do is trying

Yes.

HMJr:

I mean

Yes.

HMJr:

to be - to help me.

But - if we want to take the Perry Hall - see?....

115

-9 Yeah.

HMJr:

and make him number one, then I - then I -

I might just as well
Yeah.

HMJr:
G:

step out of the picture.
Well, if - that was the only thing I feared about,
that it might be a precedent in other cases.

HMJr:

Well, it - it is, because I told Allan Sproul, "I

Yeah.

or the time or the inclination

HMJr:

haven't got the strength

Yeah.

to sell this thing to eleven other bank

HMJr:

presidents.

Yeah.

HMJr:

And I said, "When you and I get together, you've

got to sell the other eleven."
Yeah.

HMJr:

"I'm not going to."

Yeah. Yeah. Yeah.

HMJr:

Now, he's - and he's got himself now jockeyed into
the position
Yeah.

where this thing is going to be settled on one

HMJr:
man.
G:

HMJr:

Yeah. Yeah.

I'm that I want this man to help, but
I
Sproul.

And don't want saying him to be number two af - after

Yeah. Yeah. Yeah. Yeah.

116

- 10 HMJr:

Now, I don't know how much that - that Perry Hall

is - my not taking Perry Hall, but it's Perry

Hall versus Randolph Burgess.
G:

Yeah. Yeah. Would Randolph take it?

HMJr:

I don't know, and I'm going to ask him.

HMJr:

Yeah. Yeah. Well....
Because - I mean - I think I'm sitting very pretty,
and I think those fellows, whoever he 8 going to
consult, are - are sitting in an impossible position.

Yeah. Yeah. Yeah.

HMJr:

I mean - I'd like to know why you fellows changed. I

don't get it, Ted, but I swear I don't.
Well, the only idea was that - that if you found that
a more comfortable way to get out of this situation,

why, every - everybody down here would go along with
you on it.

HMJr:

Yeah, but - but look, Herbert, it isn't a question of
my being comfortable.

Yes.

HMJr:

Let's say that Perry Hall is the best security sales-

Yes.

HMJr:

Let's say he's that.

Yeah.

HMJr:

And then we say "period."

Yes.

HMJr:

man in the United States. See?

Do I want a man who is the best high-pressure security
salesman of Stanley Morgan to be sales director for
New York?

Yeah. Yeah. Yeah. Well, of course, if you had him,
you'd have to bolster him with people who had a
broader interest than that.

117

- 11 HMJr:

Oh, but you can't bolster a fellow like that. He's

Uh huh.

he's a high-powered fellow.

HMJr:

Yeah. Yeah.

HMJr:

And you - and - he's a man who'd walk into my office
and say, "Mr. Morgenthau, on F and G there's going
to be a hundred dollar bond and not a five hundred

dollar bond, and you' re going to like it

Oh. Uh huh. Uh huh.

because if you don't I'll resign and my organization resigns with me."
No. Did he say that?

HMJr:

No, but he will, and you can put it in writing, and

HMJr:

that's what he'11 say when he' 8 in charge.

HMJr:

Uh huh. Uh huh. Well, of course, you couldn't take
anything like that.
You see, I wish you people would all get out Eccles'

Yeah. I

HMJr:

memorandum for March 1, see?

and that memorandum dated March 1 is identical
with the memorandum that they came back with and gave

me in the afternoon - Friday afternoon.

Uh huh. Uh huh.

HMJr:

And this thing - I told that to Sproul. I'm talking
much more forcefully with you now than I talked with
him.

HMJr:

Yeah.

In other words, this thing was decided about March
1 by Eccles and whoever he consulted with, and they
haven't changed one 10ta.

Yeah. Yeah.

118

- 12 HMJr:

And that was what they thought they wanted to do
then and then they come in and that's what they
want to do now.

Yeah. Yeah.

HMJr:

And this thing - it's - it's - we might just as

well settle if they want the Perry Hall and the
United States. Nice fellows, good American
citizens

HMJr:

Yeah. Yeah.

all granted, and their sons go to war. Just

as what's-his-name said
Yeah.

but there's no place for me in the picture.

Well, those - that type of men, of course, are one-

HMJr:

They're single-track men.

Yeah. Yeah.

HMJr:

I mean their whole ?

Yeah. Yeah.

HMJr:

I mean

Yeah.

HMJr:

HMJr:
G:

HMJr:

arm men so far as this work is concerned.

and there's no place - I mean - there's a place

for them
Yeah.

down the line, but not in charge of the District.
Yeah. Well.....
And it isn't making it any easier for me - I might
I all I could do is simply say, to Sproul, have

"Okay, just - Sproul, - you select him and I won't even

the veto power.

Yeah. Well

HMJr:

The impertinence of the people trying (Cont'a.) to tell me

- 13 HMJr:

119

who I can have in Washington.

(Cont'd.)

Uh huh. Yeah. Yeah.

HMJr:

I mean the next step is they 11 say I'm not good
enough.

Yeah. Yeah. Well, of course, that - that - that

HMJr:

And that's what they've been saying for ten years.

Well, of course, that suggestion which was the

suggestion about

first thing that Eccles said the other day about about the Washington end of it, of course, that that looked awfully bad for any agreement.

HMJr:

But, I mean - get out the March 1st agreement.

Yeah.

HMJr:

It wasn't an agreement - his

His memo.

HMJr:

his finance memorandum. I never asked for it.

Yeah. Yeah. Yeah.

HMJr:

Look, Herbert

HMJr:

Yeah. What?

this thing to me - I've had plenty - it's as

clear as crystal.
Yeah.

These boys want to run this show, and this thing

might just as well be settled in the next couple

of days.
G:

Yeah. Yeah.

HMJr:

Now, I want Bell to listen to this particularly.

I had Walter Stewart for supper; I gave him the
unvarnished truth; didn't pull my punches on my-

self on bit

HMJr:

Yeah.

gave him the whole picture

120

- 14 Yeah.
G:

HMJr:

about my wanting to select them instead of the whole business - all of everything that I had

said - I mean - I - I made it as unfriendly to

myself as possible.
Yeah.

HMJr:

When I got all through and done, Walter Stewart
said to me, "Henry, on your wanting the initiative
as to whom to select, brother," # he said, "you' re

absolutely right.'

Yeah. Yeah.

HMJr:
G:

HMJr:

He said, "You've got to have that."
Yeah. Yeah. Yeah.
He's the first economist of the Federal Reserve;
he's been with the Bank of England; he 8 got that
whole background.

Yes. Yes.

HMJr:

He knows all about the fight between the Treasury

Yes.

and Walter Strong

of the Federal Reserve.

HMJr:
G:

Yes.

HMJr:

And he's - when I got all through he said, "You're

Yeah. Yeah.

HMJr:

absolutely right.

He said, "Maybe the way you did it wasn't the best

way, but after what you talked about", he said, "it
makes sense."

HMJr:
G:

Yeah. Uh huh. Yeah.
And I'm having Leffingwell here at 5:30.

Uh huh. Well, that's good.

121

- 15 HMJr:

And - of J. P. Morgan.

Yeah.

HMJr:

Now, I - I mean - I'm - I'm - as I say, I suppose
you fellows want to help me.

Well, that's right and - and I don't think anybody's
losing his nerve at all.

HMJr:

Well, I - I - if you don't mind - I - I think you when - if Ted was speaking for you and Bell, I
think you fellows - well, I - if you don't mind,
I don't think your advice is very good.
Uh huh. Well, you've

HMJr:

No feelings hurt, but

Uh huh.

HMJr:

but - because, number one, this is - this is
a decision that's got to be made. It's like said the husband and wife on the first night,
except it's coming now ten years afterwards.

Yeah.

HMJr:

AndI had it once with Owen D. Young and George
Harris

Yeah.

HMJr:
G:

HMJr:

....and now I've got it again.
Yeah. Yeah.

And I'm now - Sproul has gotten himself into an
impossible position.

Well, I - I think as to the first end of his

proposition it's - it's particularly an impossible on
situation. Well, of course, anyway, on - even
their own proposition, they - you - they were
willing to freely concede you the veto power, and
if they re - if they' re willing to concede that,
why it's - it's a veto power or not a veto power.
Well, now they're not - they're not - they're not
willing to concede me anything. They're going to
(Cont'd.)

- 16 HMJr:

122

pick the man, and I take it and I like it.

(Cont'd.)
G:

Uh huh. Well, I - that's what I was saying - I
mean - they're - his - if he is not willing to

yield on Perry Hall, he's not making good on their
own suggestion.

HMJr:
G:

HMJr:

That's right.
Yeah. That's - .that's true enough.
Am I crazy? If you fellows are - are you- you
fellows all think I'm crazy?
Let me ask you this. (Laughs) No, I don't think you're
crazy.

Let me talk to Bell again. What?
Here's - here's Dan. Yeah.

HMJr:

Wait a minute, Herbert.

Yeah.

HMJr:

Am I crazy up here?

Are you crazy?

HMJr:

Yes.

No, I don't think you're crazy.

HMJr:

Well, am I unreasonable?

HMJr:

Well, you - no, I just - it was just a question that
if you - if you felt that in order to make peace
you were willing to sacrifice that much, why, Ted
said that he'd be willing to go along and do the
best he could with this fellow and - and he thought
that with proper safeguards the thing could be
operated.

HMJr:

Well, Ted doesn't know me. That's - then he just
doesn't know me.

And.

HMJr:

He's never seen me in a fight.

123

- 17 and I thought that word ought to be gotten to

you.
HMJr:

Ted's never seen me

Uh huh.

HMJr:

I mean - he should have - he - he's just never
seen me - like that Executive Order on the alien

property.
G:

Yeah.

HMJr:

He's never seen me in a fight.

Yeah. Yeah.

HMJr:

And, you'll never find - what Ted's suggesting, out of
the goodness of his heart, is that I just give up.
Well, it would be sacrificing a good deal.
Why, he - he nor Bell nor I are powerful enough once
these boys are in those positions to control them.
Yeah. Yeah. Yeah. Yeah. Yeah.
I mean that they'11 - they'11 "yes" them and then there
comes a day when they say, "Now listen, Treasury, you

do it this way and like it." And I'm not going to wait
for that day.

Yeah. Yeah.

HMJr:

We might just as well do it now and have three months

HMJr:

ready - time to get ready.
Yeah Yeah. Yeah.

And, according to Stewart, these kind of fights have
been going on long before I was in the Treasury.

HMJr:

Well, I - no doubt, they have.
Let - let me talk to Bell a minute.

Yeah.

Daniel

Bell:

Bell.

124

- 18 HMJr:

Bell?

Yes, sir.

HMJr:

Did you want me to give in and accept Perry Hall?

Well, I probably feel a little different than

anybody else around here on this thing, and Ted made

up his own mind on it that he could work with him
and I thought that it was a good thing, because I
think Perry Hall is a good man and he ought to be

kept in the situation.

HMJr:
B:

So do I.

You - you say Dr. Burgess - well, Dr. Burgess is a
good man and a better man probably than Perry Hall
in some ways, but he can't compare to Perry Hall
when it comes to being a sparkplug, and that was
the reason that I said that I thought it might be
a good thing to tell you of Ted's reaction, and
if you wanted to compromise some, that it might
be a good thing for you to even tell Allan that
Ted suggested it, which shows he's a pretty reasonable fellow
Oh.

but if you feel so strongly about it - toward
Perry - why, then, there's no thing to do but stick
to your ground.

HMJr:

I don't - I don't - he's just a symbol.

Well.

HMJr:

He's just a symbol, and

He's an awful good man.

HMJr:

If they come in tomorrow, then it means that they
don't want me to have the veto power; they don't
want me even to have the suggestion; they don't
want me to have any power.

Well, I - (laughs) - we're having a hard time. You
see, I think there's got to be some give and take
on both sides if you want to get together. If you
don't want to get together

125

- 19 HMJr:

oh, my God! I - I - I can't - it's - it's very

plain. On the ve... - supposing I said, "All
right, you have the ve. - I have the veto
power. I don't want Perry Hall. Then he comes
back and he says, "It's got to be Perry Hall."

Well, uh huh.

HMJr:

See? That's what it amounts to.

Well, I - I think you're in the same position

either side, whether you pick him or whether you

veto him.
HMJr:

That's what I've found out, and I - I

Sure.

spoke ?

HMJr:
B:

Well, I - I thought that last Friday, that it was
the same either way if you exercised your veto

power.
HMJr:

Well

And

HMJr:

but now it turns out that they don't even want

that and they want to tell me that I - I said to

him - I picked this up from Walter Stewart - I said,
"When they - in Eccles memorandum they say Eccles

and another Federal Reserve Board sit on my Policy

Board on War Bonds. I told that to Stewart and
Stewart said to me it'd be just as reasonable for
me to say I want to pick three directors of the New

York Federal Reserve Bank, because they're my fiscal
agents and I should have something to say who sits
on that Board.
B:

HMJr:

Hmm.

He said that would be just as reasonable. And as
a matter of fact, he said, "You should have somebody
there. #

HMJr:

(Laughs)

He said, "You haven't got one man on the Federal
Reserve Board" -- he went over them all -- "who is in
sympathy with the Treasury."
.

126

- 20 B:

HMJr:

Well, that's right.
And he said, "You're entitled, even if you're

not allowed to pick them, to have somebody who'd
be in sympathy on a job as important as the
Federal Reserve Board in New York.'

At least, we ought to have a decent chairman. (Laughs)
And he said, "There isn't a single man there", he
said, "Henry, that you could count on."

Well, that's - that's probably right.

Oh, he's talking sense.
Bill Morris is on the Board. You can count on him.

HMJr:

Well, I know, but

HMJr:

He's right in gen - general about it.

HMJr:

He said, "It's just as reasonable to say that you want

Hmm.

HMJr:

Now Walter is no fool. Nobody could - somebody may

That's right. He isn't - he's

HMJr:

And - and.

to pick three members of that Board."

not agree with him, but he's nobody's fool.

a brilliant fellow.

HMJr:

and Walter has always advised me as to what is

in my personal interest.

Well, I think that's right. He's always been a good

HMJr:

And he went all over those Board members of New York,

advisor.

and he said, "There isn't a man that you can count on.
He didn't call Meyers because Meyers hasn't been there
long enough.

Yeah.

HMJr:

And he said Meyers has no influence anyway.

127

- 21 -

Well, we're just trying to be helpful, that's all.
(Laughs)

HMJr:

Well

We're - maybe we weren't.

HMJr:

What?

Maybe we weren't.

HMJr:

No, but I - I - I just think that this thing has
gotten now to a point that - well, I - I just want

to - if he turns me down tomorrow, then - then we' ve
saved a lot of breath and a lot of time and we know

where we're at.
B:

Yeah. Well, I think if he does that then we've got

HMJr:

We will.

to work out something else.

A1 Williams was in yesterday and talking a little
about it. He said that to him that whatever way we
went it meant that the Federal Reserve had to get
behind the Treasury's program. He said, "If you go

to a State basis and have your own organization and
your own man in each State and leave the Federal out

of these drives," then he said, "the Federal has got

to get behind those State people and help them anyhow."

HMJr:
B:

HMJr:

Say, listen

He said, "That's the way I feel about it."
From these other people that I've talked to if - if

the Federal Reserve takes this position on Perry Hall

here
B:

HMJr:

Yeah.

and I go to the public on it, and I go to Congress
on it, if I'm pushed - if they push me - why, God
damn it, they put themselves in an impossible position.
And I kept repeating over and over this morning to

what s-his-name
B:

HMJr:

Allan.

that we're going to get together - we're going to
get together.

128

- 22 B:

HMJr:

Uh huh.

He goes out of the room and says I'm fair and I'm
square and I put all my cards on the table. I
haven't played politics; I haven' t taken advantage
of the Federal Reserve System when it was broke to

do a single thing that forced them into a single
position. So what the hell!

HMJr:

Well, I - I think you've been fair too.
They haven't got a single criticism of - of my
administration of the Treasury or my relationship
with them. I mean - I've asked them now to give me
a single criticism, and they haven'

Yeah. Well, I think that's right.
other than these petty ones, that you and I
aren' - aren't any salesmen.

Yeah.

HMJr:

Well

(Laughs) As far as I'm concerned, it's true. And it
isn't 80 far as you re concerned, but I'm out of that

class.

Well - well, I am - I claim I am a salesman because
I stay in sympathy with the people, and that - to that
extent I am a salesman.

HMJr:

Yeah.

HMJr:

So do you. Well, we'll see.

Well

HMJr:

Is White there?

Who?

HMJr:

Whit

Yeah. (Talks aside: Harry. )

Harry
White:

Hello.

HMJr:

White?

- 23 -

129

Yes, sir.

HMJr:

Have you been listening?

Well, it's - the loud-speaker hasn't been working, 80
I've got what I could out of the one-sided conversation,

but I think I've got
HMJr:

Oh, hasn'

some picture of it.

HMJr:

the loud-speaker been working?

No, it doesn't - we've done everything we could to it,
except burn it up.

Why don't you kick it?
We've tried that.

HMJr:

Well....

But I've got some grasp of what apparently is the

HMJr:

problem.

HMJr:

Well, I mean - it's down now as to whether Mr. Sproul
is going to tell me tomorrow whether he's agreeable

not to have this fellow Perry Hall.

Well, I don't - I don't know anything - I don't know
this fellow at all, but let me ask this question.

Is the success of the drive, in your opinion, dependent
upon his being in it? I mean - is he 80 outstanding?

HMJr:

No.

Can - can somebody else be obtained?

HMJr: Oh, sure.
Well, then I really don't see what
W:

HMJr:
W:

It's just that he - he's just the symbol in this case.
Yeah. Well, I mean, if you feel you can get somebody
as good, why, on general principles, I'd take somebody
else.

- 24 HMJr:

130

And so the point is, they're not only now
seemingly saying to me I can't pick the
fellow, but they re also saying to me I can't
have the veto power.

No. No, I really don't see room for difference
of opinion, with this important proviso which I

know nothing about. I mean the extent to which
his presence is essential to the success.

HMJr:

Oh, Harry, you wouldn't know - nobody

I shouldn't think so, but I don't know just what

HMJr:

The good people

Well

HMJr:

.... took care of that.

the situation 18.

(Laughs) Well, I - from what I've heard -- and to
me, the problem seems simple, maybe I'm over-simplifying it - I - there wouldn't be any question about
my position in the matter. I'd just tell him "No,
I don't like the way his ears are shaped."

HMJr:

Well, I don't have to say that. I just

No, but I mean that's what - what it amounts to

HMJr:

Well

if you've got somebody else in mind. Now, 1f you
haven't got anybody else in mind, now, that' 8 a horse

from a different stable.

HMJr:

Oh, there're plenty of people. New York is full of

Yeah. Well, if that's the case, then I - I don't

HMJr:

Well

those kind of people.

think I'd give in. I don't

...I don't see on what basis they make that condi-

tion. I mean - I don't - I fail to understand why
they should say, "If you take such-and-such a man,

we'll cooperate with you; 1f you don't take such-andsuch a man, we don't know. I mean that's a very
strange position for them to take, if there are other
men who can do the job.

131

- 25 HMJr:

oh, sure. Let me talk again to Gamble.

Yeah. Wait, Herbert would like to say a word to

you before you talk to Ted.

