The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
DIARY
Book 648
July 11-14, 1943
-A-Book
Alien Property Custodian
General Aniline and Film Corporation: New directors to be
elected - McConnell resigning as president - O'Connell-HMJr
conversation - 7/12/43
648
a) HMJr's letter to O'Connell reviewed - 7/12/43,
7/13/43
b) McConnell's reason for resignation - 7/13/43
1) Report to stockholders as of July 12, 1943
Page
12
14.21.157
152
156
c) McConnell's memorandum on post-war attitude toward
Germany contained in memorandum sent in to HMJr 7/16/43: See Book 649, page 134
B-
Bartelt, Edward F.
See Financing, Government: War Savings Bonds
(Payroll Savings Plan)
Buffalo, New York
See Revenue Revision: Withholding Tax
Burgess, W. Randolph
See Financing, Government: War Savings Bonds
(3rd War Loan Drive)
Business Conditions
Haas memorandum on situation, week ending July 10, 1943 7/12/43
28
(For memorandum on week ending July 17, 1943,
see Book 649, page 196 - 7/19/43)
-cCanada
See Financing, Government: War Savings Bonds
(3rd War Loan Drive - Slogan)
Carter, Amon G. (President, Fort Worth Star-Telegram)
Correspondence concerning son's (prisoner in Germany) inquiry
about income tax payment - 7/14/43
219
China
Discussion of Kung's request for $200 million in gold of
$500 million loan to check inflation - 7/14/43
a) Message to Adler
(See also Book 649, page 145)
b) FDR and Hull informed - 7/15/43: See Book 649, page 89
c) Adler's reply to (a) - 7/17/43: Book 649, page 175
d)
further memorandum on sale of gold in China,
smuggling situation, etc. - 7/17/43: Book 649. page 177
e) Conference; present: HMJr, Bernstein, and Miss Kistler 7/27/43: Book 651. page 199
f) Treasury reply (copy to Adler) - 7/27/43 Book 651,
pages 212 and 214
g) Adler sent copy of 2nd Treasury message to Kung 7/31/43: Book 652. page 261
h) Kung' reply - 8/2/43: Book 653, page 76
195
197
-FBook
Page
Financing, Government
War Savings Bonds:
3rd War Loan Drive:
Slogan announced in press release:
"Back the Attack--with War Bonds" - 7/11/43
a) Canada asked for posters using slogan 7/14/43
648
1
236
b) Mail report contains many suggestions - 7/16/43:
See Book 649, page 120
Foreign Missions in United States: American citizens
to be solicited - 7/10/43
a) Hull asked to make contacts - 7/14/43
Organization conference; present: HMJr, Bell, Sullivan,
4
245
Thompson, White, Smith, Haas, O'Connell, and Kades -
7/13/43
60
a) McNamara (now with Bureau of Internal Revenue)
discussed
Burgess press release on framework of New York State
Finance Committee - 7/13/43
239
Open Market Committee meeting plans discussed by HMJr,
Bell, Haas, Murphy, Lindow, and Tickton - 7/13/43
Open Market Committee meeting - 7/13/43
a) Background for recommendations
92
97
116
b) Federal Reserve Bank holdings of United States
Government securities
119
c) Treasury bills: Bell resume for June 23 and 30,
July ? and 14
Conference: present: HMJr, Bell, Haas, Murphy, Tickton,
and Lindow - 7/14/43
120
168
a) Lowering of rates rather than extending the
yearage discussed
Haas gives general outline of program - 7/14/43
a) HMJr discusses with Treasury group - 7/15/43:
253
Book 649, page 49
Payroll Savings Plan: HMJr designates Bartelt chairman 7/14/43
243
Foreign Missions in United States
See Financing, Government: War Savings Bonds
-General Aniline and Film Corporation
See Alien Property Custodian
-LLend-Lease
Reports on purchases:
Week ending July 10, 1943 - 7/12/43
17, 1943 - 7/20/43: See Book 649, page 338
24, 1943 - 7/27/43: Book 651, page 245
47
"
"
"
- L - (Continued)
Book
Page
648
164
Lend-Lease (Continued)
U.S.S.R.: Report of purchases made through Procurement
Division - 7/13/43
United Kingdom:
Aircraft flight delivery as at July 6. 1943 - British Air
Commission report - 7/12/43
Aircraft despatched, weeks ending June 29 and July 6 -
British Air Commission report - 7/12/43
49
51
M-
McConnell, Robert
See Alien Property Custodian: General Aniline and Film
Corporation
See Book 651 for appointment in Treasury
McNamara, J. B.
See Financing, Government: War Savings Bonds
(3rd War Loan Drive)
Morrison, Herbert
See United Kingdom
N-
Netherlands
Conference; present: HMJr and White, Netherlands Minister of
Finance and Financial Adviser - 7/13/43
a) Loan possibilities discussed
122
-RRevenue Revision
Withholding Tax: Likert to check on impact in Buffalo 7/12/43
22
Income Tax Form to be Filed September 15:
Discussed by Sullivan at Treasury conference - 7/13/43
a) Sullivan to check with Smith
Discussed by HMJr, Bell, Paul, Smith, Thompson, Sullivan,
Kades, Opper, Surrey, Cann, and Mooney; Atkeson present
at 2nd conference - 7/13/43
a) Copies of forms
b) Helvering also disturbed, HMJr tells group
Publicity in two steps advocated by Sullivan and Smith -
63
64
123,207
147,148
204,205
207
7/15/43: See Book 649, page 29
a) Bureau of Internal Revenue's attitude on form
explained to HMJr by Sullivan
Notice to Federal Income Taxpayers
a) HMJr tells Cann he does not like - 7/28/43: Book 652,
page 18
b) Conference: present: HMJr, Cann. Graves, Gaston,
C. S. Bell, and Smith - 7/29/43: Book 652, page 181
Publicity man for Internal Revenue discussed by Treasury
group - 7/29/43 Book 652, page 159
a) Likert-HMJr conversation on progress; HMJr may visit Buffalo 8/11/43: Book 655, page 157
32
.
-Book Page
Slogan ("Back the Attach--with War Bonds")
See Financing, Government: War Savings Bonds
(3rd War Loan Drive)
-TTaxation
See Revenue Revision
- UU.S.S.R.
See Lend-Lease
United Kingdom
Morrison, Herbert: Defeat as Treasurer of Labour Party
discussed in Casaday letter - 7/12/43
British Treasury personnel - White memorandum on - 7/13/43.
-W-
War Savings Bonds
See Financing, Government
648
54
160
TREASURY DEPARTMENT
1
Washington
FOR RELEASE, MORNING NEWSPAPERS,
Sunday, July 11, 1943.
Press Service
No. 37-47
7-10-43
The following statement was made today by Secretary Morgenthau:
The invasion of Sicily and other news developments
from battle fronts during the past twenty-four hours have
provided a slogan for our Third War Loan Drive. It is:
"Back the attack -- with War Bonds. If
As anyone knowe who has read a newspaper or listened
to news bulletins on the radio this morning, the United
Nationa are on the march. The first rumblings of the big
offensive are being heard in all the Axis nations. Thousands of our men are storming Sicily. Tons upon tons of
bombs are dropping on Germany. We are attacking Jap-
held territory as never before. This 18 a great day for
us. But it means that the time has come for us to really
tighten our belts here on the home front. We have come to
a most crucial period in the war, and the success that we
will have on the fighting fronts will depend to a considerable extent upon the degree to which we here at home
are willing to work and sacrifice and sweat for ultimate
victory.
It's going to be a costly victory. We have said that
before, but we must repeat it again and again. The real
war has only now begun. Billions of dollars more must be
spent to keep the material of war going to our men at the
fronts. Your Government must call upon you, the American
people, for that money.
Remember, it is up to all of us here at home to Back
the Attack -- and to do it more enthusiastically, more
thoroughly and with greater sacrifice than any attack has
ever been backed by any home front in all history. Everything is at stake. Everyone must help to the very limit
of his ability.
-000-
2
NOT TO BE RE-TRANSLITTED
COPY NO.
13
KOST SECRET
SECRET
224
Information received up to 7 a.m., 11th July, 1943.
JU
NAVAL
In action off CAPE USHANT on the 10th, 3 German Torpedo Boats
escorted by minesweepers were engaged. 1 Torpedo boat was severely damaged
and 1 minesweeper probably sunk. One of H.M. Ships was seriously damaged
forward and sustained 18 casualties, 5 of them fatal. 2 Norwegian Ships
were slightly damaged.
2. MILITARY
RUSSIA. No reports beyond official communiques.
3. AIR OPERATIONS.
WESTERN FRONT. 9th/10th. GELSENKIRCHEN. 1,304 tons were
dropped including nine 8,000 1b. and one hundred and eighty eight 4,000llb.
H.E. in 40 minutes. Heavy A/A opposition but few fighters. Searchlights
ineffective owing to cloud.
10th. 287 Fortresses with fighter support were sent to attack
airfields in Northern FRANCE. Owing to thick cloud, only 67 attacked dropping
a total of 142 tons of H.E. on airfields at CAEN and ABBEVILLE with fair to
good results. 3 Fortresses were lost. Venturas attacked ST. OMER Railway
centre and Typhoon bombers MAUPERTUS Airfield. 4 escorted Special
Beaufighters obtained 6 hits on a 2,000 ton ship off NORWAY and set it on fire.
One Beaufighter missing.
SICILY. 8th/9th. Wellingtons dropped a total of 105 tons
on airfields at COMISO, GERBINI and CATANIA.
9th. Nearly 650 bomber and fighter Sorties were flown against
Airfields, Railways, Barracks and other military objectives including headquarters at TAORMINA on the Fast Coast on which several hits were obtained.
3
TREASURY DEPARTMENT
Washington
Press Service
FOR IMMEDIATE RELEASE,
Monday, July 12, 1943.
No. 37-48
Secretary of the Treasury Morgenthau today announced
the final subscription and allotment figures with respect
to the current offering of 1-1/2 percent Treasury Notes of
Series A-1947.