HMJr:

Herbert

Oh.

Gaston:

I want to make my position a little clearer

HMJr:

Yeah.

Of course, if - if Sproul should come back to you
tomorrow and say, "I won't go along. I won't
have any part in this organization unless you take
Perry Hall

HMJr:

Yeah.

why, of course, there's only one answer you

could possibly make
HMJr:

Yeah.

"Your proposition is rejected. I will not

take Perry Hall.'
HMJr:
G:

Yeah.

And there's - there's no question about that, and
I never had any - any other idea. My only thought
in connection with it was that if - 1f he said,
"Well, I'm willing to go along with you and I'm
going to work with you in any event, but please
let me have Perry Hall," that might put a different aspect on it and you might want to consider

HMJr:
G:

Yeah.

and depending on what you know and feel about

Perry Hall, and I don't know very much about him.

But certainly if he puts it up to you cold, "I've

HMJr:
G:

got to have Perry Hall or I won't go along," you
just can't accept.
Yeah. Well, that's what I meant.

Yeah. Well, that's - that's - I agree with you

wholeheartedly on that. You just can't let them
face you down.

- 26 HMJr:

132

Perry Hall becomes a symbol for the whole thing.
What?

HMJr:

He becomes a symbol.

Oh, of course, if he - he - lays down anultimatum to
you why, of course, you've got to - you ve got to

turn him down.

HMJr:

Well, look. I wish everybody in the room would read

Yes.

HMJr:

Eccles memorandum of March 1st

and you'll see that they haven't moved away from

that memorandum one inch.

Yeah. Uh huh.

HMJr:

They're sticking by that memorandum of March 1st.

Yeah. Yeah.

HMJr:

Everybody in the room should read that.

Yeah. Yeah. Well, we'll get it out right away.

HMJr:

And you'11 see that - that they're absolutely

Yes.

HMJr:

And in that memorandum they give me my orders what I

Yeah. Yeah. Did you want to talk to anybody else?

HMJr:

No, I just want to - I want John to get the benefit.

Yes.

HMJr:

Hello.

Yes.

HMJr:

Let me just talk to Ted a minute.

adhering to that memorandum.

can do.

John Sullivan is here and Ted and

To Ted, yes.

Ted

Gamble:

Hello.

133

- 27 HMJr:

Ted?

Yes, sir.

HMJr:

I told you when I asked you to head this thing up....

HMJr:

Yes, sir.
I'd give you an organization whereby you could
be happy

Right.

HMJr:

and, by God, (laughs) I'm not going to give you

any other kind unless you can be happy.

Well, I think we're one hundred percent with you,

Mr. Secretary.

HMJr:
G:

You've got to leave it to the old man'
I think Mr. Gaston put it very well
opinion.

HMJr:

just now.

HMJr:

for what - under what conditions you can - you
can function.

HMJr:

Yes, sir.
Now you can't function under certain conditions.

Yes.

HMJr:
G:

Neither can I, and I'm not going to let you.
Yes. Well, I think there's one thing you ought to
know, that I may be lacking a little bit in brains,
but I sure as hell am not lacking in fortitude.

HMJr:

Well

And

HMJr:

...I wouldn't have picked you if I thought you did.

(Laughs) And

HMJr:

I want one a hundred - a yard wide and all square.

134

- 28 G:

(Laughs) Well, you

HMJr:

If you're trying to help me, I don't - I don't need

Well, it was - it was only being passed on to you, Mr.

HMJr:

No, no. You - you - I've got to give you a kind of an

that kind of help.

Secretary, that

organization under which you can be happy

That' right.

and you can't be with the - Perry Hall.
Yes, yes. Well, I think Mr. Gaston summed it up
pretty well as to what our reaction was.

HMJr:
G:

HMJr:

Okay.

All right, sir.

HMJr:

Now is John there?

Yes. Just a moment. Say, I might tell you before he
gets on the phone that they did a swell job on this
newspaper ad, the ad that Smith suggested.

HMJr:
G:

HMJr:

Newspaper ad?

A newspaper ad is going out to all the papers in the
country with a condensation of this pamphlet.
Well, send it up to me air mail through Miss Chauncey
tonight, 80 I'11 know what you re talking about.
Well, we can't do that. I can send it to you 80 you
can have it Sunday, because it' 8 in production and
it's in Chicago. We sent it to Chicago an hour ago.

HMJr:

An ad?

An ad. It's very good.

HMJr:

I don't know anything about it.

Well, I thought Smith had talked to you about it

because his.
HMJr:

He's coming to have supper with me tonight.

- 29 G:

Well, he'11 tell you all about it, because I read

HMJr:

Well, he's coming to have supper.

135

it to him over the phone.

Sir?

HMJr:

"ho's paying for the ad?

It's to be a sponsored ad. It's a report to the

people of the nation.

HMJr:

Oh, really?

It's very good.

HMJr:

I - I - it's the first I've heard.
Well, Smith sent a wire down on it the day before
yesterday, and I assumed from the wire that it was

something that he had discussed with you.

HMJr:

No.

But Mr. Gaston has gone over it and checked it, and it-

it's very good. They did a very good job on it.

HMJr:

Good.

And it was our understanding that you wanted it.
That's why we moved 80 damned fast. (Laughs)

HMJr:

Well, the more I see of Smith, the more confidence I
have.

Yes. Well, he'11 tell you all about it at dinner.

HMJr:

Okay.

Just a moment. Here's Mr. Sullivan.

HMJr:

Hello.

I read it to him over the phone this afternoon.

John

Sullivan:

Yes, Mr. Secretary.

HMJr:

John, could you hear any of this?

Yes, sir.

136

- 30 HMJr:

You got - have you got any advice to give me?

No, I don't think I have. These fellows have been

in on all of these things and I haven't. You recall
when this first came up you asked me what I felt, and
I said I felt that turning it over to the Federal
Reserve was a mistake, but that if you were going
to do it, you were going to have a difficult time
not giving them the personnel they wanted. It
sort of - it sounded as though it was working out
in that direction. Now, I don't know Perry Hall.
While you were talking - and I - and I inquired,
and I understood he was with Morgan Stanley.

HMJr:
S:

That's right.
Well, that - that doesn't ring a sympathetic bell in
my mind and I don't think it would with the American
people, but I think the way it was last described to
you is that - that is, if it is put up as an ultimatum, why, that's the end of it, and the whole thing
should be reviewed de novo.

HMJr:

If it is Morgan Stanley

Yeah.

HMJr:

and I don't think it'11 set very well with the
American people.

No, it - it certainly isn't in harmony with the with the whole program.

HMJr:

Nope. Okay, and we'll see tomorrow what happens.

Good luck today.

HMJr:

All right.

Fine. Good luck tomorrow.

HMJr:

Thank you. Can I have the operator, please.

Yes. Operator. Operator.

Operator:

Hello. Yes, sir.

HMJr:

Miss Carre?

Operator:

Yes, sir.

137

THE UNDER SECRETARY OF THE TREASURY
WASHINGTON

May 21, 1943
CABINET MEETING

The President said that he had nothing except

to report that he just had a very nice lunch with
Winston Churchill and said that he jokingly told
L. Churchill that he was responsible for speeches

such as Happy Chandler was making. Churchill could
not understand and wanted to know how come. He said when
he was over here before he made a speech before the
Congress that the Allies were prepared to prosecute
the war against Germany to the end and then they would

all pitch in and help on Japan, but he also said there
might be some partial demobilization.

The President then discussed the method of attacking Japan, as he has on several other occasions, and
paid that people like Chandler seemed to think that

we could attack Japan island by island, not realizing
that it would take an awful lot of soldiers to police
each island that they took back from Japan.
Mr. Hull had nothing to report.
The President asked me what I had in mind on the

tax situation, because I had called him just before
lunch for an appointment for Jimmie Byrnes, Randolph
Paul, and myself to see him on a situation that had
developed on the Hill. I told him that Mr. Paul had
reported that the conference committee had met all
morning and after some heated discussions the question
was raised as to whether or not they could find out
just about the kind of bill the President would be
willing to sign without publicly commenting on its
contents. It was indicated that George and Doughton
would be asked to see the President on this matter
and I told him that I was anxious that before he saw
FOR VICTORY

BUY

138

-2them he get the story from Mr. Paul and decide after
hearing the story what course of action we should

follow. I told him Mr. Paul had discussed the matter
with Mr. Byrnes and maybe he would like to make some
comments. I said I thought it was a matter to decide
whether he would accept the House bill, the Ways and
Means Committee bill or some variation of it, or if
he would go so far as to accept some modification of
the George proposal of 75% cancellation.

I told him that he would be in a much better
position as regards a future tax program if he would

accept the Ways and Means Committee bill or the House

bill because there is a feeling on the Hill that if

we get additional revenue out of a partial cancellation
scheme during the coming fiscal year, then there may
not be any need for a tax bill. On the other hand,
said, I thought he might want to consider the matter
of being free to comment on any bill that is passed.
I

The President seemed astounded that there was

some thought on the Hill that the Congress could get

by without an additional tax bill if they provided

additional revenue through partial payments of the 1942
tax liability. I told him I thought that was definitely
in the mind of some, and furthermore, I did not think
Congress would begin to discuss a tax bill until
September 1.

He said he just could not believe that that was
the case. He said that the fact that we have asked
for 16 billion of additional dollars and Congress feels
it can get by with 1-1/2 billion to 2 billion of additional revenue amazes him. He said that would make the
Treasury's borrowing program a very serious matter. I
told him that if we did not get additional revenue the
Treasury would have to borrow in the neighborhood of
$75,000,000,000 during the fiscal year 1944. He said
that was entirely too much for us to have to borrow
for a war program.
Jimmie Byrnes said he agreed with what I said

about the situation and he would like to raise the

question as to whether the President should see him,

139

-3Paul and myself before he sees George and Doughton,

or after. It might be better for the President not

to see us, but when he sees George and Doughton tell

them he has not followed the tax bill closely and he
would like to think about the proposition they have
put up to him for a while and then he will call them
on the telephone. After that he might discuss the
matter with us and decide what course to pursue.
After this discussion I asked the President what
course he would like the Treasury to follow. He said,
"I think we should just let the situation develop and
when I am approached on the subject I will decide then
whether I should see you gentlemen first or George and
Doughton first. 11

Mr. Stimson said that he was a little embarrassed
to read in a newspaper column a few days ago that the
President's Cabinet was decadent and that no important
matters were discussed at the Cabinet table; that in
particular the Secretary of War and the Secretary of
Navy felt they could not bring highly confidential
matters to the Cabinet because of the fear of a leak.

He said with that in mind he dug out of his file a
highly confidential letter covering a very important

subject which he had sent to his colleague, Secretary

Knox, a month or so ago and which he understands had
been in turn sent by Secretary Knox with proper comments

to the President for consideration and decision. He
said this important subject was the matter of the
football game between the Army and Navy next Fall.
From there on there was quite a discussion of the atter

of banning all sports, particularly intercollegiate

football games, and the matter of using gas to go to
such events, including racing and other sports.
Mr. Ickes said that two pipe lines had gone out
in the last few days -- one 24-inch in Oklahoma and
another 16-inch in Illinois -- caused by the floods;
that the gasoline situation is worse than at any time

140

-4since we started rationing, and it is absolutely

necessary that pleasure driving be banned.
This whole subject of sporting events and the
effect on the morale of the American people was

discussed for at least twenty minutes. The President
finally ended it by saying that he would have to get
a formula that would apply to the whole country
equally.

Mr. Stimson said that in view of this extended
discussion he was sure every one would agree that
the subject he had brought up was of first importance.
Mr. Biddle had nothing.
Mr. Knox brought up the question of publication
of sinkings of U-boats. He said he thought we had
an agreement with the British that we would not publish
any information on the sinking of U-boats and that the
Navy had pretty well lived up to the agreement but
that the British seemed to be continually talking about
the sinkings. The President said yes, he had noticed
that and he thought it was unfortunate that they had
as he was convinced more than ever that we should not
give out this information.
The President asked Secretary Knox if he knew the

story back of the death of Yamamoto and said if it
was not confidential he might tell the Cabinet about
it. He anid he had the story today
Mr. Knox said he did not have any story other than that
Yanamoto was in one of a group of planes which had
encountered our fliers and they shot it down and he
was killed in the crash.
The President said that was not the way he understood it. He understood that our men had information
that this gentleman was moving from the island where
he was stationed to another island and they sent out
a number of planes to attack him. They found that
his ship was identified in some way as the flagship
and they concentrated their attack on him and shot
60

him down.

141

-5Mr. Knox said that he had reported yesterday
about news being received to the effect that one of
our submarines had sunk a Japanese sloop. He did not
know just what this meant but just before he came to

Cabinet this was clarified by further dispatch. It

seems that one of our subs had sunk a 17,000 ton troop

ship with all on board.
Mr. Ickes had nothing.
Mr. Wickard reported that the Farm Credit Administration was receiving payments on account of its past
loans at the rate of 4-1/2 times the volume of loans
being made at the present time. Also, that the Farm
Security Administration had received repayments on its
loans up to about 80% In other words, out of $300,000,000
loaned, only about $60,000,000 remains unpaid.

The President said that he had noticed an article
in today's Wall Street Journal to the effect that some
man in Indiana claimed that the Agriculture Department
required him to kill, back in 1933, 150 small pigs.
This policy on the part of the Department of Agriculture,
the story stated, was responsible for a shortage of
meat today. The President said he would like to have

this story run down to see if there is any truth in it.

Mr. Jones had nothing.
Miss Perkins asked the President if he had seen
Sir William Beveridge and he said he had seen him this
morning. She wanted to know if he had discussed the

British plan. The President said no, he had not but
he had suggested that in his contemplated trip he ought
to add the South. Miss Perkins said that it was important
that very shortly she have a conference with him and
others on the American plan and send it up to Congress
to try to get action on it this session.
Messrs. McNutt, Fleming, Blandford, Byrnes and
Nelson had nothing.

Vice President Wallace said that in their dealings

with Mexico on economic problems they are constantly

142

-6being confronted with some previous commitments
that were supposed to have been made between the
President and President Comacho of Mexico. The
President said he had made no commitments of any

character on the economic front with the President
of Mexico.

DWB

143

TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION

DATE May 21, 1943

Secretary Morgenthau
FROM

Mr. Odegard

A recent Gallup Poll has uncovered some interest-

ing facts about the potentialities for expansion of the

Payroll Savings Plan.

(1) 52% of wage earners would be willing to have
15% of their pay deducted for War Bonds.

(2) Even in the lower income groups, 49 of

those interviewed would be willing to have 15% deducted.
In the upper and middle income groups, 54% are favorable.
(3) Workers who have already become accustomed

to having part of their wages deducted for bonds are more

likely to favor the idea of larger deductions. For ex-

ample, among those who already have less than 15% deducted

from their wages, a substantial number (55 per cent) say
they are in favor of going as high as 15%

144
BOARD OF GOVERNORS
OF THE

FEDERAL RESERVE SYSTEM
WASHINGTON

OFFICE OF THE CHAIRMAN

May 21, 1943.
PERSONAL AND CONFIDENTIAL

Dear Henry:

Because you took exception to a letter you had
received from Allan Sproul dated May 3, I asked him to
send me a copy. He did so and at the same time sent me a
copy of his letter to you of May 12 in response to your
request over the telephone for his ideas on the way he

felt the organization should be set up for future fi-

nancing drives.

I have gone over both of these letters carefully

and
most
are
There
is nothing in them. They are

and I think are excellent -- courteous

frank
and
comments
I
would
want to am in full everything he has to and

created

such an reaction on your part. Allan
have. unfavorable constructive. constructive I personal they cannot I say understand They every agreement why suggestion entirely direct, should they with just should he think objective. clear, practically makes. Knowing the have you sort of

Sproul as I do and as you should after your long associa-

tion with him, I should think these letters would serve
only to increase your confidence in him and in his judg-

ment. I can only conclude that you have wholly misunderstood him.

Sincerely yours,

Marrier
Honorable Henry Morgenthau, Jr.,

Secretary of the Treasury,
Washington, D. C.

3 IJune145GENERAL MOTORS CORPORATION
DETROIT. MICHIGAN
May 21, 1943

Honorable Henry Morgenthau, Jr.

Secretary of the Treasury
Washington, D. C.

My dear Mr. Secretary:

I received your letter of May 18th and I was sorry that
it was impossible for me to stay over to meet you the
next day, but it was necessary for me to attend a General

Motors meeting in New York which had been scheduled for

some time, and the part I had to play in the meeting made
it quite necessary for me to be there.
I will be in Washington on June 1st and 2nd and I am asking
Mr. Bathrick to see whether or not we can make an appointment

with you for either the 1st or 2nd, as I am very much interested to talk with you about the forward organization and the
reactions that I picked up in Detroit since I last saw you.
Sincerely yours,

R. H. Grant/
vm

Registrant

Called Bathrick who will

give Grant the

3 P.M June / information
E17.
5/25/43 400 pm

146

THE BORDEN COMPANY

photolet
tom

350 MADISON AVENUE
NEW YORK
SEEDA

1857

COORE G MONTAGUE

May 21, 1943

Hon. Henry Morgenthau, Jr.,
Secretary of the Treasury,
Washington,

D. C.

Dear Mr. Morgenthau:

I was indeed very happy to receive
your letter of May 18 advising me of the good work
Stuart Peabody did for the Treasury Department in
connection with the Second War Loan Drive.
Mr. Peabody has told me that he
thoroughly enjoyed the work assigned to him and
derived much pleasure from it.
The Borden Company has been called

upon to provide the assistance of several of its
people to aid in the war effort, and we are all proud
of the opportunity which has been given to us to do
our part.

I want you to know how much I

appreciate your letter, and by all means please feel
free to call on Stuart for advice when the occasion
arises.

Sincerely,

Thomas I Montague
President

147

MAY 21 1943

Mr. E. F. Bartelt,

Commissioner of Accounts of The Treasury,
Washington, D. C.

Dear Mr. Bartelt:

Reference is made to the coament in your recent report
on the War Bonds Office of the Chief of Finance in Chicago, Illinois,
to the effect that you were unable to obtain any information as to
what protection is provided for that building in the way of antiaircraft guns.

This is not surprising inasmuch as such information is
secret. I may tell you, however, that the War Department policy
with respect to protection against hostile air attack is to assure
protection of areas rather than individual installations.
A recent special survey has been made by the respective

Service Connands of all other internal security measures at the four
Army Regional Accounting Offices (New York City: Atlanta, Georgia,

Chicago, Illinois; and Los Angeles, California) as well as the

Office of Dependency Benefits, Newark, New Jersey. These security
measures include such factors as fire and accident protection and
prevention, the prevention of sabotage and espionage, and passive

defense against air attack. Such deficiencies as were found are in
process of correction and rechecks will be made in order to maintain
these installations at a high security standard.
Sincerely yours,

(Signed) ROBERT P. PATTERSON
ROBERT P. PATTERSON,

Under Secretary of War.

This document contains information affecting the
national defense of the United States within the meaning
of the Espionage Act, 50 U. S C., 31 and 32. as amended.

Its transmission or the revelation of its contents in

any manner to an unauthorized person it prohibited by
law.

148

III
MEMORANDUM FOR THE SECRETARY.

May 21, 1943.