Subscriptions and allotments were divided among the
several Federal Reserve Districts and the Treasury as
follows:
Federal Reserve
District
Total Subscrip-
Total Subscrip-
$ 1,022,210,000
$ 133,453,000
tions Received
,
Boston
New York
Philadelphia
Cleveland
1,301,921,000
1,160,805,000
1,040,092,000
905,249,500
Richmond
Atlanta
1,139,315,500
2,728,261,000
Chicago
St. Louis
Minneapolls
Kansas City
Dallas
San Francisco
Treasury
TOTAL
586,158,000
422,874,500
670,095,500
700,083,500
1,866,178,000
300,000
$19,543,543,500
-000-
tions Allotted
696,267,500
135,409,000
181,616,000
173,076,500
378,140,500
366,196,000
143,634,000
86,000,500
115,537,500
114,048,500
183,585,000
300,000
$2,707,264,000
4
COPY
1943 JUL
12
wu2 43 GOVT NL COLLECT
BEACON NY JULY 10 1943
TREASURY DEPARTMENT
EDWARD BARTELT
OFFICE OF THE TREASURY DELIVER 830AM MONDAY
SUGGEST YOU CHECK UPON AMERICAN CITIZENS WORKING FOR FOREIGN
MISSION IN THIS COUNTRY AS TO HOW MANY WAR BONDS THEY BUY
SUGGEST YOU DESIGNATE ONE AMERICAN IN EACH FOREIGN MISSION
TO STIMULATE THE SALE OF WAR BONDS COPY TO MRS KLOTZ
HENRY MORGENTHAU JR
740AM JULY 12
4
COPY
mu16 25 COVT NL COLLECT
1943 JUL 12 M 8 30
TREASURY DEPARTMENT
TOWD SEACON NY JUL 11 1943
DANIEL w BELL
OFFICE SECY OF TREAS
SUGGEST THAT WE GALL GROUP OF BANKING ADVISERS FOR THURSDAY.
PLEASE TALK TO ME ABOUT IT WHEN I CALL MONDAY, COPY TO MRS
KEKLOTZ
HENRY MORGENTHAU JR
816AM JUL 12 1943
5
July 12, 1943
9:10 a.m.
HMJr:
Hello. You sound peppy.
D. W.
Bell:
Oh, I'm full of pep.
HMJr:
Have a nice week?
B:
Very good, thank you.
HMJr:
Good.
B:
Very good.
HMJr:
How is Mrs. Bell?
B:
She's fine. And I saw my daughter.
HMJr:
How is she?
B:
She's fine, too.
HMJr:
Good.
B:
And saw Delia. She wanted to be remembered to you.
Good. I think
HMJr:
HMJr:
I've got the group here.
Yeah. The best news I have is I think Mrs. Morgenthau
is going to be able to come up here next Saturday.
B:
Oh, isn't that fine.
HMJr:
Yeah.
B:
That's grand. Getting along all right now, huh?
HMJr:
Well, the boy's coming back is what made her want to
hurry up and get well.
B:
Oh, that's fine. I hope she does.
HMJr:
Now, I've been sending telegrams all Saturday and
B:
Sunday.
B:
I have one.
-2HMJr:
And you know what that group is that you got - I'11 tell
you - George Harrison was in the other day and he said
he felt a little hurt. He thought he'd been fired -
thought he was on that group and 80 forth and so on, see?
B:
Yes.
HMJr:
Now, I think I sent in a list to you that
B:
Yes,
I have it. Smith, Burgess, Edwards, Brown, Spencer
and Harrison.
HMJr:
Well,
there are some others. Fred Smith - Uh - Tom K.
Smi th.
B:
Yes.
HMJr:
You know that first group.
B:
Well, that's the group that we had advising us before
the A.B.A. came into the picture.
I explained that to George
HMJr:
B:
Well, I did, too.
HMJr:
Did you?
B:
He understood it.
HMJr:
Well, he still felt a little hurt.
B:
(Laughs) Really?
HMJr:
B:
Why couldn't we weld those two groups?
Well, I suppose we could. The only thing is that that
last group was picked by Hemingway
HMJr:
B:
Well
and if you recall, we asked him to put Spencer on
and he said he'd already asked Mr. Steele and he came
from a smaller bank which he wanted to give a chance.
HMJr:
Well, this is what my thought is - uh - we want to talk
about the basket don't we?
B:
Yes, sir.
C
-3HMJr:
Well, why can't we have the A.B.A. group and I could
have a - three or four special advisors to me sit in what harm can that be in order - I don't want to hold
three meetings.
B:
I see no objection to that. Just call your regular
advisory
group and then have these other fellows on the
side.
HMJr:
B:
HMJr:
B:
HMJr:
Yeah. You mean as the regular advisory of the A.B.A.
That's right.
Then these two or three who are not on the committee.
I think that's all right and probably better.
And now what would you say if I had them, say, for
eleven o'clock Thursday?
B:
HMJr:
I think that's all right if I can get them.
Well, you can invite them and if they don't want to
come, that's too bad.
B:
Yes.
HMJr:
Now, I don't think I'm going to have them for lunch it's too hard to get food these days.
That's right. Let them buy their own lunch.
B:
HMJr:
What?
B:
Let 'em buy their own lunch.
HMJr:
Yeah.
B:
Uh
- it may be a short notice. Would you want the full
A.B.A. committee?
HMJr:
Leave that to them, Dan.
B:
I'11 call Hemingway.
HMJr:
Yeah - but I would get out telegrams this morning
B:
HMJr:
All right.
for eleven o'clock Thursday and will you tell
FitzGerald?
7
-4
B:
HMJr:
Yes, sir, I will.
Now, there's another thing - uh - on today's financial
page of the Times is the first half-way friendly article
on redemption, comparing our redemptions with Canada
B:
HMJr:
B:
Uh huh.
-
....and gi vine us a break and I wondered if anybody in
Washington
had anything to do with that - I mean
whether thi
low Prenosil or what ever his name 18.
I don't know - Prenosil - I don't know whether he did
or not.
HMJr:
B:
Well, Fred Smith might check up.
( Talks aside) Fred Smith says that Prenosil did cover
New York
HMJr:
Well
B:
....and
whether he had anything to do with this particular
one
he don't
HMJr:
You read that story because it's the first friendly
story we've got on redemption.
B:
HMJr:
I'll check it up.
And, another thing - my local paper here had an A.P.
story out of Washington in which it said the fight
would be - it was sort of partly quoting George, "The
fight was going to be for the sales tax, compulsory
savings as against additional new taxes."
B:
Yes, sir. I saw that.
HMJr:
And that's the thing that I forecast would happen.
B:
And I understand Barkley made some statement that he
thought undoubtedly this enforced savings would be a
subject for a long discussion.
HMJr:
Right.
B:
I saw that yesterday.
HMJr:
Now, Dan, I wish you'd bring yourself up to date on
what I've been doing with Norman Thompson and Bell on
on the War Finance Organization, see?
8
9
5
B:
Uh huh.
HMJr:
Because I'm going to hit that again at nine o'clock
tomorrow morning.
B:
HMJr:
B:
HMJr:
B:
HMJr:
All right.
In fact, I announce now, I want a 9:30 group at 9 o'clock
provided Sullivan can get there.
(Laughs) He heard you.
He heard me? Does he look sleepy?
No, he doesn't look sleepy.
He doesn't. Well, good. Now, do you want to ask me
anything? I've got a couple of other things.
B:
No, I haven't anything. I'11 see if any of this
group has. (Pause) No thing, except Joe O'Connell has
got something to talk to you about on the General Aniline
and Film.
HMJr:
B:
All right.
Do you want to talk to him now or do you want to go ahead
with your
HMJr:
Well, I've just got a few minor things which I'll
B:
Good.
HMJr:
which I'll talk at you and then you can parcel them
out. They're only little things.
B:
HMJr:
All right. Go ahead.
I don't know - a week or two ago we were supposed to
send either letter #1 or letter #2 of War Finance to
all the Congressmen, and I wondered what the reaction
was - if Fred Smi th could contact Mrs. Forbush - maybe
he could let me know tomorrow.
B:
All right. He's right here.
HMJr:
Did he hear that?
B:
It went to all the Congressmen and to the Committee.
-6HMJr:
10
Well, I'd like to know
B:
Oh, wait a minute, just the Committee heads and he will
check up on it and get the reaction.
HMJr:
He will check up?
B:
Yes.
HMJr:
Then, another thing which I want to suggest to War
Finance - I - for instance, if we want to get out some 4
uh - mailing of something, there must be literally hundreds and hundreds of wives of officers in Washington who
would be glad to volunteer for half a day. And I think
Norman Thompson ought to get up a sort of a roster. If
we've got to get out something in a hurry, we'd call on
B:
these people for volunteers.
Just to come in and work
HMJr:
For
a half a day - to come in either the morning or the
afternoon.
B:
Well, you know the Red Cross has quite a list of people
who
with will
it. come in and work and Mr. Bell is quite familiar
HMJr:
Well
B:
All they do is call them up and the come down and work
for half a day or a day.
HMJr:
Well, I know they have these rush jobs over at War
Finance and if they knew where they could get twenty-
five or fifty girls - they'd come in
B:
Yes.
HMJr:
Tell Norman to look into it.
B:
All right.
HMJr:
Will you?
B:
Yes, sir.
HMJr:
And then that's all I've got but I want to ask Harry
White something if he's there.
B:
Harry.
-7Harry
White:
Hello.
HMJr:
Hello, Harry.
W:
Good morning.
HMJr:
Good morning. Harry, did we get off that cable to
Winant about
W:
HMJr:
W:
We did, yes. Yes, sir.
Well, will you give Miss Chauncey a copy if you have
not done so, so I can
I think she has but I'll make certain.
HMJr:
I want to use that as a follow-up if I don't hear
from Halifax by tomorrow.
W:
HMJr:
All right.
And I think you might send a follow-up today to Winant
and ask him how it's coming.
W:
HMJr:
W:
HMJr:
Yeah. I think we ought to give him another day or two.
Oh, no. He's had time enough.
All right.
Send him a follow-up
W:
I'll have one ready for you
HMJr:
What?
W:
I'll have a cable ready for you.
HMJr:
I mean a follow-up cable.
W:
Yes.
HMJr:
Okay. And if you have no engagement, Harry, hold
W:
tomorrow night open, will you? I'm taking option on it.