Mail Report

A sharp upturn in mail receipts during the past

week was due to increased correspondence on the subject

of Bonds. In spite of general discussion of taxation
matters, letters in regard to this much-debated topic

seemed to side-step the Treasury, being addressed
either to the President or Members of Congress. Within
the last five days the White House has referred more

than 100 pieces of mail asking a Presidential veto of
the Ruml Plan if it is passed by Congress. Of the
mail received here a number of letters were copies of

communications originally addressed to Congressmen.
Other letters assumed a disagreement between the
Treasury and Congress and launched immediately into
a suggested compromise plan. There has therefore been

very little to quote, either favorable or unfavorable
to Treasury taxation policies.

Of 30 letters favoring a pay-as-you-go plan, 14
disapproved forgiveness, and 8 suggested that 1942 tax
be forgiven but considered as taxable income for 1943.
A number of correspondents, feeling sure that legislation would provide some measure of forgiveness,

urged that all tax refunds be made in the form of
Government Bonds.

Oregon's recent announcement of legislation which
makes it the tenth Community Property state brought a

few protests, and warnings of the effect of similar
action by all states.
Although increased in volume, no new type of Bond
mail appeared. A second wire dated May 15, and addressed

to smaller business firms, brought even more satisfactory
replies about Bond deliveries than had the earlier one
addressed to large agencies. Many reported instant

149

-2- Memorandum for the Secretary.

May 21, 1943.

delivery, and very few reported more than 10 days as
the period required to get Bonds into the hands of
employees. More Bonds were sent to the Secretary for
redemption, the total reaching 63. Complaints from
War Department personnel, 58 in all, were up slightly

over last week. Several of the replies from industry
as to the delivery period stated that there had been

no complaints from their own employees, but that they
had heard frequent ones from men working at arsenals,
ordnance plants, and other Federal agencies.
In general, the week saw renewed interest in plans
for pre-payment for post-war purchase of homes, real
estate, cars, and durable household goods.
Cash contributions and ideas for increasing such

gifts to the war effort come in every day. Recently
there has been an increased number of requests for
permission to organize drives for cash donations.

Gabrulie, E. Forburk

150
General Comments

Senator Tom Connally (Texas) forwards letter he has
received from H. G. Parr, Well Machinery & Supply Co.,

Incorporated, Fort Worth, Texas. "May I suggest that
while Congress is in session you gentlemen take action
and kill that monstrosity which some bright boy, who
must have been very smart, figured to unload on the
public instead of our copper pennies? We have enough
to worry about without having our money all mixed up.

If there is any human living that can put a few of

these things in his pocket, and have a few dimes and

go pay a bill without getting them mixed up, I'll buy
a treat. If there is anything that crowd at Washington

can possibly do that means the loss of time and more red

tape, they seem to be able to put it over; and I think
Congress, while this is a small thing, should take

action and kill the darn thing and pull all of them in
that are in circulation, and make one out of cast iron,

or just anything except what they have made them out of.

* # We are told if we will use them long enough they
will get old and black and then they won't bother us
Well, if we use this New Deal, with all
any more
the Bureaucracy that we have, long enough, maybe it

will get old and black enough so that the people of the
United States will decide to throw the robbers out.
John George O'Brien, Waterford, Ireland. I have the

honour to congratulate on your effort to stabilise an

International Money and I sincerely hope you will be
very successful. As one of the many who sold thousands
of cases of American canned goods and dried fruit in
this country on Coinage Manipulation Basis, I realise
how great a measure this would be.

Stephen Cochran Singleton, Key West, Fla. I doubt if
any recent action of the Government, wise or unwise,
has occasioned more heartfelt cussing than this one-cent
coin which is so readily wished off on hurried cashiers
and dim-sighted old people as a dime. I suggest that a
square hole be punched in the middle of the Infernal
thing, thereby saving tons of scrap metal and the souls

of men from perdition. P.S. In the event that money

of this value does not come under your observation, I am
attaching a sample which I am very glad to get rid of.
It cost me nine cents.

151

-2Favorable Comments on Bonds

Frank Niemetz, Y.M.C.A., St. Paul, Minn. I sold my
common stocks and bought $10,000 worth of G Bonds.

It was my life savings. I came to this country penny-

less and America took me and let me stay. I never was
on relief - made my living by honest work, and I am
grateful to my adopted country. I thought my country

is in need of financi al aid, and I am proud to lend

my money to my beloved country. Some people say common

stock will pay big dividends during war, but I have
faith in my Government. I know my life savings are
safe for my old age. With best wishes to you and our
Victory.

George W. Hill, President, The American Tobacco Co.,

Inc., N.Y.C. I am touched and proud to receive your
letter of May 14. I deeply appreciate your courtesy

and want to assure you that I, my people and my Company

have been happy to cooperate with you in the furtherance of your plans. Your acknowledgment of our small
efforts is most gracious.

Mrs. E. C. Fulgham, Wilson, N.C. You will recall that

you sold me several Savings Bonds over six years ago,
none of which have been redeemed so far, I'm glad to

state. It is my hope to let them reach maturity.

I wish to give as a free gift $150 in War Savings Bonds
to Mr. Ernest Speight Mears, c/o Belk-Tyler's Depart-

ment Store of this city, and lease notify him as to

this effect in a personal letter to him. # * You

still have my Bonds in your possession, you will recall,
and I wish to invest the above amount in a similar way.
* * * Thanking you so much in advance for attending to
this immediately.
Mrs. Marion Montague, San Francisco, Calif. For a long
time I have been buying Defense Stamps with the interest

152

-money I receive on my Bonds, and in that way the money

goes back into the
nothing
is not
lost in
to the
* AsTreasury
a matterand
of fact,
I am
Government.

favor of interest for our Bonds at all, not even after

the war is over, and would be willing to accept less
than I put in to ease things afterward. And you can
put me down as one who will be satisfied with anything

my Government decrees. My compliments and thanks to

you for a magnificent job.

153

-4Unfavorable Comments on Bonds

J. A. Farber, Washington, D. C. I am employed in the

Office of War Utilities, War Production Board. I requested that $30 per payday ($60 per month) be deducted
from my salary for the purchase of War Bonds. My

application was not accepted in that form, and I was
requested to change it to $25 or $37.50 per payday.
Since the latter is too large a deduction, only $25
per payday will be deducted for the purchase of Bonds.
Although this is only $10 a month, or $120 per year,
I wonder how much the purchase of War Bonds is being
hindered by such a regulation. When employed by a

private corporation, prior to my coming to Washington,
the company was glad to have its employees subscribe

to their limit, regardless of whether the amount was

a "convenient" one for the company's bookkeeping records

or not. *

Thomas G. Cooke, Dillsburg, Pa. We hear from the
Treasury almost every morning about buying War Bonds,
and we also hear and read about paying the German and

other officers of the enemy that are taken prisoners
of war $20, $30 and $40 a month for the fun of being
in prison, and it just made me plain mad to hear the
latter. You ask us to buy Bonds and pay it out to our
enemies who were using their knowledge of killing to
kill our boys. What kind of a morale builder do you
think that will be when the people once learn of it?
And it goes without saying that they are feasting on meat, sugar, coffee and cream that are rationed
to us. I reckon this courtesy has been fixed up by
the war mongers so they will not need to suffer for
their crimes. The money in the Treasury is our money
and you officers have no right to pay it out to our
enemies that we are trying to keep from invading our
are
country and making slaves of us. * # What else

you fellows doing that smacks of German collaboration?

154

-5

Charles H. Bailey, Darcy, Loughman & Bailey, Counselors

at Law, N.Y.C. May I call to your attention that an
unnecessary burden is being imposed upon War Mothers

by the regulations of your Department relating to re-

issue of War Bonds. The Navy Department has notified

that William Charles Bailey has been killed in action.
His mother presents this letter with Bonds which the
boy had purchased in the name of William C. Bailey,

for reissue, and your clerk insists upon an affidavit

to be procured by this mother from two disinterested

persons, to the effect that William Charles Bailey is
the same person as William C. Bailey. In this particular instance, this bit of red tape can be readily cut,
though time and patience are wasted. But many such

instances will occur, since service men are registered

in their full names but rarely use their full middle

name in business affairs. Possibly such annoyances
explain Mrs. Bailey being the lone person in line at
the reissue window in your office at No. 51 Pine Street
this morning, whereas several windows were required

to take care of the cash-in patrons. Would it not be
possible to furnish your clerks a pad of simple affidavits in blank to be filled in by the War Mothers to
establish the Bond owner's identity?

Senator Albert B. Chandler forwards communication he
has received from Mr. D. Saunders Threklkeld, Dayton,
Ohio, which reads as follows: "Some months ago a payroll deduction plan for the purchase of War Bonds was

inaugurated at the Wright Field. I subscribed to the

purchase of Bonds as I was able as of August 1, 1942.
On December 15, 1942, the Field took over issuance of
Bonds, and from that date we have received Bonds regu-

larly. However, for the period of August 1 totheDecember
Bond

15, I have six Bonds due me. # I wrote
office early in the year and they told me they didn't
have much help and that I would receive the Bonds at

an early date. Evidently they still can't get stenographers to type these Bonds. Since I went to Kentucky
two times to vote for you last year, I wonder if it
would be asking too much if you would loan one of your
stenographers to the Treasury Department long enough to
type these six Bonds. #

155

-6Letter addressed to Mrs. Roosevelt by Dorothy Lawson,
N.Y.C., and referred to the Treasury by the White House.
My fiancee has been buying a War Bond ever

since his induction in the Army Air Corps -- now he is

fighting in Africa, and still buying them. I was named

as co-owner and the Bonds (eight months
of them) were
* When eight months
to be sent to my home address.
passed, however, and no Bonds were delivered, my fiancee

became aggravated and worried. I, in turn, wrote to the
Finance Department of the Centralized Field Office in
Chicago. In answer, two days ago, came ONE Bond --

April issue -- accompanied by a note saying it was the
'only Bond they had record of'. Seven Bonds completely
unaccounted for! The one thing we felt complete faith
and trust in, was any savings and loan arrangement
backed by our Government! In a New York paper a few
nights ago appeared this comment, 'One of the most
embarrassing squawks that shortly will resound in this
Capital, will be heard when men in the armed forces
put the heat on and discover why those Bonds they have

been paying for haven't been delivered'. I put this

aside as so much bad publicity and cheap propaganda,

knowing the paper was against the fourth term, in

particular, and President Roosevelt in general. But
now it seems there is truth in back of their statement.
Certainly I shall induce my friend not to invest any
more money in Bonds, nor shall I do so either until this
matter can be quickly and satisfactorily cleared up.
I am at a loss knowing where else to write or
what to do about the matter when the office from which
one Bond was delivered has no record of any previous
Bonds. You can imagine with what poor heart and spirit
I will have when I write to my friend now endangered in

a struggle that means as much to you, your husband and
the Government he proudly represents, as well as it does

to us -- we little people who are taking all the risks
of this rotten mess we're in -- when I tell him that
apparently the Government holds his savings and his
investments in very poor grace and light esteem.

I am a little passionate about this because I do not

like to see any one individual sacrifice so much -- life
and money -- if the Government is not capable of pro-

tecting him to the limit. What do you advise that

156

-7do? I am representing five different people who

have I this same complaint, in even a greater degree

of loss than the seven Bonds I mention. We are waiting for your advice. We are grateful too that we
feel this good old American privilege of getting our
trouble off our chest, even when it comes to bothering the highest Lady of the Land with our burden.
Wm. W. Gardner, Bemus Point, N.Y. On Monday, May 17,

I am going to cancel my participation in the payroll

savings plan at the Marlin-Rockwell Corporation,
Jamestown, N.Y. Many others working for the above
company are doing this too. Last week I received a
Bond which I had finished paying for in March. I have

two more Bonds paid for, still in their hands. Others

have even more coming to them than I have. It has been
found by some of the people who have left the employment of the Marlin-Rockwell Corporation that they had
to make several trips before they could get the Bonds

coming to them. * If the payroll savings plan is

not handled in a more satisfactory manner for the
workers, the Government is going to lose a large number of investors. There are 1,400 people working at
this plant, and I believe that many who are giving up
this method of buying Bonds will not purchase them
elsewhere.

S. C. Kelton, Secretary, Rohm & Haas Co., Philadelphia,

Pa. We are in receipt of your full-page telegram of

about 200 words, urging all employers to speed up the
issuance of War Bonds purchased under the payroll
savings

plan. For our three companies in Phila-

delphia and Bristol, Pa., we are issuing at the present

time between 2,500 and 3,000 Bonds per month. It be takes

between ten days and three weeks for the Bonds to
delivered to the employees after completion of the in pay-

roll period. We try to exercise the utmost care the

order make certain that no error is made in
issuance to of the Bonds. * In view of the great in-

crease in the number of our employees, the shortage of

157
8-

help in our Payroll Departments, the extra work involved in issuing Bonds, deducting Victory Taxes,
and particularly the extra work involved on account
of the laws freezing wages and salaries, we believe
The 0 nly serious
that the delay is not excessive.
complaints that I have heard regarding the delay in
*

the receipt of Bonds have come from Government em-

ployees whom I know. For example, the Treasury Depart-

ment from December of 1941 to August of 1942 had some

20 to 35 accountants, supervisors, guards, etc.,
stationed in our office and factories. They were quite
envious over the fact that our employees got their
Bonds within ten days to three weeks, while, according to their statements, they usually waited forty

days. In order to verify the accuracy of this complaint,
I telephoned to one of the Bond officials in the Federal
Reserve Bank, and when I mentioned that some of the
Treasury Department men here had been required to wait

for forty days for their Bonds, the comment was, "They're

lucky. A good many Government employees have to wait

for six months to a year". The delay in issuing Bonds

to Government employees was, we believe, discussed in

some articles in the Philadelphia papers recently.

Although you suggested that we should wire our answer,

collect, we decided that in view of the length of our

answer, there was no need of our wasting so much Government money. You may rest assured, however, that we are

not satisfied with having ten days to three weeks elapse
before our employees receive their Bonds, and that we
are pushing our various Payroll Departments as much as

possible to speed up their delivery.

158

-9Favorable Comments on Taxation

Francis W. Hackett, The Good Housekeeping Shop,

Detroit, Mich. The writer heartily concurs with your
condemnation of any plan of tax forgiveness which
forgives taxes due the Government by those who have

the ability to pay and should have the desire to do

so. The principal ob jections to the so-called
Ruml Plan are that it is highly inflationary, that

it deprives the Treasury Department of income that is
badly needed, that it permits those with large incomes

in 1942 to escape taxation, that it is class legislation in that the man with a big income benefits to

a much greater degree than the man with the small
income.

159

TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE

MAY 21
TO

Secretary Morgenthau

FROM Randolph Paul

For your information:
Foreign Funds Control reports that on May 12
the Bank of China, New York Agency, instructed the Irving
Trust Company to issue a cashier's check for $100,000 to
the order of Madame Chiang Kai-Shek. The check was then
endorsed by Madame Chiang to the order of Lin Kai Kung, a
son of Dr. H. H. Kung, Finance Minister of China, and

deposited by him to the credit of his personal account,
which is unblocked pursuant to General License No. 42.

The $100,000 check was issued by the Irving Trust Company
and negotiated by the Chase National Bank pursuant to the

terms of General License No. 60. On May 17 a transfer of
$61,000 was similarly effected, together with a transfer

of $59,000 by Madame Chiang through Lin Kai Kung to the

account of Lin Kai Kung's secretary, F. C. Woo, whose
account is also unblocked pursuant to General License No. 42.

It is possible that these funds are to be used

for some of Madame Chiang's expenses in the United States.
Foreign Funds Control is checking transactions effected
through the accounts of Lin Kai Kung and F. C. Woo since
Madame Chiang's arrival in the United States and you will

be informed if any significant information is developed.

L
160

May 21, 1943.

Dear Mr. Payser:

The Secretary is away from Washington

and I as therefore acknovledging on his behalf
the copy of Mr. Donald M. Nelson's May report
is connection with the Second Russian Protocol.

I shall be glad to bring this to Mr.
Morgenthan's attention as soon as be is back
in his office, and I know he would wish me to
thank you for your courteey in sending it to
him.

Sincerely yours,

(Signed) H. S. Klotz
H. S. Klots,
Private Secretary.

Mr. E. A. Payser.

Director, Foreign Division,

Var Production Board,
Washington, D. C.

File in Diary

GEF/dbs

161
WAR PRODUCTION BOARD
WASHINGTON, D. C.

May 17, 1943
IN REPLY REFER TO

Mr. Henry Morgenthan
Room 280, Treasury Department
Washington, D. C.

My dear Mr. Morgenthau:

I an transmitting for your information a
copy of Mr. Donald M. Nelson's May report to the
President on production performance against materials
and equipment commitments of the Second Russian
Protocol.
I would appreciate any comments you may

wish to make in regard to either the report itself
or the performance record to date.

Sincerely yours,

X. A. Peyser

Director, Foreign Division

Attachment

PORVICTORY

BUY
WAR

162
C

SECRET
0

WAR PRODUCTION BOARD

WASHINGTON, D. C.

May 15, 1943
IN REPLY REFER TO:

My dear Mr. President:
The accompanying tabulation shows the progress made

during April, and during the ten months ending April 30, toward
fulfilment of Second Protocol materials and equipment production
programs for the Union of Soviet Socialist Republica.
The situation in regard to most of the items included
is generally very satisfactory. Full Protocol commitments for a

considerable number have already been met, and the great majority
of the remainder, except those for which production has been
curtailed because of excessive seaboard stocks, are up to the

schedule called for by the Protocol. Specifically, only nichrome
wire, stainless steel, alloy tubes, certain wire products, small
cutting tools, contained rubber, cable, and a few minor miscellaneous items are behind Protocol requirements. of these, it
appears that only power cable will remain appreciably behind at
the end of the Second Protocol period. For reasons discussed in
previous reports, several power cable contracts will have to be
continued after June 30.

In addition to carrying on Second Protocol programs, the
War Production Board is currently making arrangements to get Third
Protocol programs under way so that there will be no interruption
in the flow of supplies to the U.S.S.R. We have completed our
study of production possibilities against Third Protocol requests
and have recommended to the Protocol Committee offerings which can

be met during the next fiscal year. Pending completion of negotiation of the new Protocol, we are processing requisitions which
fall within the scope of our recommended offerings and are making
provision to place these under schedule immediately.
Respectfully yours,
/a/
Donald M. Nelson
DVICTORY
BUY

The President
The White House

Washington, D. C.
Attachment

SECRET

SECRET
STATUS OF MATERIALS AND EQUIPMENT PRODUCTION PROGRAMS UNDER THE SECOND RUSSIAN PROTOCOL. AS OF MAY 1, 1943

(APRIL DELIVERY DATA SUBJECT TO REVISION)

2nd Protocol Made Available

Pro-

Item

tooal

Unit Production
Program

Item

at Mill in U.S.A.

Made Available

in U.S.A.

Apr. 1 Apr. 30

July Apr. 30

1/
No.

Percent of

Ratio of

Balance to

2nd Prot.

Actual De-

be Produced

Program

liveries to

as of May 1

Completed

Prot. Schod.
(Prot.Sched.

to Satisfy

as of May 1

100)

2nd Protocol
Proi. Program

FOR-FERROUS METALS

, Aluminum Ingota
34 Duraluminum

Total Aluminum

S.T.
S.T.

1,680

27,180
9.510

S.T. (36,690)

2,856

19,276
19,650

(4,536)

(38,926)

207

249

(106)

(128)

Comments

7,904

(10,140 Excess)
(2,236 Excess)

Aluminum hipments totaling 22,400 S.T. have
been scheduled for the five months period
February 1, 1943 June 30, 1943. This means
that the Second Protocol commitment will be
exceeded by 11,140 S.T.

The Second Protoool nickel commitment, which

has been fixed at 7,800 S.T., is scheduled to
be exceeded by approximately 400 s.t. The
delivery figures given are based upon (1) do-

liveries of sickel metal, July 1, 1942 April 30. 1943: (2) nickel delivered to mills
Tickel (Metal and Contained)

S.T.

7,800

711

7,968

102

(168 Excess)

123

in the U.S. for fabrication on U.S.S.R. account
of steel, puza sickel wire, alchrome wire,

cupro-nickel, etc., July 1, 1942

December 31, 19421 and (3) nickel contained

is steel, pure nickel wire, nichrone wire,
cupro-sickel, etc., delivered to Soviet
representatives in the U.S.A., January 1. 1943 April 30. 1943.
5 Molybdenum

6 Copper (Metal and Contained)

S.T.

4,000

775

4,082

102

(82 Excess)

123

The full Protocol commitment has been exceeded.

The production program shown is for copper to
be shipped .. such and copper to be shipped as
S.T. (134,400)

(10,877)

(108,323)

(81)

(98)

(26,077)

contained metal in products other than military
products. The delivery figures include copper
in (1) refinery shapes: (2) pure copper prodnote: (3) cooper base alloyes (4) wire and
cable: and (5) manufactures other than military
manufactures.

9,633

1 Kolled Copper(Copper base alloys only)S.T. 109,411

99,050

10,331

110

Because of the sixe of stocks of copper base
alloys being held on U.S.S.R. account, 12,500 S.T.
of breas will capacity which had been reserved
for the U.S.S.R. in April and May has been
reallocated to the U.S. Aray and Havy. Nevertheless shippents continue to exceed the required
Protecal rate.
To meet pressing Soviet needs. shipments of
2,016 S.T. of magnesium - tal have been scheduled

1,344

336

5 Magnesium

S.T.

(1,344 Excess)

for the last six months of the Second Protocol
period.
SECRET

SECRET

164

164
SECRET

2nd Protocol Made Available

Pro-

Item

toool

Unit

Production

Apr. 1 Apr. 30

Program

Item

at Mill in U.S.A.

Made Available
in U.S.A.

Percent of

Ratio of

Balance to

2nd Prot.

Actual Da

be Produced

July Apr. 30 Program

No.

Completed

liveries to
Prot. Sched.

as of May 1 (Prot,Sched,*
100)

Comments

as of May 1

to Satisfy
2nd Protocol
Prod. Program

NON-FERROUS METALS (continued)

Shipments of sing metal continue to exceed

Protocol requirements by 1,000 S.T. per month.

At the and of the Protocol period,9,110 s.f. in

S.T.

9 Sinc

29,000

3,500

31,118

129

107

(2,118 Excess)

excess of the full commitment will have been

made available, In addition, approximately
40,000 S.T. of sinc will have been furnished

to U.S. mills for the production of items
containing sinc on U.S.S.R. account.

The fall Protocol requirement has been practic
11 Copper Goods and Tubes

S.T.

15,148

15,123

940

119

cally not: severtheless further deliveries are

scheduled for May and June: accumulated stocks

continue to be large.
30 Nickel-Chrome Vire

s.f.

394

538

The full commitment is . cheduled to be not by

144

June 1.

Shipments already made are said by Soviet

120

118

100

120

200

241

Regular lead and tis requirements of the U.S.B.R.
are satisfied by the U.K. Shipments from the U.S.
have been is response to spot requests.

(1 Excess)

Commitments and deliveries shown were sade is

response to spot requests. There are no regular
Boviet requirements on the U.S.

1
64

S.T.

92 Babbitt Metal

100

representatives to be ample to meet U.S.S.R.
import requirements to June, 1944.

c Nickel

S.T.
S.T.

, Tis

S.T.

A Alusions

120

91 Foil

100

S.T.

90 Tin

S.T.

89 Lead

300

360

S.T.

by Mercury

(596 Excess)

299

896

1,600

1,928

(60 Excess)

An additional NO S.T. is being supplied as a
part of the Arctic Program.
Despite the completion of Protocol requirements

93 Cadaium

S.T.

100

12.5

94 Cobalt

s.t.

144

s.t.

203,293

Total Non-Ferrous Metals
Excluding Item 6 (Copper)

20,494.5

175

168

117

199,495

211

(75 Excess)

141

(24 Excess)

118

is October 1942, deliveries are continuing at
the rate of 12.5 S.T. per month.

3.798

SECRET

165
BECKET

2nd Protocol
Pro-

Item

tocal

Unit

Production
Program

Item

Made Available

at Mill is U.S.A.

Made Available

Percent of

Ratio of

Balance to

is U.S.A.

2nd Prot.

Actual Do-

be Produced

Program
Completed

liveries to

as of May 1

Apr. Apr. 30

July Apr. 30

as of May 1

No.

Comments

Prot. Sabed.

to Satiefy
2nd Protocol
(Prot,Sched,"
100) Prod. Program

Because of the sise of stocks and the failure
to make overseas shipments, so formal allocations

12 Terrosilices

S.T.

5.062

620

9,408

of ferrorilicon to the U.S.S.R. are being sade;
the deliveries shown for April are shipments

4,346

made against one contract which had gotten is
arrears and which has been allowed to continue.

Because of the sise of stocks and the failure
5.376

2,573

13 Terrochrome

S.T.

to make overseas shipments, allocations of
ferrochrome to the U.S.S.R. have been completely

2,803

suspended.

7.643

620

120

100

120

100

120

Commitments and deliveries above were is response

to spot requests. There are no regular Soviet
requirements on the U.S.

14,792

S.T.

Total Terro-Alleys

S.T.

100

87 Ferrotungates

S.T.

16 Ferroranadium

S.T.

85 Terrophosphorus

7,149

HIGH PRIORITY ALLOT STEEL

0 Other Alloy
17 High Speed Tool Steel
18 Tool Steel
B Alloy X12
0 Alloy X12K

D Alley-Other
19 Cold Finished Bare

S.T.
S.T.

S.T.

3,400

B High Speed

105

127

109

131

3,031

604

585

118

S.T.
S.T.

700

650

S.T.

6,700

829

550

5,311

8,753

s.f.

95,000

8,457

82,397

s.f.
s.f.

2,200

0 Not Rolled Bare

S.T.

800

25 Steel Vire
Ball Wire (Alley)

S.T.

1,344

114

S.T.

2,400

417

S.T.

1,200

258

, Strip

0 Alley 4140

scheduled

105

1,882

12,603

this is the fact that orders for alley tubes have

not followed the breakdown provided by the Protocol.
906

413

1,292
63

287

350

that deliveries of carbon .5% moly. alley tubes
are shown is toto rather than by individual type
as has been the case is the past. The reason for

372

429

688

3 Alley ASTM 232

large.

1,389

held on U.S.S.R. account continue to be

100

102

A Sheets

115

tube items.

1,848

23 Stainless Steel

101

being relatively has ments certain not are been alley very ourtailed. obe Nevertheless, Full not It Protocol is should all be cases production commite noted except

10,635

20 Hot Rolled Alloy Bars & Billets

107

369

Stooks of alley items included is this category

S.T.

, Electric Furnace or O.H. Alley

(3 Excess)
(4 Excess)

16 Polished Drill Rods

656

1,749
527

651

IS
69

373

SECRET

166
Pro-

Item

Unit

tocal

2nd Protocol Made Available

Made Available

Percent of Ratio of

Production

at will is U.S.A.

Program

Apr. Apr. 30 July Apr. 30 Program

Item
1/

is U.S.A.

No.

2nd Prot.

Balance to

Actual De-

be Produced

liveries to

as of May 1

Completed

Prot. Sched.

as of May 1

(Prot.Sched.2
100)

Comments

to Satisfy

SECRET

2nd Protocol
Prod. Program

HIGH PRIORITY ALLOT STEEL (continued)

27 Steel Alley Tubes

Stainless 16-8

4-64 Chrome

C.3 Carbon .5% Moly.
H.R. Ball Bearing Tubes

,
,

25 Stainless Wire
290 Other Alloy Wire

S.T.
S.T.
S.T.

2,200
15.500
6,300
5,400

S.T.

2,000

S.T.

2,600

S.T.

Total High Priority Alley Steel S.T.

159,484

577

1,623
8,025
2,488

378

7,475
3,812

630

701

1,847

111

391

2.554

118

16,431

122,503

1,801

4,699

See preceding page for comments.
153

36,981

OTHER ALLOT STEEL

13,440

839

S.T.

The U.S.S.R. has cancelled the Protocol commite

12,601

14 Armor Plate

most for armor plate.
Stocks approximate 33,000 S.T. and liftings are

Total Other Alloy Steel

59.494

60.333

1,941

18,041

S.T.

95,000

S.T.

106,440

S.T.

20,000

S.T.

125

S.T.

3,400

184

2,748

10,000
20,000

981

4,347

S.T.

3,196

9,449

1,830
671

8,830
8,590

326

21 0g-81-Ma Billets

currently negligible. No further shipments

35.506

during the Second Protocol period are scheduled.

48,107

HIGH PRIORITY CARBON STEEL

10 Simetal (Copper Clad Strip)
16 Polished Drill Rods
A Plain Carbon

18 Tool Steel
A Plain Carbon
19 Cold Finished Bars

. 3.0.H. Bullet Core

S.A.E.1015-1050 & Other Plain Carbon S.T.

25 Steel Wire
D Music Wire
Spring Wire
Card Wire

Square Wire
Tinned Wire

Misc. Vire Products

I
0

I
L

26 Wire Rope

A Aircraft

, Other Wire Rope
334 Not Rolled Sheets

S.T.

S.T.
S.T.

12,000
12,000
350

114

264

S.T.

300

S.T.

3,000

369

S.T.

20,000

1,687

2,215
17,117

S.T.

20,000

5.608

32,356

Total High Priority Carbon Steel S.T.

S.T.

122,145

700

160

270

110

406

S.T.

1,959

106

652

5,653
10,551

3,170

3,410

112
71

106

Except for bullet core, S.A.B. 1015-1050 plain

carbon bare, square wire, and tinned wire, total
deliveries are approximately up to or is excess
of Protocol requirements. Limitations on pre-

duction facilities are responsible for the lag is

shipment of the items behind schedule. It should
be noted hat in the case of some items is this
category. notably hot rolled sheets, shipments
substantially above total Protocol requirements
have been made.

110
294
36

16,703

104,963

162

104

195

104

785

2,683

(12,356 Excess)
17,182

SECRET

2nd Protocol Made Available
Pro-

Item

total

Unit

Production

at Mill in U.S.A.

Made Available

in U.S.A.

Percent of
2nd Prot.

Program Apr. 1 Apr. 30 July Apr. 30 Program

Item

No.

Ratio of
Actual De

Balance to

liveries to

as of May 1

Completed

Prot. Sched.

as of May 1

(Prot,Sched.
100)

167

be Produced

Comments

SECRET

to Satisfy
2nd Protocol
Prod. Program

OTHER CARBON STEEL

60,000

s.f.

75,000

S.T.

60,000

S.T.

67,200

22 Cold Rolled Sheets
Cold Rolled Strip

S.T.

19 Cold Finished Bare
A Bessener 3/8"-2"

2,825

25,350

11,417

29,636

34,648

34,650

63,583
30,364

B Dalvanised Roofing Sheets
0 Plates
D H.R.Bare and Bar Mill Shapes

I Structural Shapes

, Strip

0 Terms Plate and Long Terms
yus Bolte,Wuts,Rivete,Chaine & Screws

, Fails

Total Other Carbon Steel

S.T.

S.T.
S.T.
S.T.
S.T.

370

3,431
14,571

15,000
3,000

5,000
75,000

12,364

12,538
2,318

438

15,000

9,369
2,569

9,429

1,341

2,650

29,032

680

2,279

S.T.

6,500
13,000
11,000
4,000

S.T.
S.T.

6,000
7,000

307

S.T.

670,300

1,772

728

Stocks of items is this category are still

excessive. Production continues, therefore,

15,000
34,272
2,636
27,462
12,682
15,000

2,350

45,968
8,176

137

165

396

15,076
3,955

119

2,746

3.254

2,488

4,855

2,145

11,553

283,162

387,138

59.767

(4,076 Excess)
45

BAILROAD MATERIALS

S.T.

102 Mounted Sets of Wheels and Axlee

5.9.

103 Car Axlee

104 Locomotive Car Wheel Tires

80,000
36,000

s.f.

60,000

S.T.

13,500

3,544

15,467
21,757

3,417
0

1014 Accessories

175,000

S.T.

101 Raile

33,155

12,303

to be limited to few specialties which are

needed to meet spot requirements.

1,135

100

4:36

1,659

962

33 Hot Rolled

S.T.

2 Seamless 011 Vell Tubing

. Tool Joints

s.t.

2,631

Seamless Drill Pipe

S.T.
S.T.

35,000
15,000
40,000

4,228

527

I Seamless Line Pipe

S.T.

845

Electric Veld Line Pipe
0 Seamless Casing

S.T.
S.T.

17,143

,
D

Electric Weld Casing

57
68

N.T. Press and Mechanical

S.T.

2,119

121

0 Gold Drawn Press and Mechanical

S.T.

6,304

Seamless Press and Mechanical

S.T.

22,857
1,755

6,000
12,000
6,000
24,000
15,000

32 Pipe and Tubing
A Welding Press and Mechanical

5,881

S.T.

B Staples

13,696

40,000
2,600

5,906
2,825

S.T.
S.T.

314 Barbed Wire

70
29

32,552

Low Carbon

20,000
8,000

1,175

S.T.
S.T.

14,094

4,000

20,000

S.T.

Electric Welding Vire
Galvanised Tel. & Tel. Wire

25 Steel Wire
, Rope Wire

a fisplate

115,233

64,533

14,243

26,845

110

1,197

Because of new U.S.S.R. requirements for rails

and accessories, existing stocks of these items
are being rapidly moved to port and production is
currently being received. Wheels and axles and
locometive car wheel tires are also being moved.

Production of other items is this category continues
under suspension because of the stocks situation,
however.

SECRET

168

2nd Protocol Made Available
Pro-

Item

Unit

speak

-6-

Made Available

Production

at will in U.S.A.

in U.S.A.

Program

Apr. 1 Apr. 30

July 1- Apr. 30

Item

168
Percent of

Ratio of

Balance to

2nd Prot.

Actual De-

be Produced

liveries to

as of May 1

Prot. Sched.
(Prot.Sched.#

to Satisfy

Program

Completed

as of May 1

No.

100)

Comments

SECRET

2nd Protocol
Prod. Program

RATLROAD MATERIALS (continued)
18,000

S.T.

255

S.T.

300

S.T.

383,055

S.T.

12,000

Total Railroad Materials

108 Electric Locomotive Axles

107 Steel Locomotive Axles

6,961

10,262

7.738

253

119

222

150,662

See preceding page for comments.

S.T.

105 Rolled Steel Car Wheels

232,393

CHEMICALS

350

103

(61 Excess)

2,400

2,461

124

S.T.

540

3,600

231

3,060

102

S.T.

(76 Excess)

3,000

238

3,076

124

S.T.

101

295

1,800

130

1,505

S.T.

3.530

113

232

104

1,646

146

176

106

3,762

S.T.

12,000

1,270

10.354

S.T.

4,600

1,572

6,730

S.T.

3,600

S.T.

52 Centralite

S.T.

53 Resarin (Resorcinol)

S.T.

120

s.t.

300

S.T.

3,600

112

required by the Protocol; is the case of a majority
of items entire allotments for the Second Protocol
period have been not. Stocks of chemicals continue
excessive.

116

S.T.

100

120

100

120

100

120

Boviet cresol requirements are being satisfied

S.T.

Shipments of all chemicals are above the rate

250

S.T.

597

120

100

S.T.

(2,130 Excess)

59 Cresol

120

100

120

58 Cerium

100

during the month of April amounted to 73 S.S.

57 Terims (T. Nitrate)

120

560

56 Redalite (Rhodamine B)

100

representatives. Net outback is production

55 Strontium (s. Oralate)

4,203

200

4,800

Revised commitment agreed to by U.S.S.E.

S.T.

600

" Barium Peroxide

103

S.T.

51 Ameonium Oyanide

100

50 Potassius Nitrate

1,804

48 Amonia Chloride

150

M Urotropine

1,800

45 Methanol

Item 614 *Other Chemicals.

S.T.

4b Collexylin

(4 Excess)

43 Diphemylamine

sade available are included under

120

42 Dimethylaniline

Additional quantities of Ethylene Glyool

100

in Dibutyl Phthalate

638

40 Phoephores

114

2,400

39 Sodium Bromide

2,400

38 Ethylene Glycol

S.T.

11,362

997

36 Phenol

by the U.K.
SECRET

169
Pro-

Item

Unit

toool

2nd Protocol
Production

Made Available

at Mill in U.S.A.

Made Available
in U.S.A.

Percent of
2nd Prot.

Apr. 1 Apr. 30 July Apr. 30 Program

Program

Item

Completed

as of May 1

No.

Ratio of

Balance to

Actual De-

be Produced

liveries to

Prot. Sched.

(Prot.Sched.

120

100

Total Chemicals

S.T.

1,800

319

61A Other Chemicals

1,800

S.T.

60,000

6,781

51,298

S.T.

115,708

12,364

108,244

(9 Excess)

61 Anthracene

S.T.

TERICALS (continued)

SECRET

to Satisfy

2nd Protocol

100) Prod. Program

60 Potassium Sulphate

Comments

as of May 1

102

8,702

110

10,464

Requisitions for the full Protocol commitment have

INDUSTRIAL EQUIPMENT

22,404,000

15 Ears Alloys and Small Cutting Tools

See preceding page for comments.

1,060,664

14,960,849

not yet been submitted: this is large part explains

7,443,151

the lag in shipments behind Protocol requirements.
The guaranteed Protocol commitment for equipment

62 Machine Tools

63 Electric Furnaces

150,000,000

32,109,647

156,857,149

(6,857,149 Excess)

127

105

of this type has already been exceeded. Neverthe
less very large deliveries are scheduled for May
and June.

64 Forging Presses and Hammors

65 Tarious Industrial Equipment)
3,679,502

176,404,000

33,416,921

175,497,500

Total Industrial Equipment

246,610

61 Abrasives

4,000,000

1,034

111

320,498

119

906,500

MARINE AND SUBMARINE CABLE

1 Marine Cable

Ka.

2 Submarine Cable

Ka.

1,421

141

780

265

2,201

406

745

387

116

1,779

Deliveries are consideredrery unsatisfactory. A

POWER AND OTHER CABLE

1,214

2,993

52,386

25,823

S.T.

4,494

105,052

5.708

28,816

S.T.

18,670

2,466

Pre.