I have, but I can see what I can do to cancel it - let's
say a certain part of the time.
11
-8HMJr:
12
Well, you know, you wanted to go over that stuff with
me.
W:
HMJr:
That's right. What hours do you have in mind?
What hour? Seven-thirty to one minute of nine.
W:
Okay.
HMJr:
(Laughs) All right.
W:
I'll keep those open.
HMJr:
W:
HMJr:
W:
What hours have you got in mind?
(Laughs) Well, that kind of infringes on the hours
I had in mind, but I'll change my schedule.
Don'ttime.
do that.
Maybe
day
Don't
do it.we could work it in during the
All right.
HMJr:
Don't disturb yourself.
W:
All right.
HMJr:
W:
And - uh - anyway
You didn't hear anything further from that letter?
HMJr:
No.
W:
Oh.
HMJr:
When you see me tomorrow, just say to me, "Mr. Morgenthau,
what did you want to tell me about the Mission to Moscow?
- and I'11 tell you something.
W:
HMJr:
W:
HMJr:
All right. All right, sir.
The picture
All right, sir. It's Joe O'Connell. He wants you.
All right.
Joe
O' Connell: Hello, Mr. Secretary.
-HMJr:
0:
13
Good morning.
Good morning. Bob McConnell called me Saturday and tells
me
that he
has submitted his resignation as President of
General
Aniline.
HMJr:
O:
Yeah.
The meeting is scheduled - an adjourr d meeting is
going to be held tomorrow morning.
HMJr:
Yeah.
O:
....or
slatetomorrow
of fifteensometime,
directors.and they're electing a new
HMJr:
Oh-oh!
0:
McConnell tells me that there are some new faces but
that as far as he's concerned the general set-up is
as bad as the other one or worse. Now, he did not feel
free to talk because he was under something of a ban as
far as talking very freely is concerned. He did indicate
to the
menew
thatboard,
in addition to his objections to the set-up
of
HMJr:
Yeah.
0:
he had gotten into a position of having very fundamental differences with the Allen Property Custodian as
to matters of general policy in the operations of the
company.
HMJr:
Yeah.
O:
He was speaking rather vaguely because he was not permitted
to speak until he had - his resignation had been accepted
which, I understand, will be tomorrow.
HMJr:
O:
Oh.
But I gathered there is some plan under way for a - tying
in the operations of General Aniline with some South
American interests - the disposition of a part of the
stock to either South American governments or some South
American interests, with which he has taken rather
violent exception.
HMJr:
Uh huh.
- 10 0:
14
That is all I know. I drafted a letter which I thought
you might be willing to sign and send to Mr. McConnell
in which I was having you say that you'd like to have
him come in and see you. I did not know whether your
thoughts on that had changed since We talked before.
HMJr:
C:
No. I think he is a very able person.
So do I.
HMJr:
Well, have you got the letter there?
0:
Yes, I have.
HMJr:
Supposing you read it and let everybody listen.
C:
It's got some bouquets in it, but I'll read it.
HMJr:
Sure.
0:
Dear Mr. McConnell: I have just learned that you are
resigning your positions as President and Chairman of
the Board of General Aniline and Film Corporation after
having served in those capacities since March 16 of last
year. Mindful of the fact that at my insistence you
took on the job of running the affairs of this important
German dominated industrial concern when the Government
seized it, I could not let the occasion pass without
indicating to you my appreciation for the yeoman
service you have performed. I realized full well that
the task of operating that company successfully, stripped
as it had even of most of its executive personnel when
you entered the picture, would not be an easy one. Furthermore, it was essential that the Company be reorganized in
such fashion that it would make the maximum contribution
to the war effort. Your problem was complicated by the
necessity of making very substantial changes in the
personnel you inherited in order that the national
security might not be endangered by the continuance of
potentially disloyal and thus dangerous individuals in
responsible positions with the company. It has been with
a feeling of pride that I have followed the activities
of the company under your guidance, not only during the
period when you were responsible to me as Secretary of
the Treasury and were operating under the General in-
structions I gave you at the time of your selection, but
also in the more recent period during which your operations have been carried on under the supervision of the
Alien Property Custodian, whose office succeeded the
responsibilities of the Treasury Department in this
matter late in April of last year. The result te you
- 11 -
15
O:
(Cont'd)
have achieved have amply justified the confidence that was
reposed in you and both you and I, but particularly you,
may look back upon your period of service with a great
deal of personal gratification. Certainly it was a
difficult job done extraordinarily well. I should like
very much to have you come in to see me at your conven-
ience. Sincerely yours. "
HMJr:
O:
The
only - it's an excellent letter - I'd only add,
"At your early convenience."
At your earliest convenience. That would be, I think,
about Thursday of this week because the meeting is
tomorrow and he - I gathered from him that he was planning
to be in Washington about that time.
HMJr:
O:
Well, when does he want this letter?
Well, he's - he's leaving that up to you. I thought it
would be nice if the letter could get to him tomorrow.
That's the day of the stockholder's meeting. I don't
know that he has any - he has no intention of using it
HMJr:
other than that he would like to - this is about all
he is getting out of this year and e half.
Well, why don't you do this. Send him the letter in
the form of a telegram - see?
0:
Yeah.
HMJr:
And tell him I will confirm it with a signed letter
when I get to Washington tomorrow.
O:
HMJr:
Right.
Now, there's one thing. I'd like very much to know
whether Fred Smith has any comments on this. He knows
some of its background.
O:
HMJr:
Well, he's sitting right across the table. (Talks aside)
He has no particular comment. He says he thinks it is
a good letter.
I mean - he thinks that - 'course this man will make
this public - does he think it's all right?
O:
Well, Fred (Talks aside)
- 12 HMJr:
Hello.
0:
Well, Fred thinks that quite possibly we might cut out
the material that I have in - in here with reference to
the period under which - during which he was under the
supervision of the Alien Property Custodian. He suggests
that possibly we might say that you have followed with
pride the activity of the company not only during the
period that you were - that he was responsible to you
but since. Period. Without reference to the detail as
to the Alien Property Custodian.
HMJr:
I think that's
0:
Yeah.
HMJr:
That's an improvement.
O:
Yeah.
HMJr:
I was afraid that somewhere or other Fred would bring
in the word "sweat" - he's got a passion for sweat.
O:
Well, it's too early in the morning for sweating I think.
HMJr:
Isay
see.
(Laughs) He doesn't want to bring in the word and
that
0:
Hello.
HMJr:
and say "while you sweated under the Alien Property
Custodian.
O:
(Laughs) Well that would be a change, too. I don't know
whether that would be an improvement or not. Well, why
don't
extent?we cut that latter part out and shorten it to that
HMJr:
O:
HMJr:
O:
HMJr:
You could send it as a telegram signed - and say when I
get in tomorrow
Right.
.... I'll send him a formal letter.
All right. That's fine.
I think that's all right. Of course, if I could get him,
which I imagine I could, I think I'd much rather have him
than I would this unknown man in New York.
16
- 13 0:
That's what Chuck and I hoped you would say. We'd been
talking about that a bit over the week-end -
HMJr:
Yeah.
O:
and we know him. We know he's a very competent
fellow
HMJr:
Yeah.
0:
and while I haven't run down the other man entirely
yet, he's - and he looks all right what we have seen of
him - but very active in business right now.
HMJr:
Oh, he is?
O:
Yeah.
HMJr:
Well, I'd much rather have
O:
Well, that's fine.
HMJr:
.... this man, although I know he had some tax troubles
and all that but that's all behind him.
O:
HMJr:
Oh, those are all straightened out. And
There
there? was nothing that wasn't perfectly honorable was
0:
Absolutely not. No, sir. The record - his record is
absolutely sound on that - in fact, he got a pretty
sizable refund at the final end up of that tax case.
HMJr:
Oh, he did?
O:
Yeah.
HMJr:
You don't think I ought to ask McConnell to come and see
me at the hospital tonight?
O:
Well
HMJr:
I
I could do that. I know how I could reach him if you
think you'd like to see him. I think he could give
you more detail now than he was able to give me. I
don't
think there is anything can be done to stop the
thing tomorrow.
17
- 14 HMJr:
Well, after all, I've done all I could.
0:
Yeah.
HMJr:
Maybe it would be just as well not.
0:
Yeah. By the way, did you know that he is a fairly
close friend and has been for a long time to Mr.
Baruch?
HMJr:
No.
HMJr:
Yeah.
HMJr:
No, I did not.
0:
That's my understanding.
HMJr:
No. I mean - I'm just thinking out loud - supposing
he gives me all the dirt. What can I do?
0:
No thing.
HMJr:
I've gone - I've gone to the President on this once.
That's right.
O:
HMJr:
What?
O:
That's right. Well, I thought you might want to talk
to him tonight about the other project. That's the
18
only purpose I could see.
HMJr:
Oh!
O:
But that could wait very well until he comes down
later in the week.
HMJr:
What do the people think? Should I try to get the
dirt once more or - I - I've gone all through it
once - the President knows about it - Jimmie Byrnes
knows about it
0:
To others: What do you think? - - general discussion
aside). Fred Smith doesn't think you ought to go further
and that's certainly the way I feel about it and I don't
guess the other people here are familiar enough with it
the background - to have any particular comment. I
think we ought to just send him the telegram saying you
want to talk to him later in the week when he comes down.
-
- 15 HMJr:
19
Yeah, well, you could tell him because I don't think I'11
be there more than three days and he'll have - he better
make an appointment.
O:
Well,
I'll do that if I can get your schedule fairly well.
I can do that with him today.
HMJr:
IThursday?
don't - do either of the girls know my schedule for
O:
(Aside: Do you know? Will he be here Thursday? Yes, the
Secretary. Do you know his schedule?)
HMJr:
How about ten o'clock Thursday?
O:
(Aside: What's on at eleven? - Answer: The bankers).
Oh-oh, the bankers are going to be here at eleven on
Thursday.
HMJr:
Well, what about ten o'clock?
O:
Well, let's see, Miss Chauncey is coming in right
HMJr:
What about ten o'clock?
O:
Press conference at ten-thirty.
Well, half an
HMJr:
O:
HMJr:
O:
Ten o'clock.
hour will be enough.