2,400,000

212,958

18,000,000

3,228,284

Total Power and Other Cable

52,666

S.T.

The Misc. Cooper Cable and Wire

CLOTHING

71 Shoe Leather
72 Army Boots

73 Cloth

Deliveries are now considered satisfactory and
there seems to be no doubt that full Protocol
requirements will be not.

422

Total Marine and Submarine Cable Ka.

74 Electric Power Cable

Shipments are considered satisfactory.

Tds.

8,257

2,233,374

14,708,296

49,673

26,563

promised acceleration has begun but until the
present 11 has been far under expected proportions.
Deliveries are becoming increasingly accelerated

but they are still considered unsatisfactory.

76,236

10,413

112

166,626

3,291,704

SECRET

Quartermaster items.

170

2nd Protocol Made Available

From

toeal

Item

Made Available
in U.S.A.

Unit Production at Mill in U.S.A.
Program

Item
1/

170

Apr. 1 Apr. 30

July Apr. 30

Percent of
2nd Prot.
Program

Completed

No.

as of May 1

Ratio of

Balance to

Actual De

be Produced

liveries to

as of May 1

Prot. Sched.
(Prot.Sched.*

2nd Protocol

100)

Comments

to Satiefy
SECRET

Prod. Program

MISCELLANEOUS MATERIALS ITEMS

37 Petroleum Products

S.T.

240,000

12,110

173,305

66,695

Delivery figures are actual export figures.
Shipping conditions, rather than production
conditions, have governed performance.

Webbing deliveries have been slightly behind
Protocol requirements because of limited BASS75 Webbing

Tde. 36,000,000

26,722,074

2,849,936

9,277,926

facturing facilities. A recently arranged
conversion of rug mills is currently bringing
about an acceleration, hovever.

Existing equisition for tarpaulis has been
76 Tarpaulin

Ida.

8,000,000

5,829,620

3,773

2,170,380

completed. Seviet representatives have been asked

to place new requisition for any additional
amount required.

More than 90% of the Sheet Fiber commitment was

not requisitioned until the last of August, 1942.
The requisition involved was held in the O.L.L.A.

for approximately two months before being cleared

for allocation and procurement. As a result

contracts were placed only is December and

January. Deliveries consequently have been con80 Sheet Fiber

S.T.

4,361

1,500

227

41
34

2,861

siderably behind Protocol requirements. In
addition, present schedules do not call for com-

pletion of orders until August, 1943. Soviet

representatives have stated that they understand
the circumstances responsible for the delay and

do not anticipate full satisfaction of the

Protocol commitment until after the and of the
Second Protocol period.

Deliveries against all requisitions submitted
to date have been completed. The Soviet

S.T.

240

S.T.

908

S.T.

2,090

148

83 Condensor Paper

161
82

The entire Protocol commitment has been satisfied.
34

2,339

112

135

(249 Excess)

Additional requisitions are being accepted to
meet the needs of the Soviet fishing industry.

Protocol requirements are scheduled to be

MISCELLANEOUS EQUIPMENT ITEMS

68 Grachite Electrodes

Deliveries are considerably ahead of schedule.

13 Parchment Paper

sitioned 148 S.T. of the 240 S.T. allotted the

U.S.S.R. is the Second Protocol.
747

834 Cigarette Paper

Government Purchasing Commission has not requi-

satisfied before June 30. In addition, the

S.T.

5,840

716

5,436

112

404

supply of 633 S.T. of carbon electrodes during
the resalsder of he Second Protocol period has
been authorised.

SECRET

(

171
SECRET

2nd Protocol Made Available

Pro-

Item

total

Unit Production
Program

Item

at Mill is U.S.A.

Made Available

is U.S.A.

Apr. 1 Apr. 30

July Apr. 30

No.

Percent of

Ratio of

Balance to

2nd Prot.

Actual De-

be Produced

Program
Completed

as of May 1

liveries to

Prot. Sched.

to Satisfy

(Pret.Sched.
100)

2nd Protocol
Prod. Program

KISCELLANEOUS EQUIPMENT ITEMS (continued)

Na.

Ea. 28,000,000

66,466

2,546,095

10,751,000

70,150,281

4,812

19,142

70 Balls and Rollers

There ismo fire Protocol commitment but large
numbers of requisitions have been accepted.
Deliveries against these have been unsatisfactory.

It is hoped that through the submission of new
requisitions which call for types of bearings
which can be easily fitted into U.S. production
schedules, the situation will be improved.

69 Bearings

Comments

as of May 1

251

302

(42.150.28) Excess)

Deliveries a: considered satisfactory.
Delivery figures are for rubber content of

78 fires,Tubes,Other Rubber Products

s.f.

40,320

S.T.

648

S.T.

21,178

Department only.

(Rubber Content)

82 Metallic Cloth and Screen

438

Deliveries of both high pressure hose and shock

absorber card represent a relatively large
percentage of our total production.

The production program hown is a translation
$

81 Shock Absorber Cord

210

19 High Pressure Hose

tires and tubes procured by the Treasury

1,000,000

165,766

1,165,001

117

141

(165,001 Excess)

calculated by the Soviet Government Purchasing
Commission of the Protocol commitment into dollar

value. Deliveries have bees satisfactory.

Second Protocol production programs have been adjusted (a) to take account of the modification of steel requirements under the 2nd Protocol worked out by the Steel Division, v.r.b., and
representatives of Government Purchasing Commission of the Boviet Union, and approved by the Requirements Committee, V.P.B., is Program Determination No. 2301 (b) to take account of the
portion of ferresilicon and ferrochrose commitments which are being supplied by the U.K., and (e) through translating some commitments from short tons into the units of measure commonly

used is connection with the items in question.
June
2/ Made available data is the case of all items except steel, railway materials, "other chemicals", machine tools, electr 10 furnaces, forging presses and hammers, various industrial
equipment, tires, tubes and other rubber products, electric power cable, miscellaneous copper cable and wire, t arpaulin, shock absorber cord, sheet fiber and metallic aloth and screen
of

30.

include stocks which were on hand as of June 30, 1942, and which were available for shipment against 2nd Protocol commitments. Stocks of steel items which were on hand as
were taken into account in the adjustment of steel requirements under 2nd Protocol commitments mentioned in Note labove.

y/ The 2nd Protecol calls for deliveries in Equal Monthly installments. Thus five-sixths of each commitment should have been delivered by Apr. 30. if Protocol schedules were th be
maintained,

Var Production Board

Foreign Division
Review and Analysis Branch
May 14. 1943

RECENT

172

MAY 21 1943

Tear Mr. Leffingwells
Thank you for your kind note of May 7, 1943.

I shall be glad to receive the statement of
your views on the Treasury proposal for an International stabilization Fund. You may be more 10

will be given careful consideration.
sincerely,
(Signed) H. Morgenthan, Jr.

Secretary of the Treasury.

Mr. R. C. Leffingwell,
23 wall Street,
New York, New York.

Photo file in Diary
File to White's office
EMBebh 5-19-13

withit
23 Wall Street

NewYork
May 11, 1943

R.C.LEFFINGWELL

Dear Mr. Secretary:

Life

May I trouble you to substitute
the enclosed revised pages 4 and 7 in my
note on Keynes's International Clearing

Union. They correct mistakes which I
found in the second paragraph on page 4

and the third line on page 7.
I am, my dear Mr. Secretary,

with great respect,
Faithfully yours

The Honorable

the

The Secretary of the Treasur
Washington, D. C.

Enclosures

fall Street
heyYork
May 71 1943

Mr. Secretary
Thank you so much for your good letter and for
ing me the memorandum of the U.S. Treatury Preliminary Draft
posal for a United and Associated Nations Stabilization Fund,

had put off consideration of it until I should have the advantage
hearing Professor White talk about it at the Council on Foreign

lations, as he did last Friday. However, I had the bad luck to be
ck a-bed with a cold and sore throat when Friday came along 50 I

aid not go. If I do write a note about it I shall send you a copy
or what it may Le worth. At first sight it seems to be in principle
(ch the same as the Keynes plan, though considerably different in

tail.
By the way, there is a clerical error in my memorandum

April 19th, page 7, third line: "tens of billions" should of cours
"ten billions. If The actual figure I believe is thirteen billions.
I AM so Clud that you went all the way to the coast

your Second "ur Loan tour. I.am sure it did a lot of good. I
ate it didn't wear you out. I congratulate you with all my heart on
e great success of this great effort.
I am, my dear Mr. Secretary with great respect
Faithfully yours SED
Honorable

The Secretary of the Treasury
Mishington, D, C.

Relations

OFFICE

SECRETARY OF TREASURY

1943 MAY 22 PM 2 40
PARIMENT

DAYBEE RAB TRANSLITTED
COPY NO.

BRITISH MOST SECRET
U.S. SECRET

OPTEL NO. 166

Information received up to 7 a.m., 21st May, 1943.
1. NAVAL

One of H.M. Submarines torpedood a ship of the VIRGILIO
class (11,718 tons) escorted by 2 destroyers on the 12th in GULF OF GENOA.
The German liner GNEISENAU (18,160 tons) was minod in the BALTIC at the end

of April, Swedish press reports states she is beached and lying on her side.
2. AIR OPERATIONS

WESTERN FRONT. 19th/20th. Aircraft dospatched; Sea mining -

23, BERLIN - 3, Intruders - 25.
TUNISIA. 17th/18th. 25 enemy aircraft attacked the harbour
and airfield at DJEDJELLI. 2 Ju 88's were destroyed by Beaufighters.
SARDINIA. 17th/18th. 16 Wellingtons bombed ALGHERO town

and port with 32 tons.
PANTELLERIA. 97 tons dropped by 86 Medium Bombers escorted

by 91 Lightnings. Hits on docks, quays, barracks and among grounded aircraft.
SICILY. Fortresses escorted by Lightnings attacked TRAPANI

dropping 140.tons. Bursts seen in town, near harbour and among ships in one
of which explosion caused.
SICILY and SOUTHERN ITALY. 18th/19th. Mosquitos on Intruder

patrols effectively attacked railway objectives and factories.
BURLA. 18th. Liberators dropped 36 tons on MINEU, 150 miles
East of AKYAB.

178.
May 22, 1943
9:52 a.m.
HMJr:

Operator:

Hello.
(Talks
aside: I mean I'll just do this,
and then
I'11....)
Hello.

HMJr:

Hello.

Randolph
Paul:

Hello.

HMJr:

Is the light - are you making a record?

HMJr:

Are we - yeah, I guess - yes, we are now.
All right. Now would you tell me what happened,
please.

Well, yesterday afternoon about - well, Dan
Bell went over - we talked to Dan Bell before
Cabinet meeting, and he called up and tried to
get a date with the President just before

Cabinet meeting.

HMJr:

Yes.

The President was too involved and had been

late for lunch and so on, so Dan went over the
whole situation with me, and he was prepared to
discuss it at Cabinet meeting.

HMJr:

Yes.

He did discuss it with the President, and Byrnes
was in on the conversation.

HMJr:
P:

Yes.

He told the President what Vandenberg had
brought up, and - and they - he even discussed

the situation with respect to the new tax bill
and the - the relationship of this 50%-75%
plan in that it prevented or complicated the

job of additional taxes, which led into a discussion of the next tax bill. Dan explained to
the President that the idea of a good many
members of Congress was that if they forgave

part of '42 taxes and left the other part on,
that that would be in lieu of any new taxes,
meaning a couple of billion dollars in new
taxes and no more.

177

-2HMJr:

Yeah.

The President was quite shocked by that,

apparently

HMJr:

Yeah.

and said that - well, he needed - he had
asked for sixteen billion and it would be too

much borrowing and - and it would have a bad

effect on inflation.

HMJr:

Yeah.

Dan also told the President there was a good

deal of disposition up there not to start a tax
bill until September

HMJr:

Yeah.

and Byrnes agreed with Dan on both these

things. He said he'd heard the same thing.

HMJr:

Yeah.

The President said that was - was rather shocked

HMJr:

Yeah.

at that.

Now on the point of - of any possible - on the
point of explaining the distinction between a
straight 50% or 75% cut, which is what George
favored

HMJr:

Yeah.

and the House bill and the Doughton bill,
which we have been favoring right along

HMJr:

Yeah.

the President said he didn't know whether he
would - he would either see us before he saw
George or right afterwards, and he wouldn't make
any decision

HMJr:

Yeah.

178

-3but he was going to wait to see - see if

George communicated with him. But he wouldn't
make any decision without consulting us.

HMJr:

Yeah.

Well, that was - that was during Cabinet meeting.
HMJr:

Yeah.

We were up - I waited until the last minute and
went up, and they had a three o'clock meeting
and about four o'clock or so

HMJr:

Yeah.

George went out of the room for quite an extended telephone conversation. Of course, we

didn't know with whom.
HMJr:
P:

Yeah.

He - after that conversation he drew Walsh out
of the room and talked at some length with him,
and then later he asked Doughton out and they
talked.

HMJr:

Yeah.

And then after those three conversations, George
said, well, he didn't know whether there was any

possibility of - of agreement, but he - he sug-

gested they meet at eleven o'clock this morning

HMJr:

Yeah.

and he said, "And you might be thinking over

the idea of just having withholding tax with no
abatement, leaving abatement to the tax bill."

HMJr:

Yeah.

Then I came back, and of course - it was obvious
to me that something had been going on there.

HMJr:

Yeah.

Dan didn't know what was going - didn't - hadn't
heard any more, so I called up Ben Cohen

179

-HMJr:

Yeah.

and I didn't get him until about five-fifteen

or so.

HMJr:

Yes.

He said that following the conversation at the

Cabinet meeting

HMJr:

Yes.

George had called Byrnes

HMJr:
P:

I see.
lock

and Byrnes had - had told him about the dead-

Yeah.

and that between that conversation and - and

just before I talked to Ben -- that is, I should
say, towards late - say, five to five-fifteen

HMJr:

Yeah.

in that time, Byrnes had called George - no,
Byrnes had talked to the President

HMJr:

Yeah.

and the Pres. - and explained to him the

difference between these two ideas.

HMJr:

The President explained to whom?

Byrnes explained to the President.

HMJr:

Yes.

And the President decided that he was in favor

of the House bill or the - or the - or the

Doughton bill, or any reasonable variation of
them, as against the George type

HMJr:
P:

Yes.

of flat bill. Following that conversation

between Byrnes and the President, Byrnes called
up George and told him.

180

-5HMJr:

Yeah.

So that's - that's what's happened, and I don't -

HMJr:

Well, here's the way I feel. Hello?

Yeah - yeah.

I haven't heard from George or Doughton or anybody this morning.

HMJr:

If there's going to be a meeting between the
Leaders and the President, I'd like to be there,
if there's time for me to get down.
Yeah. Well, I haven't heard of any meeting, but
And - and, I could - as I say, I could get down
very quickly, because it's so important.
Yeah.

HMJr:
P:

And I might be helpful.
Yeah. Well, I haven't heard of any meeting, but
I take it that - that the President has made his
decision and - and what will happen when - and I
suppose George will say something about it at the
meeting this morning.

HMJr:

Right.

George is sort of official communicater between

HMJr:

George?

Yeah. And I suppose George will make some
announcement this morning, and then the confer-

the Conference Committee. and

ence will either break up or it will - or it'll

decide to take one of the things the President

wants. I
HMJr:

The President wants either - well, what do you
think - has - you got this second-hand, haven't
you?

Yeah, I got it through Ben Cohen.

HMJr:

Yeah.

181

- -6 -

HMJr:

I wasn't present at any of these conversations, but
Yeah.

but I did talk to Byrnes, and I - I
HMJr:
P:

HMJr:
P:

Well, from my standpoint

just before the Cabinet meeting, I talked to

him at length
Yeah.

right after his Board meeting yesterday, and before Cabinet meeting, and then I rushed back to talk

to Dan Bell.
HMJr:

Well, from our standpoint, it's going all right,
isn't it? As far as the White House
Well, yes, the White House is completely backing us
up, and - and I think we have Byrnes equally in and we have Byrnes in the position where he can't go
back on us now because he's - he's been in on this

letter, and he's - he's the one that explained this
distinction to the President.

HMJr:

Well, why don't I simply sit tight and wait until
he hears what happens at eleven, see?

Yeah, I guess there's nothing else for you to do,
but if there is any meeting, of course, I'll
communicate with you right away, and I'll try
Well

to get the meeting put off

HMJr:
P:

HMJr:

Well

to a certain time.
Why don't you do this? Tell Byrnes if there's going
to be any meeting, I - I'd like some warning.

Well, I'll call Byrnes and tell him that.

182

-7 HMJr:

And I'll call up Grace Tully and tell that

And by a meeting, you mean of the Leaders

HMJr:

to her myself.
Yeah.

HMJr:

or any critical meeting that may transpire.
That's right.

All right.

HMJr:

I could always get down. From the time I got
word, I could always be there in a couple of
hours.

Yeah. I hope you don't come down this afternoon though because it don't look very good
here. (Laughs)

HMJr:

What's that?

I hope you don't come down this afternoon. It
doesn't look very good here.

HMJr:

You mean the weather?

Yeah.

HMJr:

Well, of course, I couldn't fly if the weather

Yeah.

HMJr:

But so far I - my think is - I think you

Yeah, well, I - I - I think we - I think it's

wasn't good.

fellows have handled it fine.

going well except, of course, what may happen

is a - a complete deadlock, and - and if you
like that better than the Ruml plan that's

what you may have - you may have what you

want. (Laughs)

HMJr:

A complete deadlock?

Yeah.

183

-8 HMJr:

No, I don't want a complete deadlock.

Well, that's what - that's what very well may

happen, and according to this morning's papers
the Republicans may then try to force another
vote in the House, which may be the fourth time

they're licked.

HMJr:

Well, the point is this. I have no personal
vanity that I want to be at a meeting just to
be there

HMJr:

Yeah.

but I want you to judge if you think that

there's a balance that I might by throwing my
weight

HMJr:
P:

HMJr:

Well, I don't - I think that's true, but in any
event I want to get you in at the meeting if
there's any pos - unless
Don'

they rush it together on five minutes'

notice.

I know. But, as I say, it isn't a question of

my wanting to sit in on a meeting.

Yeah, well

HMJr:

You know.

Yeah, I know.

HMJr:

But what I think I'm going to do is I'm going to
have my plane come up now.

Yeah.

HMJr:

So it'll be here standing by.

Yeah.

HMJr:

Just in case.

Well, I - yes, you might do that, although -

well, you know how these things are. They' re
completely unpredictable. They may decide to
(Cont'd. )

184

-9have a meeting this afternoon, or they may

(Cont'd.)
HMJr:

not -- I don't know.

Well, the plane might just as well be sitting
here as in Washington.

Yeah, okay. Now do you want to talk to Herb
or John? They're both here.

HMJr:

No. You see, I've got Sproul coming in at

Yeah.

HMJr:

10:15

and - I understand I've got three letters

from Eccles on my desk
(Laughs)

HMJr:

and you might -- I think Chauncey's
dictating them now to my outer office here I'm at the Customs House -- but you might just

tell Herbert that the group that is advising

me on War Bonds versus Federal Reserve better
read the Eccles correspondence.
P:

All right. Herb's right here. I think he

HMJr:

All right.

wants to say one word to you.