Half an hour.
=
HMJr:
Ten o' clock.
O:
Ten o' clock Thursday morning.
HMJr:
Why not give him ten o'clock.
O:
Okay. All right. I'll talk with him and tell him that.
HMJr:
All right. You and Chuck feel he'd be the best man?
0:
Yeah.
HMJr:
What?
- 16 -
20
0:
Yes, much the best of the two because we know him. He's
a - he's a competent fellow. We might not always agree
with him but he's certainly smart.
HMJr:
That's right. I think we can leave it till - that way
and then get him off this telegram and letter to follow.
0:
All right, sir. That's fine. Do you have anything
else for anyone else.
HMJr:
No, except that I just hope that they're going to be
ready for Mr. Baruch at one o' clock on Wednesday. Does
anybody know?
0:
Just a minute. (Aside: He says he just hopes you'll
Oh, yes. Fred Smith says he's sure they will be.
be ready for Mr. Baruch at one o'clock on Wednesday. )
HMJr:
Is Haas present?
0:
Yeah. He's here.
HMJr:
Well
0:
He seconds the motion. (Brief discussion) Chuck - Fred
says you got a couple of fellows from the Army to help,
too.
HMJr:
To help Banyas, yeah. I have nothing else.
O:
All right, sir.
HMJr:
Thank you all.
O:
Thank you. Good bye.
The Secretary
Contingent expenses
July 12, 1943
Hon. Robert E. McConnell
Room 1548
230 Park Avenue
New York, N. Y.
I have just learned that you are resigning your positions
as President and Chairman of the Board of General Aniline and
Film Corporation, after having served in those capacities
since March sixteen of last year STOP Mindful of the fact
that at my insistence you took on the job of running the
affairs of this important German-dominated industrial
enterprise when the Government seized it, I could not let
the occasion pass without indicating to you my appreciation
for the yeoman service you performed STOP I realized full
well that the task of operating that company successfully,
stripped as it had been of much of its executive personnel
when you entered the picture, would not be an easy one STOP
Furthermore, it was essential that the company be reorganized
in such fashion that it would make the maximum contribution
to the war effort STOP Your problem was complicated by
the necessity of making very substantial changes in the
personnel you inherited, in order that the national security
might not be endangered by a continuance of potentially
disloyal, and thus dangerous, individuals in responsible
positions with the company STOP It has been with a feeling
of pride that I have followed the activities of the company
under your guidance, not only during the period when you
were responsible to me as Secretary of the Treasury and were
operating under the general instructions I gave you at
the time of your selection, but since then STOP The results
you have achieved have amply justified the confidence that
was reposed in you, and both you and I, but particularly you,
may look back upon your period of service with a great deal
of personal gratification STOP Certainly it was a difficult
job done extraordinarily well STOP I should like very much
to have you come in to see me at your earliest conve lence
STOP Letter to the same effect as foregoing follows
JJO'C.Jr/1sw
H. Morgenthau, Jr.
Secretary of the Treasury.
22
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE July 12, 1943
FS
TO
Mrs. McHugh
FROM
Fred
You can tell the boss I beat him to the punch on this one. Dr. Likert
is including in his plans for Buffalo a complete check on how withholding
is working, what its impact is, and how families have readjusted their
spendings and savings schedules to accommodate the withholding.
23
WUT 24 GOVT NL COLLECT
BEACON NY JUL 10 1943
FRED SMITH
1943 JUL 12 AM 7 49
TREASURY DEPARTMENT
OFFICE SECY OF TREASURY DLR MONDAY 830 AM
WHEN DOCTOR LIKERT MAKES HIS SURVEY IN BUFFALO SUGGEST HE
CHECK UP ON HOW THE WITHHOLDING TAX IS WORKING. COPY TO MRS
KLOTZ
HENRY MORGENTHAU JR.
737 AM JUL 12 1943.
24
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE July 12, 1943
Secretary Morgenthau
Fred Smith
The article on redemptions, which you saw in the New York Times was
widely distributed over Associated Press wires.
It was written by Jerry Muchmore of the New York financial news staff
of the Associated Press, and was based on material supplied in our bulletin
to financial writers on bond redemptions.
Mr. Prenosil had an interview with Victor Hackler, general Financial
Editor of the Associated Press last week. He promised full cooperation
on War Bond publicity, and started to carry out his promise with this
article. At our suggestion he made an independent study of the Canadian
situation before writing the attached article.
Mr. Prenosil has thanked Mr. Hacker, and has told him that we are
preparing a bulletin showing that, contrary to the impression in some
quarters, war plant workers with high incomes buy the bulk of securities
on the payroll savings plan, and thus it is draining off dangerous money.
He said he would be interested and would give wide distribution to the
material.
25
NEW YORK TIMES - July 12, 1943
Canada Adopts Pay-es-You-Go
BOND REDEMPTIONS
Canada went a witholding-tax
basis last year, and made it virtually complete pay-aa-you-go early
LESS THAN 6%INU.S.
Figure Covers Entire Period
Since 'Defence' Issues Were
Offered Originally
DANADIAN RATE IS HIGHER
this year.