Herbert
Gaston:

I read the Eccles memorandum. of course, it's
even stronger than the - it's the same position
that the presidents took in the meeting, and

it's - he puts it in an even more direct way,

that they have a "mandatory" duty to handle
the financing.
HMJr:

Yes.

But - but the thing I really wanted to say is

HMJr:

Yeah.

this

that I think this thing has got kind of

upside down on our talk about the personality
of that one man

185

- 10 HMJr:

Yes.

Perry Hall; that the real issue you're

facing with Sproul is this. Is he willing to
concede your right to - at least to disapprove
his selection? In other words, is he willing
to go along on the basis that he will select

nobody or that nobody will be selected unless
that man has your complete approval? And that
question has to be faced before you come to the

matter of Perry Hall. Is - is - if he's insisting at the outset that he's got to have Perry

Hall, why, that's in violation not only of the

plan we proposed but of the plans they proposed
themselves.

HMJr:

Oh, I've got that.

Yeah, yeah.

HMJr:

But, Herbert

Yeah.

HMJr:

I mean what it boils down to -- up to the time

Yeah.

HMJr:

he comes in

....is that he wants to do it his way, and he

doesn't want me to either have the veto power
or the suggestive power.

Yes. Well, of course, he's got to - if he if he won't give - grant either of those,
then he's not willing to go along. That that's all.
No. Well, and the letter - there's one letter
they've read to me from Eccles that is much

worse.
G:

Is that so?

HMJr:

Oh, yes. He - Eccles - there's a letter in

from Eccles now - before I appoint the National
Director, they want to be consulted.

186

- 11 G:

Uh huh, uh huh, yeah, yeah. Well, of course,
that's - that's way out of bounds.

HMJr:

What?

That's way out of bounds.

HMJr:

Yeah.

Those - those letters are not available here, are
they?

HMJr:

Wait a minute. Wait a minute. Mrs. McHugh just
handed them to me. Just let me see a minute.
Yeah, Miss Chauncey has the letters. But just
let me read this. Will you hold on a minute?
Yes. Yes.

HMJr:

Well, there's one. I've read that. That's the

Yes.

HMJr:

one on Gamble. Hello?

Just a minute. Well, then he wants a copy of a
transcript of the meetings. You can think that
one over.

Uh huh.

HMJr:

Well, now let's see

They - they had previously asked that the

HMJr:

What?

They had previously asked that the transcript be
destroyed.

HMJr:

Yeah. Now they want a copy of it.

Uh huh.

HMJr:

Well, the other letter is that he's seen the
letter that Eccles has written - Sproul has

written me, and why do I misunderstand them;

they': re perfectly fair, and so forth and so on.

Uh huh, uh huh.

187

- 12 HMJr:
G:

Well, anyway - hello
Yes.

HMJr:

I'll try to get hold of Grace Tully.

Yes.

HMJr:

You ask Miss Chauncey, and you - you know the
group that's been working with me on the War
Bonds

Yes, yes.

and I'll

HMJr:
G:

You want them to see those letters.

HMJr:

Yeah, yeah.

Yes.

HMJr:

Well, if I can have the operator now I want to I've only got a few minutes, and I want to get before Sproul gets here.

Yeah.

Operator:

Operator.

HMJr:

Miss Grace Tully or.
(Remainder of conversation not recorded.)

cc - Bell, Gaston, Gamble

188
May 22, 1943
11:10 a.m.

HMJr:

Ronald

Hello, Ronald.

Ransom:

Yes.

HMJr:

Hello. Can you hear me? This is Henry

Yes.

HMJr:

Morgenthau, Jr.

I am sitting here with Allan Sproul, and I
wanted to talk to Marriner but he's out, and
they don't know where he is and they say he
can't be reached until 12:30. They don't seem
to know where he has gone to. You don't know

where he 1s, do you?
R:

I haven't the slightest idea. They just told
me now that you had called for Marriner but
wasn't able to get him, and so you wanted to

talk to me, 80 I came out of a meeting. I
think he is at a meeting somewhere but they
haven't any record here as to where he is. It
may be that he is in the process of coming
back here to the office.
HMJr:

Well, I take it you are familiar with this

Oh, yes.

HMJr:

Well, let me tell you what I have been doing.

controversy that has been going on.

Allan Sproul is sitting here and - it is a

little difficult for me to report it, and if
I don't report it correctly he will talk to

you. Sproul and I met yesterday, and I don't
know but I guess he reported that part of it to
Eccles.

HMJr:

He may have, but I haven't heard.

Well, briefly, we talked about it yeaterday and
we got down to personalities. I told him that

as far as the Washington end was concerned, that
under Bell and me would be Ted Gamble. I then

suggested we would like to set up an organization
here, and we got down to personalities and the
name of Perry Hall came up, and I said that I
(Cont'd.)

189

-2HMJr:

didn't want him as second man to Allan Sproul.

(Cont'd.)

You didn't want him?

HMJr:

I didn't want him as second man, no. I would
be glad to have him in the organization and
have him work with the wealthy people, but
that this was a matter of forty-three weeks
out of fifty-two we would be working with the
smaller people, and I wanted somebody whom I
thought could do that better.

Yes.

HMJr:

I then suggested the name of Mr. Madden.

Madden?

HMJr:

Madden, yes. He is Executive Vice President

of Manufacturers' Trust. Sproul didn't think

he would fill the bill.

HMJr:

Yes.

I then suggested Randolph Burgess, and that

didn't seem to suit Sproul.
Yes.

I then suggested that I bring up here to New
York Bell, Gaston, and Gamble so that we

could talk the thing over.

HMJr:

Bell, Gaston, and Gamble?

Yes. But Sproul said he wasn't ready to talk
with them. He said he wanted to think it
over, particularly the part about Perry Hall.
Yes.

Well, then Allan and I have been sparring
around this morning on my position that I
want to make the suggestions and then let
him approve or disapprove. He said he didn't
want to say "yes" on Madden, and he thinks
he can get a better man than Burgess.

190

- 3- -

HMJr:

Yes.

I pressed him fairly hard on the position I
took last Friday morning when I said I wanted
to take the initiative and say, "This is what

we want."
R:

HMJr:

Yes.

Now Sproul hasn't said definitely that he would
go along with me if it wasn't Perry Hall.
How's that?

Well, I don't know just how to put it, but
Sproul hasn't definitely told me that he will
go along with me if it isn't Perry Hall.
This is a little confusing. You say he hasn't
said he won't go ahead if it is not Perry Hall?
He hasn't told me that he will go with me if it
isn't Perry Hall.
He hasn't told you that he will go with you if

it isn't Perry Hall.
That's right. I will put it this way. To me
Perry Hall, in this case, becomes a symbol.
am stating and sticking by my position that I

want to take the initiative. I want to make

the proposals, and then the President of the
Federal Reserve Bank can say "no." I proposed

Randolph Burgess as a name or Madden.
R:

Yes.

HMJr:

I feel that either one could do it. Sproul won't

say he will go along. Now I had suggested Madden

or Burgess. Sproul won't say he will go along

unless it is Perry Hall. I think I'm reporting
this right - well, he hasn't given me the "no"
signal yet so I guess that's right. I'm watching
his eye.

I see.

191

-4HMJr:

Now I also suggested that - that I - that
after Sproul and I got together, he should
sell the other eleven presidents. He thinks
it should be done in conjunction with representatives of the Federal Reserve Board.

HMJr:

Oh, I think that would be better.
Yes, I agree with him on that.

Yes.

HMJr:

Now I have told Sproul from the bottom of my

Yes.

HMJr:

heart that I think he is making a big mistake.
I think the attitude, judging from my past record
with the Federal Reserve, should be that we will
cooperate with you and we do trust you and we
would like to be helpful.
Now instead of that I am sitting here for the
second day bargaining, and I don't like to

bargain. I don't think I should have to.

Yes.

HMJr:

Now in one more effort to get together with the
Federal Reserve Board, whose assistance I want

very much, it would be very useful, but, as I

told Sproul, if this thing gets to the people,
which it eventually will have to, I think that

with the support of the Commander-in-Chief
behind me I am afraid the Federal Reserve will

suffer. I think the people will back the

President and me.
R:

Yes.

HMJr:

Now I think you people will suffer in this. I

think the attitude, as explained by Williams to
Bell, that no matter what he would go along with
me is the attitude that should be taken by all
the presidents of the banks.

Yes.

192

-5HMJr:

Now I think that attitude, as explained to me
by Bell, is the one that should stand.

Yes.

HMJr:

I have asked both Marriner and Sproul whether

I've tried to play politics at any time, and
they both told me I haven't. Hello?

Yes, I'm here. I'm listening.

HMJr:

Now I think that a 9-year record is much
better than a 12-year promise for the future.

Yes.

HMJr:

Now I would like sometime Monday morning, if

possible - if not Monday, the first thing

Tuesday morning I would like to meet with the
full Federal Reserve Board at the Treasury
and with as many of the presidents as they

wish to invite.
R:

HMJr:

Yes.

I'm up here in New York. My wife has had an
operation, but I will come down sometime
either Monday or Tuesday to suit your conveni-

ence, but I'm inviting the full Board plus as

many of the presidents as they care to invite.
R:

HMJr:

Yes. All right, now. I'11 report this to

Marriner as soon as he gets back. And how

can I get in touch with you?
I would like to know the time as soon as
possible. I can be reached through the
Treasury.

HMJr:

All right. We'11 get in touch with you.
But this 18 my last effort, and I'm not any

more in a bargaining mood. I'm inviting you
gentlemen in to help me on my terms, and

you ve got to help me raise this money. But
I want you to know this beforehand. I am no
longer in a bargaining frame of mind. I am
not going to bargain any longer.

193

-6R:

HMJr:

Allan

Yes.

Now Sproul will talk to you, and if there's anything I haven't reported he will tell you about
it.

All right.

Sproul:

Hello.

I think the Secretary has reported to you the gist
of our conversation. I would say this, however.
I think that since the Secretary has asked the

presidents of the Federal Reserve Banks to act as
chairmen of the District committees that he should
have confidence in them as public servants to set
up an organization which they could submit to him
for approval.
R:

Yes.

On the second thing, which is more personal, I
have said to him that after having decided to
put in Mr. Gamble as National Director of Sales,
and having decided that Mr. Hall cannot be the
second man to me in this district, he is making

it very difficult for me to go along; that as of
today, under those circumstances, I would have to
state that I couldn't do it. It might be impos-

sible for me to find a man who would have the
experience and training that he should have
really do the work that must be done in this
to

district. It is very difficult, I think, under
the circumstances.

You haven't developed a name which would be

equally acceptable to both of you?

That's the situation.
Now on the question of the meeting with the
Secretary on Monday or Tuesday, I take it that
the invitation should be accepted.
Oh, yes.

194

-7R:

Well, we will have to see how many of them we
can get together. Does the Secretary have any

preference as to Monday or Tuesday?
S:

I think he would prefer Tuesday. (Talks aside
to Secretary.) Yes, he would prefer Tuesday if
agreeable to you.

Well, I think we would prefer that too, and I'11
talk to Marriner as soon as I can get in touch
with him. He happens to have left his office, and
they don't know where he 1s. But I will talk to
him as soon as possible and then we can call you
back and discuss details about the meeting.

All right.

And we'll let the Secretary know - where can he
be reached?

(Talks aside to Secretary. ) You can reach him
through the Treasury switchboard.

All right.

195

May 22, 1943
2:10 p.m.
Randolph
Paul:

Yes.

Operator:

Hello.

HMJr:

Yes, Randolph.

Bell is still out to lunch. Gaston and John

HMJr:

All right.

We were - hello?

HMJr:

Go ahead.

We were excluded - all the experts were excluded

HMJr:

HMJr:
P:

Sullivan are with me.

as soon as they started a session at 11:00 o'clock.
Too bad I wasn't there. They would have let me

sit in. I wasn't
(Laughs)

....an expert.
Well, I might have - I think I'm qualified there
too. I mean I'm not an expert, any more. But
anyway they - they had a session until - oh, I

should say about nearly 1:30, and then they came

out and announced "no agreement and meet at 10:00
o'clock Monday morning."
HMJr:
P:

I see.

Now - and then I under - I went back just now.
I went to lunch at the Senate restaurant, and
I just went back because I forgot my coat, and
I found that the Democrats, both on the Senate

and the House side, are still in session up
there. Now as to what went on, I - I only have
two clues, one from Vandenberg and one from
Cooper

HMJr:

Yes.

196

-2P:

and that is that they've been discussing
board, say 50% which is what the President does
not want, but excluding - but giving forgiveness

the gadget of taking it straight across the

of the first $50 of tax.

HMJr:
P:

HMJr:

First fifty.
Yeah - which - which is, of course, no good at all
as a scheme. Now Jere Cooper indicated to me
that they were discussing that, and I told him he
might just as well go to the House bill of 19%
because you can't give forgiveness at the very
bottom and also at the very top. That'd just knock
the devil out of the middle brackets.
Yeah.

I don't - that's - I guess that's all there is to
report.

HMJr:
P:

Well, there isn't much good I can do down there.

I don't see that there's any good. They're -

Byrnes - there's no meeting going on at Byrnes'.
HMJr:

I got

Oh, I know one other thing I wanted to tell you.
HMJr:

Yes.

This is just a surmise, but it is a very curious
thing that the Democrats are meeting separately
on both sides - I mean the House and the Senate,
and they seem to be having quite a long session.

They' 've been on there - they're still - just -

when I just left, they're still there.

HMJr:

HMJr:
P:

You mean the Democrats from the Senate and the
House are meeting together
Yes.

or separately?
Together.

197
-

HMJr:
P:

Together.

You see, usually that - the House groups - the

House group meets, Democrats and Republicans,
and the - the Senate group meets, Democrats and

Republicans, but this is a strange performance of
having the Senate and the House Democrat groups
meet. And they have been steadily in session,
neglecting their lunch and everything else, so
they must be having quite a talk.

HMJr:

Well, if

Now my surmise, one possible explanation of it,
is

HMJr:
P:

Yes.

that George did not tell them this morning
in the total session about the President's -

about what the President would do, and that he's
telling these Democrats now.
HMJr:

Well, Randolph

Yeah.

HMJr:

....if there's - if there's something definite,

will you try and reach me.

Yes, I'll try to reach you. Now - of course, as

soon as I can get somebody like Jere on the Jere Cooper on the phone, I'll be able to get the
real - the dope on what went on this morning, but

so far he's still in that conference.

HMJr:

And you don't think by coming down right now I

I don't see how anything could go on now...

could help any?

All right.
because - well, I don't think they're going to

HMJr:

Okay.

HMJr:

have a meeting with Byrnes. They might, but I
haven't heard anything about it. Byrnes has said
that there's no meeting.

198

-4P:

HMJr:
P:

Is there anything - and do you want to talk to Dan

or John or Herb Gaston?

I want to talk to Gaston a minute.

Just a minute. (Talks aside: He wants to talk to

you.)
Herbert
Gaston:

Hello.

HMJr:

Herbert?

Yes.

HMJr:

Did you get my conversation?

Yes.

HMJr:

About - with Ransom? About Sproul?

No.

HMJr:

You haven't had it?

HMJr:

Miss Chauncey said she gave it to you.

A conversation with - with

HMJr:
G:

With - it's with Ronald Ransom this morning.
No, I haven't seen that.
But Miss Chauncey said she gave it to you.

Well, what she gave me was the three Eccles letters.
This was a - this was a dictated record of a conversation?

HMJr:

Yeah. Well...

Well

HMJr:
G:

what's the matter with those people there.
Well, unless it was laid on my desk when I was out
between one and two, I haven't seen it.

199

-5HMJr:

Well, look, I'll wait a minute. Can you tell
Fitz to send for Miss Chauncey and find out

what the hell's she done with it?

(Talks aside) Yes. I'm - I'm having him send

for Miss Chauncey now.

HMJr:

I told them to give it to you, Bell, and Gamble.

I - I'll see if Dan has it. (Talks.aside: This
conversation with Ronald Ransom about Allan

Sproul, have you seen it?) No, Dan hasn't seen

it.

HMJr:

I don't know what's the matter with them.

What - what time was that?

Oh, around 12:00 - 12:30. I just spoke to her,
and she said that she distributed this.
Well - I could inquire in my office.

HMJr:

Well, wait - it would take too long. It's six

HMJr:

pages. It would take too long to read it any-

way.
G:

Yeah, yeah.

Is Bell there?
Bell is here, yeah.

HMJr:

Well, I'm sorry he hasn't read it because it's

Well

HMJr:

got the background, and I've asked the

Federal Reserve - I said I'll - I've invited

the Board
Uh huh.

and as many of the bank presidents as they
want to come to my office either Monday or
Tuesday

Oh.

200

and Eccles was to let me know.

HMJr:
G:

HMJr:

Oh. Uh huh, uh huh.

Gosh, I don't see why that hasn't been dis-

tributed. I - I can'

Well, I'll - if you want to talk to Dan now,

I'll see what I can do about chasing it down.

HMJr:

Where is Chauncey?

What?

HMJr:

Where is Chauncey?

I don't know. Just a moment. (Talks aside:
Did you send for Miss Chauncey?) She's coming
right now. (Talks aside: The Secretary is

asking about a conversation with Ronald Ransom.)

She says she has a copy right here. She's going

out to get it. Well, this - this arrangement

was made with Ransom, was it?
HMJr:
G:

HMJr:
G:

Yeah. Where is Chauncey?

She just dashed out of the office to get a
copy of this.
Well, what did she do with it?

I - I just don't know. She said - I asked her
for it just now, and she said, "I have a copy

right out here. I'll go and get it."

HMJr:

Well, there's no use giving it now - I mean it's
six pages.

Oh. Uh huh.

HMJr:

I mean - because the thing must have been distributed by noon.

Uh huh. Well, I have it right in front of me
now.

HMJr:

Is Chauncey there?

201

-7G:

She's here.

HMJr:

Let me talk to her.

Yeah.

Miss

Chauncey:

Hello.

HMJr:

Miss Chauncey, what did you do with that statement?

Mr. Morgenthau, it was just completed about one
minute ago.

HMJr:

Well, good heavens, it must have been on the record
a long time ago.

It was about - Mrs. McHugh started in dictating
about ten minutes after one, and the girl started

in immediately transcribing it - just finished.

HMJr:

Well, all right.

There wasn't really any delay about it.

HMJr:

All right.

Just a minute.

HMJr:

Hello.

Yes.

HMJr:

Well, I - I can't take - I'm sorry - I - I don't

HMJr:

understand why it wasn't transcribed, but anyway -

is Bell there?
He is here. Do you want us to read this thing
over and discuss it and call you back?

No, I - I'm going to - I'm going to - I'm going
to rest. I'm all played out.

Yeah. I'll....

HMJr:

Is Dan there?

202

-8G:

Daniel

I'll put Bell on, yes, right away.

Bell:

Hello.

HMJr:

Dan?

Yes, sir.

HMJr:

I can't - there's no use in my trying to describe

six pages of conversation
No.

but the upshot is I invited them to come Monday

HMJr:

or Tuesday
B:

Monday or Tuesday?

to see them.

HMJr:
B:

Invited whom?

HMJr:

The Federal Reserve Board and as many bank presidents

that they want to come, to my office.

I see. All right.

HMJr:

I told him they could reach me through the Treasury.

All right.

HMJr:

Hear me?

Yeah.

HMJr:

Eccles - but I think you might tell the Treasury when
Mr. Eccles calls up they should put him on to you.

All right. I'll do that.

HMJr:

See?

Yeah.

HMJr:

And I just

203
-

Well, he wasn't there when you called this
morning?

HMJr:

He wasn't there, and nobody knew where he was,
and they wouldn't tell me where he was.

(Laughs) Really?

HMJr:

That's right.

He may have gone away for the week-end.

HMJr:

What?

He may have gone away for the week-end.

HMJr:

No, they said he was in some secret meeting and
he'd be back at 12:30.

Secret meeting?

HMJr:

Well, you'll see the conversation

Yeah. That's something.

HMJr:

And his secretary didn't know and Ronald Ransom
didn't know.

I see. Well, anyway, you said to give him either

Monday or Tuesday?
HMJr:

I said either Monday or Tuesday, Tuesday preferred,
and you might call up his office and say when he's

ready to talk you'll take the message.

All right.

HMJr:

If you don't mind.

No, I don't mind. I'll do it.

I've just played myself out flat this morning.
Well, I'll bet you have.

HMJr:

What?

I'll bet you have.

HMJr:

204

- 10 HMJr:

And they're the most unreasonable, unfair

people I've - I think that I've ever had anything to do with

Oh, that's too bad. Didn't get

HMJr:

and....

couldn't do anything with them.

HMJr:

you'll see it. I read it - and I - I

dictated - I spoke to Ronald with this fellow
sitting there, and every statement I made he
said was true.

You mean Allan sat right by you when you talked

HMJr:

Yeah, and then he got on the phone.

Uh huh.

HMJr:

And - I did have a satisfactory talk with Burgess

You did?

HMJr:

Yeah.

I see.

HMJr:

there?

afterwards.

And he said that he - he's going to see me through
this thing whatever comes.

Well, I think they all will of that type.

HMJr:

Well, you let me know later on.
All right. How is Mrs. Morgenthau?
She's getting along nicely.

Well, that's - that's fine. That's one good

HMJr:
B:

thing anyhow.

HMJr:

All right.

Goodbye.

205

May 22, 1943
3:00 p.m.
Daniel

Bell:

Hello. Hello.

HMJr:

Dan?

Yes.

HMJr:

Have you had a chance to read that memo?

HMJr:
B:

Yes, sir.
Well, that gives you the story.
That gives me the story, yeah.
Well, could I be any fairer?
No, I think that was a very fair statement,
and Allan also agreed with everything you'd
said.

HMJr:

Pardon me?

I say Allan told Ronald that you had stated

HMJr:

Yeah.

HMJr:

the case

which - seemed as though you fellows were

on friendly terms
Oh, yes.
and

HMJr:

But we didn't get anywhere.

You didn't get anywhere. Well, the first part
of his - in your conversation you said that

Allan had not told you that he would not go
along
HMJr:
B:

Yes.

but in his conversation with Ronald he said
that he didn't know whether he could - he wasn't
certain that he could go along on those terms,

so it isn't clear. It just

206

-HMJr:

of course, it isn't.

Eh?

HMJr:

I couldn't pin him down when he was talking to
me. Hello?

Yes.

HMJr:

Is there somebody on this wire?

No, but we've had bad connections before when

HMJr:

the loud-speaker - I can hear you all right.
Well, I can't hear you.

HMJr:
B:

HMJr:

we had it - we could hardly hear you here on

No, it wasn't clear just - just what position
he is going to take
Well, I

... in the end.
....I can't figure this out. He wouldn't give

me a statement if I'd ask him.
He would not. I wonder what he was stalling

HMJr:

might want to talk to Marriner?
I don't know. He said he talked to Marriner

for. Do you think he was stalling that he

last night. Now I - what I don't think I told

you, I had two hours with Randolph Burgess.
B:

Yeah, you told me that you'd seen Randolph

HMJr:

And Burgess says that, come what may, he's going

Well, I thought he would.

HMJr:

See?

Yeah.

but you didn't say

to see me through this.

207

-3 HMJr:

It will
be very
embarrassing for him, but he'll
do
whatever
I want.

That's good.

HMJr:

He'll see me through this.

Well, we were sitting here discussion - discussing
as to the nature of the meeting on Monday or

HMJr:
B:

Tuesday, whenever we got it, and whether or not
there should be some kind of a program.
Well, you saw what I told him.

Well, you just said that, "I want a meeting of
the Board and as many presidents that can be
available."

HMJr:
B:

HMJr:

That's right.
But you didn't say for what purpose.
Well, I told him I'm going to resubmit my memorandum of Friday morning.

Going to do what?

HMJr:

Resubmit my memorandum of Friday morning.

Oh....

HMJr:

Hello? Hello?

Yes.

HMJr:

Resubmit my memorandum of Friday morning. Hello?

Hello?

Hello. Can you hear me?
This wire.

Can you hear me?

HMJr:

Not very well.

Yeah, poor connections.

208
--4HMJr:

I say I told him I'd resubmit my memorandum
of Friday morning.

I see. Well, just submit that and nothing
else, eh?

HMJr:
B:

Yeah, I've got to that point now.
Uh huh. And not see if there isn't some basis

we can get together on.
HMJr:

Well

That's the only basis, I take it.

HMJr:

They don't want to - they don't want me to have
the veto power and they don't want me to suggest.

Well, that's the unfortunate part about your

HMJr:

Yeah.

HMJr:

conversations with Allan

that he doesn't want you to have the appointive power, and when you exercised the veto
power, why, he disagreed with you on that.
He doesn't agree with me on - in other words -

and they want it just their own - they want it

as of March 1.
B:

Yeah. Well, I suppose it's

HMJr:

Look, I can't - it's why it's so difficult

HMJr:

It's awful.
....and I'll - when I come down - I'll be down in

plenty of time to talk with you fellows before

we go in the meeting.
B:

HMJr:

All right.
So there's no use in trying to do it on some wire
if somebody is listening in.
Would you come down - are you coming down anyway

Monday, or you won't come down until we have the
meeting?

209

-5HMJr:

I - I won't come down until we have the

meeting.
B:

I see. Well, I hope I can let you know this
afternoon, but I haven't heard a thing so far.

HMJr:

Well, I'm going to rest now until five o'clock.

All right. Goodbye.

HMJr:

Goodbye.

210
BOARD OF GOVERNORS
OF THE

FEDERAL RESERVE SYSTEM
WASHINGTON

OFFICE OF THE CHAIRMAN

SECURITY

May 22, 1943.
PERSONAL AND CONFIDENTIAL

Dear Henry:

I hope I may have an opportunity to
talk to you again before you announce the appointment of the National Director of Sales.

I realize, of course, that the responsibility for the selection is entirely

yours, but the appointment is of such importance to the future success of the war financing and to the relationship of the Federal Reserve System to it that I should like
very much to discuss it further with you.
Sincerely yours,

Marriner
Honorable Henry Morgenthau, Jr.,

Secretary of the Treasury,
Washington, D. C.

211

May 22, , 1943

TO:

HAROLD N. GRAVES

SUBJECT: WEEKLY PROGRESS REPORT FROM WAR SAVINGS STAFF

FIELD DIVISION

Retail Section

Walter Field Company of Chicago, Illinois, with
a clientele of over 2,000,000, 18 advertising Bonds in its
seasonal catalogue.

Edison Brothers Stores, Inc., St. Louis, Missouri,
sold $100,159 in Bonds and Stamps in April.
The United-Whelan Flying Fortress Drive, held during

April, shows a final total of $3,326,007.80, enough to purchase
over seven Flying Fortresses. Attached is a copy of Whelan's
Drive Bulletin. (Attachment #1)

727/43

-2-

FIELD DIVISION

Retail Section (Continued)
The National Association of Food Chains of Washington,
D. C. sold over $25,000,000 in Bonds and Stamps to their
employees and customers in 1942.

During the Second War Loan Drive, Sonnenfeld's,

St. Louis, Mo., selected volunteer salesgirls to devote a day
to selling Bonds and Stamps. Post cards were sent to customers
and friends of each girl and each was featured in advertisements.
Syraouse, N. Y., retailers went over their quota of
$10,000,000 by selling more than $26,000,000 in Second War Loan
Bonds.

Bonwit Teller, New York, sold Second War Loan Bonds

totaling $1,197,653.

The three weeks' drive for a $10,000,000 goal by the
Fur Industry in New York has been successfully concluded.
Employees of Famous-Barr Company of St. Louis, Missouri,

have invested $1,019,031 in War Bonds in sixty-six weeks. The
goal now is another $1,000,000 by New Year S.
Education Section
"The Teacher of English and the War Savings Program",

a thirty-page mimeographed bulletin, has been prepared by the

National Counoil for Teachers of English with the cooperation of
the Education Section, intended for use in secondary schools and
for summer use in curriculum workshops, and is being distributed.

212

-3-

FIELD DIVISION

Education Section (Continued)

A fifteen-page bulletin, "Sharing America, A
Musical Pageant", is being prepared for school pageants and

sings. It contains narrator's script, production hints, a
song list, bibliography of related materials and suggestions
for a War Bond auction or sale.
A kit of commencement materials which relates to

War Savings is being sent out to those schools which have

indicated a desire for it.
Women's Section

A representative of this section will speak before
the Foreign Language Group in Pittsburgh, regional conferences
in Massachusetts and Connecticut, and the State Federation of
Women's Clubs in Vermont.

A special issue of the Campus Clip Sheet, designed

for summer sessions, is now in preparation.

To date, 23 colleges with a total enrollment of
16,487 students, have reported Second War Loan sales in Bonds
and Stamps amounting to $436,445.40.

The May issue of the Women's Club News Service is

ready for distribution.
At the completion of the College Playwriting Contest

Treasury citations were sent out to five winning authors. Plans
were discussed for radio and press publicity, and arrangements

213

-4-

214

FIELD DIVISION

Women's Section (Continued)

are being made for mimeographing and distributing the plays.
A summary of specific ways in which local women's
committees can organize War Stamp Corsage activities has been

prepared. A Women's Letter has also been prepared containing
data on ready-made corsages, corsage kits, designing and producing

original corsages, promotion and publicity.
Recordings of "Mrs. Brown Goes to War" are being

distributed.
Motion Pictures and Special Events Section
Up to May 15th, Bomber and Fighter Campaigns have

raised $112,225,000 exclusive of such campaigns conducted during
the Second War Loan Drive.

During its five hour tour in Fall River, Massachusetts,
the Jap Two-Man Sub sales amounted to $673,900, averaging $2,250
per minute.

Special talent booked for the current week includes
Bing Crosby, Dinah Shore, Paulette Goddard, Burgess Meredith,

Constance Collier, George Jessell, and Constance Bennett.

The complete schedule is attached. (Attachment #2)
On Monday night, May 24, the Washington Senators will

play the Norfolk Naval Training Station All-Stars Baseball team,
with admission by purchase of War Bonds only.

-5-

215

FIELD DIVISION

Motion Pictures and Special Events Section (Continued)

War Bond admission tickets to the Ringling Bros.
Circus, during its stay in New York, accounted for $6,977,200
in War Bond sales.
The "Truth or Consequences" War Bond broadcast from

Portland, Oregon, on Saturday, May 15, resulted in the sale
of $109,915,391.50, which tops all figures for any War Bond

benefit to date. It was booked through this Section.
The Boys' and Girls' 4-H Clubs of Georgia have
purchased $2,605,363 worth of "R" Bonds for the "Name A Liberty

Ship" campaign. The ship will be named "Hoke Smith", after the
late Governor of Georgia.

On May 27, North American Aviation, Inc., in conjunction
with the War Activities Committee of the Motion Picture Industry
and the War Savings Staff, will launch a Bond campaign in theatres
that are Bond issuing agencies entitled "Send Your Name to War."

Further information on this special campaign which is to run as

long as results justify, is attached. (Attachment #3)
Payroll Savings Section
Attached is a list of companies which have reported
reaching 10% during the past week. (Attachment #4)

The Analysis of Exposure to Payroll Savings Plans is
attached. (Attachment #5)

-6-

216

FIELD DIVISION (Continued)

Agricultural Section
Agricultural Deputy Administrators from New York,
North Carolina, Indiana, Texas and Montana met this week in

Washington to plan future promotional material to be released

by the Agricultural Section in support of state War Savings
educational programs. Materials studied and prepared included
leaflets, posters, easels, radio announcements, skits, advertisements, and press releases.

Three "yardsticks" are being suggested by the Ohio
War Savings Staff to help farm people determine how much they

should invest in War Bonds in 1943. If farm people of Ohio were

to invest the added profits they may expect to receive in 1943
due to the war, investments would be at the rate of about $3.90
an aore. If they spent as much for Bonds in 1943 as they did
for new buildings and equipment in 1941, they would invest in
Bonds as depreciation reserves at the rate of about $3.75 an

aore. Finally, if they do no more than purchase their share
of the War Bonds allotted to Ohio, they would invest at the
rate of $2.93 an aore.
Field Memoranda

Recent memoranda sent to the field include numbers 612

and 613. (Attachment #6)

-7-

217

PRESS, RADIO AND ADVERTISING DIVISION

Radio Section

Constance Bennett will act as Mistress of Ceremonies

to introduce the musical portion of the "Saturday Night Bondwagon"
over the Mutual Network, May 22nd, 10:15 - 10:45 P.M.
Guy Lombardo, Horace Heidt, Tommy Dorsey, and Little

Jack Little and their orchestras are continuing their regular
War Bond broadcasts.

A second "Four Freedoms War Bond Show" will be heard

over the Blue Network Thursday, June 3, 10:30 - 11:30 P.M.

in connection with the exhibit of Norman Rockwell's paintings

at the International Building in Rockefeller Center, New York.
The "Buy-A-Tank" Committee of the Blue Network announced

that $119,150 in War Bonds have been purchased in the Network' a

current personnel Bond drive.
Admission to a violin concert by Jack Benny July 4th
at the Hollywood Bowl will be by War Bond purchases.
Advertising Section
An analysis of tabulations of Second War Loan advertisements made by the Advertising Checking Bureau, Inc. is attached.
(Attachment #7)

of a total of 40,774 Second War Loan advertisements

carried in daily and Sunday newspapers, 62.3% of the total lineage
was material furnished by the Treasury Department. The daily and

-8-

218

PRESS, RADIO AND ADVERTISING DIVISION

Advertising Section (Continued)

Sunday newspaper lineage totalled 30,585,481 lines at a value
of $3,362,890.92. The 33,164 weekly newspaper advertisements

totalled 42,048,321 lines valued at $1,201,380.60. The total
for both daily and weekly newspapers was 73,939 advertisements,

totalling 72,633,802 lines at a value of $4,564,271.52.
Outdoor advertising War Bond posters during the
Second War Loan period were placed on 7,254 panels at a space

value of $181,350, and in addition 8,089 Second War Loan posters

with a space value of $202,225 were used. A total of 84,000
car cards with an approximate space value of $100,000 were placed
and 4,000 tear-sheet posters with an approximate space value of
$15,000 were placed during the period.
Forty-six leading magazines, including LOOK, NEWS-WEEK,

LIBERTY, etc., have already filed their orders for plate material
from the recently issued magazine portfolio.
During the week of May 10 we received 112 War Bonds

ads and mentions in seven top weekly magazines. Attached is a

list of the advertisers and publications. (Attachment #8)
Production has already started for a distribution of
24-sheet outdoor posters to tie in with the new phase of the
Payroll Savings Plan. In addition, arrangements have been made

to carry 19,000 oar cards in twenty-four key cities to tie in with
this program.

-9-

219

PRESS, RADIO AND ADVERTISING DIVISION

Advertising Section (Continued)

Attached is a portfolio prepared by the Sunset
Advertising Company of Seattle, Washington, which reviews

the program of cooperation for that company. (Attachment #9)
Attached are photos of two mammoth War Bond bulletins
displayed in Montgomery, Alabama. (Attachment #10)
Press Section

Attached is the June Company Publications Press Book,

containing features, cartoons, pictures, editorials, information
for editors and fillers. (Attachment #11)
Included in the attached picture page, just released,
are special pictures for Memorial Day, Flag Day, and Father's Day,

as well as other War Bond pictures. It went to all dailies and
mat-using weeklies. (Attachment #12)
The May 15 issue of THE SATURDAY EVENING POST devotes

a considerable portion of a major article to War Bond purchases.
(Attachment #13)

Releases made this week include #335, dealing with the
Secretary's announcement of the results of the Second War Loan

advertising campaign, and #334 dealing with sales of "E" Bonds to
date. (Attachment #14)
The April issue of CONGRATULATIONS carries a full page

War Bond spread. (Attachment #15)

- 10 -

220

NATIONAL ORGANIZATIONS DIVISION

Labor Section

Members of the Street Car Men's Union, Local No.241,
have received a wage increase granted by the War Labor Board,

and arrangements are being made to have them invest part of
their back pay in War Bonds.

A representative of this section addressed the annual
convention of the Rhode Island State Federation of Labor
May 15.

The Texas and Pacific Railway Company shops at

Marshall, Texas, are investing 11% of gross pay in Payroll Savings.
Foreign Origin Section
A representative of this section addressed the "I Am
An American" Day celebration in Los Angeles, sponsored by 21

foreign origin groups, at which over $1,000,000 in War Bonds were
sold.

Some 240 foreign origin groups have been asked by this

Section to hold War Bond rallies on Flag Day.
Inter-Racial Section
A representative of this section addressed a meeting of
the Chefs, Cooks, Pastry Cooks and Assistants Union, in New York,
which is investing $100,000 in War Bonds. The section was also

represented by speakers at joint sessions of the Washington
Annual Conference at Lynchburg, Va., and the Seventeenth Annual

Session of the United Baptist Missionary and Auxiliaries of

- 11 221

NATIONAL ORGANIZATIONS DIVISION

Inter-Racial Section (Continued)
Maryland, at Baltimore, as well as other meetings.
Fraternal Section
Incomplete returns from the Knights of Columbus
War Bond Campaign show War Bond sales, as of May 10, of $60,104,292.

Forty-two jurisdictions have now exceeded their state quotas.
War Bond sales of $394,325 were reported by B'nai B'rith

Lodge, Worcester, Massachusetts, in their April drive. A
consolidated report of the New England Zionist Districts show
April War Bond sales of $1,018,375.
Since January, 1943 the 20,000 members of the Masonic

Lodge of the District of Columbia have purchased $1,418,769.75
worth of War Bonds.

The American Legion of Indiana is sponsoring a May
War Bond Campaign with a goal of $22,000,000. The campaign opened
May 6.

The Florida State Lions Convention at Mount Dora
purchased $145,200 worth of War Bonds.

The Lions Club of Grand Rapids, Michigan, inaugurated

a War Bond campaign last July, with a goal of $1,000,000. On
May 2, the drive was over the top by $631,680.
In Newark, New Jersey, the Rotary Club has expanded its
ourrent War Bond Campaign to finance additional equipment for armed
forces.

- 12 222

OFFICE OF THE EXECUTIVE DIRECTOR

Promotional Research Section

This section handled the measuring, tabulating,
and analysis of Second War Loan advertising in weekly papers,

a study which involved 33,164 ads containing 42,048,321 lines
appearing in 7,735 weeklies.
Attached is the analysis of newspapers using the
carrier plan compiled as of May 20,1943. (Attachment #16)

PARAPHRASE OF TELEGRAM RECEIVED

223

FROM: American Embassy, Chungicing

Secretary of State, Washington

DATED: May 22, 1943
NO.:

754

STRICTLY
CONFIDENTIAL

In connection with the following message please make reference to the
Embassy's wire of April 1, 1943. no. 549. and the Department's previous wire of
May 19, 1943, no. 637. which has just been received.

First. A note from the Foreign Office dated May 19, 1943. has just been
received by the Embassy. This note communicated "provisional regulations" of the
Ministry of Finance which provide for the extension of favorable treatment to the
Consulates and Embassies in connection with the conversion of foreign exchange
into national currency for the purpose of meeting their expenses. The following
provisions are made:

1. The conversion of foreign exchange into Chinese national currency for
the duration of the war by foreign consular and diplomatic offices for their
expenditures will be made at the established rate and in addition there will be

paid an amount equivalent to 50% of the proceeds ON dollars.

2. The foreign exchange which is received from foreign consular and

diplomatic offices will not be credited to the account of the Stabilisation Board
of China but instead will be put in a separate account with the Central Bank.
3. The Central Bank will temporarily advance the national currency needed
for the foreign exchange converted by the foreign consulates and embassies and it

will be set off against the said foreign exchange. Settlement of the account
will be made as soon as the war is over.

4. Upon the basis of certifications contained in official letters from the

Embassies concerned, the conversion of the foreign exchange mentioned above

will be carried out by the Central Beak.

5. The Central Bank of China will list each month in a table the amounts
of the conversions of the foreign exchange to convert the expenses of the various
consulates and embassies in China and the Central Bank will separately report
these amounts to the Ministry of Finance and the Stabilisation Board for reference.
The various consulates and embassies in China will apply directly to the Central
Bank of China whenever they require foreign exchange and that bank will make
payment in foreign exchange at the same rate at which foreign exchange is received
(by the bank from the embassies). The Central Bank shall enter such transactions
into the account under an appropriate heading for calculation.
It is stated by the note that the regulations are to be implemented "from
May of this year" and it is requested that figures be submitted as to the amounts
of foreign exchange desired monthly by the embassy.

Second. The Embassy is refraining from taking any action conformable to
the Foreign Office note in view of the Department!s wire of May 19, 1943, no. 637,

and in view of the ambiguity of the third article of the regulations. Prior to

the receipt of the Department's wire no. 637, I had arranged to see Dr. Kung today

or the purpose, among other things, of seeking a clarification of the regulations.
In the absence of affirmative instructions, I shall refrain, of course, from
discussing with his the subject of the Department's wire no. 637.

Third. Incidentally, it may be added that while the ambiguity of the third

224

-2-

article is assumably designed to meet the objection of the Finance Ministry to a
"special rate" and foreign objection to a "subsidy" for diplomatic establishments,
we have received the impression from conversations with several foreign diplomatic
representatives that they will hesitate to accept the arrangements until the
language of article three is modified appreciably or supplemented by written
assurance that it does not create any financial obligation on the part of foreign
governments but is only a matter of mechanics between the Finance Ministry and
the Central Bank.

Fourth. Will you kindly refer to the message which Adler sent to the
Treasury on this day's date which, among other things, dealt with arrangements
made for increased exchange for organisations of a relief, missionary, educational
and philanthropical nature.

ATCHESON

eh:copy

j-26-43

225

PARAPHRASE OF TELEGRAM RECEIVED

FROM: American February, Chungking, China

DATE: May 22, 1943, 10 a.m.

NO.1 755
This is a message TF 122 from Mr. Adler for the
Secretary of the Treasury referring to Department's no. 587,

dated May 6. and Kabrasy's TF 180, dated May 12.

I. The Ministry of Finance has given the Board

official notice that the Central Bank has been instructed

to arrange for foreign embassies and consular bodies to
receive the official rate of exchange plus 50 percent and

to make this retrantive to May 1.

II. Dr. Kung, when I saw him on May 19, told me about
his interview with foreign missionary and philanthropie
organisations in Chengtu, during which 11 appears he gave
assurance he would match foreign contributions for famine

relief and would grant the official rate plus 50 percent

for foreign missionary philanthropie and educational expenditures. This arrangement, he said, and the one for embassies
and consulates did not mean that special rates were being
established for special purposes, nor did they mean that
subsidies were being granted. No matter how the arrangement
is easoflouged, however, it would appear that they actually
are special rates for special purposes even though not called

this. Until there is further clarification, however, their

status will be ambiguous.

III. The Board has as yet had no official notice,
but I understand that instructions concerning the arrangement regarding foreign missionary philanthropic and educational
organizations have already been received by the Central Bank.

IV. I feel that your attention should be called to one

aspect, namely that the arrangement with respect to foreign
embassies and consular bodies does not involve large amounts
of foreign exchange and can be looked upon as an exceptional
ease, but the arrangement with respect to missionary philanthropic and educational organisations will involve a substantial
amount of foreign exchange. It would seem an eneronchment on

the effective functioning of the board to have this amount of
foreign exchange accrue solely to the Central Bank, as it will

under the proposed arrangement. As long as nothing better could
be

226

-3
be proposed, of course, no objection could be made to granting
foreign missionary philenthropic and educational organization
the official rate plus 50 percent, but there are reasons for
preferring an arrangement which would accomplish this purpose
while still consinuing to keep the board as the recipient of
foreign exchange from remittances to foreign missionary
philanthropie and educational organisations. For this reason,
I would appreciate 11 18 you could advise me of Treasury's
attitude in regards to the proposed arrangement before the
subject is formally brought before the board.
ATONESON

227
OFFICE

SECRETARY OF TREASURY

KM3 MAY 24 AM 10 15

BRITISH MOST SECRET
U.S. SECRET

COPY NO.

EASURY DEPARTMENT

OPTEL NO, 167

Information received up to 7 A.M. 22nd May 1943.
1. AIR OPERATIONS.

Western Front. 20/21st. 17 aircraft laid 80

seamines. Intruders damaged 13 locomotives, destroyed an
enemy aircraft and damaged another. 1 Intruder missing.
21st. 45 U.S. Fortresses dropped 138 tons from 22000 feet
on Steel Works at Emden. 77 U.S. Fortresses dropped 203 tons
on Wilhenshaven Naval Dockyard from similar altitude. Result
in both instances are reported as 'Fair'. Out of 160
Bombers despatched 12 are missing. 21st/22nd. Aircraft

sent out. Berlin 4, Anti Shipping 5, Intruders 24, Sea-mining
104. 4 missing. Preliminary Reports. A 3,000 ton ship

seriously damaged and 2 armed trawlers sunk off Cherbourg.

279 Sea Mines were laid. 11 Enemy Aircraft operated over
South Eastern Counties, 1 was shot down by Fighters. A few

bombs were dropped at Dover and in the South Eastern Suburbs

of London.

North West Africa 19th/20th. 12 enemy aircraft

attacked Oran where a ship was set on fire and Irzeu where
another ship was hit.

Sardinia and Sicily. 19th. A total of 90

escorted Mitchells and Marauders were sent to attack Sardinian
airfields at Milis, Villacidro Monseratto and Elmas and
the harbour and city of Cagliari. Fires were started among

numerous aircraft on the ground. In Sicily the airfield at

Trapani was attacked by 24 Fortresses and was well covered
with fragmentation bombs. Casualties for the day Enemy 29.12.6.

Allied 6.Nil.2. 19th/20th. 19 Wellingtons bombed 2
Sardinian Airfields. 20th. 60 Fighter Bombers and escorted
Mitchells attacked Sardinian objectives including a dam near

Sassari, Airfields at Milis and Villacidro, Barracks at
9.1.3 in fighting and 3.0.12 on the ground. Allied Nil.

Bonorva and railway communications. Casualties. Enemy

228
NOT TO BE RE-TRANSMITTED

COPY NO. 13
OFFICE

BRITISH MOST SECRET
U.S. SECRET

SECRETARY OF TREASURY

OPTEL No. 170

1943 MA 26 AM 11 46

Following is supplementary resume of operational events covering the
period 15th to 22nd May, 1943.
TREASURY DEPARTMENT

1. NAVAL
NURNBERG and KOLN have been located at KIEL. SCHEER has left SHINEMUNDS

but probably remains in the BALTIC. On 21st HIPPER was seen at PILLAU and GNEISENAU
PRINZ EUGEN and EMDEN at GDYNIA.

MEDITERRANEAN. Destroyer and light craft patroit report practically no
enemy shipping in Tunisian waters. Prisoners have been taken off ZEMBRA and PLANA
Islands which have been occupied, as well ES GALITA, the lest named by the French.
H.M. Submarines report 4 small ships sunk, probable hits on one large and one small
merchantman. Discharge of a general cargo of 22,532 tons was completed at MALTA on
14th. The cable between MALTA and TRIPOLI has been restored.
SUBMARINE WARFARE. Spirited action by escort groups has enabled two

ocean convoys to resist heavy U-boat attacks with conspicuous success. During the
week 85 ships in 3 ocean convoys arrived in Home Waters without loss. Week ending
19th, 65 attacks on U-boats. 8 promising attacks of which 4 by H.M. surface craft
SHIPPING CASUALTIES. During week 15th/21st inclusive, 10 ships were reported to have been torpedoed - 1 British ship in outward bound convoy off GREENLAND,
British ship in mid-ATLANTIC in outward bound convoy, 1 British ship in the FREETOK

area, 1 British ship and 1 U.S. ship (the latter reached port safely) in S. ATLANTIC
U.S. ships (1 a large tanker) in the PACIFIC, 1 British ship in the INDIAN OCEAN

and in the MEDITERRANEAN 2 British ships in convoy (1 of which reached ANGIERS) In
addition a British ship was damaged by a mine and a Dutch ship by aircraft off YARMOU
and 2 British ships were damaged by aircraft in MEDITERRANEAN ports. 7 U.S. ships re
ported overdue at different dates are now presumed sunk through enemy action and a U.
ship is overdue at FREEMANTLE since 9th.
TRADE. Imports in convoy into United Kingdom week ending 15th - 896,000
tons of which 228,000 oil.
2. MILITARY

TUNISIA. Once enemy Commanders had surrendered the Axis troops appear

to have had little desire to continue fighting and after 9th when a hard battle was
fought in the HAMMAN LIF area the rank and file surrendered in large numbers. Actic
by armoured division in cutting off neck CAP BON Peninsula probably shortened campai
by some weeks as enomy might have held good defensive position here. Axis emphasis
on "last man last round" defence not true. Estimated figures from EL ALAMEIN to end
of campaign inclusive:

(1) Prisoners of war

140,000 (including some G.A.F.)

German

Italian
Total

150,000
290,000

(2) Axis Divisions represented by above losses (approx.)
11 (3 Armd., 2 Flak)
German
14 (3 Armd.)
Italian
25 (6 Arnd)
Total
(3) Tanks and Guns (approx)
1,100 (of which over 50% German)
(a) Tanks
(b) Guns
Field & Medium 950
Anti-Tank

1,500

(4) Killed and Wounded
55,000 (including some G.A.F.)

Gorman

Italian

Total

35,000
90,000

18th Army Group, having served the purpose for which it was formed in
Headquarters February, closed down at midnight 15th May and became merged in Allied Force Head-

quarters.

229
BURMA. ARAKAN. Further details now available of enemy operations in
first half of May which resulted in our withdrawal from BUTHIDAUNG and MAUNGDAW. On
3rd those places were covered by 2 Brigades west of MAYU RIDGE, one Brigade east of

MAYU Ridge, and 1 Battalion on the ridge, with 2 Brigedes guarding L. of C. The
Japanese then had one regiment west of the ridge and approximately 2 Battalions ongaging 55th Indian Brigado east of the ridge as woll as 2 other buttalions unlocated
somewhere on the ridge. It WAS impossible to stop parties of the enomy infiltrating
northwards along the ridge between 7/15th Punjab Regiment on the ridgo and 55th
Indian Brigado owing to thick jungle. These parties were at first am 11 in number

but late on 4th were reinforced. There is no doubt that the enomy in this arna ner
the two unlocated Battalions and the Japanese eventually developed a strength of DOW
1,500 astrido the BUTHIDAUNG-MAUNGDAW road by infiltration methods. Orders were class
for BUTHIDAUNG to be held and arrangements were made for a counter attack by brigado

from L. of J. protection duties. This failed to rostoro the situation owing largely

to the inferiority of the attacking brigade vis a via the Japanose as Infantry
soldiers in this type of country. This failure necessitated the evacuation of

BUTHIDAUNG and the withdrawal of 55th Indian Brigade which took place on 7th. The
desirability of holding MAUNGDAW was appreciated but in view of the weak eastorn
flank of the MAUNGDAW position and the ease with which its lines of communicatio

could be cut from East, also the very weak strength of formations due to the hig.
sick rate from malaria, as well as the difficulties of roinforcement, it was doc.dac

not to hold it. Eastern Army therefore issued orders only to hold MAUNGDAW long
enough to enable the evacuation of all stores to be carried out. This ovacuation
was reported complete by night 11th/12th and withdrawal began on 12th. Both sidos
have since been regrouping their forces in now positions. Japanese are digging
around BUTHIDAUNG and have sent patrols northwards. They are believed to have 5 OT

6 battalions in front line but most of them are under strength.

3. AIR OPERATIONS

WESTERN FRONT. Night. 561 Sortios, 13 aircraft missing. Out of the
19 Lancasters from a squadron specially trained for the operation and each carrying
9,000 1b. mine carried out completely successful attack on the MOHNE and EDER Dams.
The SORPE dan was also attacked, owing to different method of construction was not

expected that this could be breached immediately, but it was hoped shock would produce seepage and ultimate collapse. Dam was hit and soopage appears to have begun.

If dam collapses all the results of the destruction of the MOHNE dam will be greatly
increased. Seamining was also carried out on fairly extensive scale during week.

Day. From 13th to 19th inclusive U.S. 8th Air Force carried out 12 separ
ate attacks employing 973 bombors. About 75% of them attacked the objective dropping
1,574 tons of H.E. Losses averaged approximately 3.5% of force dospatched. On one
occasion a strong force sent to bomb WILHELMSHAVEN found weather unfavourable and at
tack was switched to HELIGOLAND whore severe damage was done to barracks and the

Naval Signal Station. Enomy more active than usual but in no strength. Total of
about 115 aircraft operated and 4 nights in succession attempts were made to reach
LONDON. Some damage caused at CARDIFF. Enemy losses 9, 1, 2. Ours nil.
MEDITERRANEAN Area. Extensive air operations as reported in daily OPTELS

RUSSIA. Russian Air Force reduced their bombing against enemy railway
communications and air fields. WARSAW bombod and a number of trains reported hit.
German Air Force attacked the Russian railway system behind the front especially in
the DONETS Sector. Canon aircraft have boon used apparently successfully against
Russian landing craft off the KUBAN Peninsula.
4. EXT RACTS FROM PHOTOGRAPHIC AND INTELLIGENCE REPORTS ON RESULTS OF ALLIED AIR
ATTACKS FROM UNITED KINGDOM BASES

DORTMUND. Photographs 13th show heavy damage in centre and around harb

Many important works involved and on East side of canal harbour and industrial aros
of 45 acres devastated.
DUISBURG. Photographs 13th show further considerable damage particula:
around main railway station which has received a number of direct hits. Consideral a
fire damage probably in HAMBORN area. Severe damage Bebcock and Wilcox factory,

bridge over Ruhr collapsed from direct hit and main building of Speldorf railway
station burn't out.
BOCHUM. Widespread damage mostly by fire and worst in town centre.
Severe damage in Versinigto Stahlworeke and other important industrial damage. About
12 acres of business and residential property devastated near main railway station of

which four direct hits.

230

-3
KIEL. U.S. day attack. Photographs 2 days later show very heavy
damage opth from H.E. and incondiaries. Almost every building in Germenia yerd
revoals some trace of damage. Doutsche Work also heavily hit and naval Arison
SY*NKRADE/HOLTON Considerable damage to chemical works and synshe'de

oil plant Perfirmed by photographs.
TH.ONVILLE. Mosquto day attack. The B main buildings of the re lw
works shops Managed extensively.

MEAULTE. U.S. Day attack. Main assembly shed Potez air frame factory
damaged and large part of sub-assembly shop demolished. Aircraft hangars threequarters wrecked.
BORDEAUX. U.S. Day attack. Gate of one lock damaged and basin is LC.

tidal. At least 8 direct hits on Matford Aoro Engine Works. Reported that 2 Um
boats lying alongside in basin were damaged.
ANTWERP. U.S. day attack 14th. Photographs same day show that main

building of Ford has had several direct hits causing heavy damage. General Motors
shops have sustained severe damage to roofs and upper storeys.
5. HOME SECURITY

Estimated civilian casualties week ending 19th - killed 218 seriously
wounded 366 including fatal casualties - TYNESIDE 103, CARDIFF 38.

231
OFFICE

SECRETARY OF TREASURY
NOT TO BE RE-TRANSHITTED

1943 MAY 24 PM 12 55
BRITISH MOST SECRET
U.S. SECRET

COPY NO.

EASURY DEPARTMENT

CPTEL NO. 168

Information received up to 7 a.m., 23rd May, 1943.
1. NAVAL

On 22nd, Aircraft from one of U.S. Escort Carriers, oscorting
eatward convoy in Mid Atlantic, sank one U-Boat, from which survivors word
picked up, damaged another and possibly damagod a third.

2. AIR OPERATIONS

WESTERN FRONT. 22nd. A Mosquito and two Hustangs damaged

12 locometives in the BORDEAUX and ENNES Arcas. 22nd/23rd. Aircrait despatched:

Intruders - 11, Anti Shipping - 4.
ITALY. 20th. Fortress dropped 90 tons on GROSSETO Airfield,

bursts being seen all over the airfield especially among concentrations of aircraft. 21st. Liberaters attacked the forry Termini at REGGIO DI CALABRIA and
SAN GIOVANNI, dropping 64 tons on the former and 60 tons on latter. The Forry
borths and railway yards were hit and a large ship damaged.

SICILY. 20th/21st. Liberators dropped 16 tons on the Forry
Terminus at MESSINA. Naval Albacores attacked and set on fire a 4,000 ton ship
off the Southwost Coast.

SARDINIA. 20th. Modium bombers attacked the airfields at
ALGHERO and DECIMOLANNU, destroying or damaging a large number of aircraft on
the ground.

MALTA. 21st. About 36 escorted F.W. 190's appreached the

island but only a few crossed the ccast, 4 of our aircraft wore destroyed on
the ground at HAL FAR. Casualtics in the air: Enomy 2, 0, 5. Ours - 1 lest
through engine trouble, pilot safe.
BURMA. 19th. Liberators dropped 52 tons on MAGVE and 30 tona

on oil installations at THAYETMYO, 160 miles cast-southcast of AKYAB. 20th.
Heavy and Modium bombers drepped 80 tons on towns on the IRRAWADDY. 2 Liberature
bombod a 3,000 ton ship off the ANDAMAN ISLANDS, the crow abandoned ship.