But in March, after Finance Minister J. L. Ilsley announced a stepup in deduction rates, redemptions
of Canada's war savings certify
icates which resemble our war
bonds jumped to 34 per cent of
the total sold against 27 per cent
in February.
The redemption rate continued to
increase: in April equaling 42.4 per
cent of sales, and then climbing to
47.8 per cent in May, latest figure
available.
In the United States redemptions have been far below those
But Officials Here Await the
Effects of Withholding
percentages. Canada's 1942 expe-
Levy on Holders
the 1942 average was 3.9 pericent.
rience showed redemptions of about
20 per cent. For the United States
As the total of outstanding
bonds increases, redemptions natuBy The Associated Press.
Will Americans turn their war
rally tend to rise in relation to
monthly sales. In June they
bonds into cash and reduce their
purchases now that wage earners
equaled 15.3 per cent, estimates of
are feeling the bite of the with
since "defense" bonds, now "war
bonds, were first offered, redemp-
holding tax?
Government and private finan-
cial leaders hope not, for those
the Federal Reserve Board indi-
cate. But for the entire period
tions have been less than 6 per
cent.
bonds are a double-barreled way
Redemptions Here a Question
of helping to fight inflation now
The question is whether Ameri
cans, feeling the reduction in take
home pay as a result of withhold
and helping to re-establish: normal
markets after the war ends. In the
taxes, will boost redemptions
meantime they help pay for a tre-in
toward the Canadian percentages
mendously costly war.
Redemptions have worried the
Inflation conscious investment
Canadian National War Finance
circles are studying Canada's experience with war savings certifi-
urged recently that the public be
cates under a pay-asyou-go income
tax plan to help them guess what
may happen to U. S. war bond
Committee to the point that it
educated to the importance of holding the certificates.
"Although it is obvious that
sales of these instruments can be
sales now that withholding has be-
expected to increase as public hold-
gun.
ings increase," the committee said
Government leaders have asked in a statement, "there is still eviAmericans to increase their bond dence of misunderstanding and tr.
purchases as one of the best ways responsibility on the part of the
to put aside the temptation to general public.
spend money in inflationary ways. Aside from increased turn-ins of
Private economists have ex- certificates, the Canadian figures
pressed a belief war bonds sales available show that May sales
provides a way for the taxpayer to fairly steady rate, although there
end the year with income taxes
was a drop in June compared with
paid.
the billion-dollar months of April
and May, when the Second War
Loan drive was under way.
a
might slump with the inception of there
were
for Dur- any
month
in smaller
1942, at than
$5,500,208.
withholding. To counteract this ing 1942 the average was above
possibility. the Treasury has em$6,600,000 a month.
phasized that pay-as-you-go does
In the United States so far war
not increase taxes, that it merely bond sales have been rising at
26
UNITED STATES FLEET
COMINCH FILE
HEADQUARTERS OF THE COMMANDER IN CHIEF
NAVY DEPARTMENT WASHINGTON D.C.
July 12, 1943.
Mr. Henry Morgenthau, Jr.,
Secretary of the Treasury,
Treasury Department,
Washington, D. C.
Dear Mr. Secretary:
I have received your letter of July 9 relative to the pro-
cedure for handling War Bond allotments by officers and enlisted men
of the Navy.
I am this date recommending to the Secretary of the Navy
that he promulgate to all ships and stations a letter clarifying the
procedure for the purchase of War Bonds by those officers and men sta-
tioned outside the continental limits of the United States. This proposed letter directs that adequate facilities be made available to
assure all officers and enlisted personnel the opportunity of register-
ing alletments for the purchase of War Bonds. Competitive campaigns,
or ratings, or high pressure selling campaigns are not, however, to be
conducted for the reason that this would not be appropriate to the work
the operating forces are required to do.
Ships and stations are advised that issuing agencies have
been established at bases outside the United States for the cash sale
of bonds, and that other agencies with trained War Bond Sales Officers
will be established upon the recommendation of the Fleet Commanders in
Chief concerned. Naval agencies are not to be established at those
stations where naval personnel are adequately served by Army organizations.
The proposed letter, as drafted for the Secretary of the Navy
will best meet the requirements of Naval, Marine and Coast Guard personnel in the war areas without being detrimental to their actual combat effort.
Your help and interest are much appreciated.
Sincerely yours,
Eyning
Admiral, U. S. Navy.
27
7-12-43
TREASURY DEPARTMENT
Commissioner of Accounts
rose catary Margenthen
you
probably
will
be interested to
know that l received
a telephone callful
Capt whank many
Bond officer Promotional highey
congratulating you
for the skilfull
way in which you
handled the annial
Kingitsituation.
He
said
was the best
thing that could have
happened in the
interest of the nancy
Bend program a d was
highly elated. Mr. Bartelt Respectfully
28
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
CONFIDENTIAL
DATE July 12, 1943
TO
Secretary orgenthau
FROM
Mr. the
HOPE Situation,
Subject: The
business
Week ending July 10, 1943.
Summary
Marge control; The War Labor Board continues to be confronted
with heavy pressure for wage increases, and has again warned
that the failure to stabilize living costs constitutes a
threat to the maintenance of the "Little Steel" formula.
The nation's shipbuilding workers, in addition to other
labor groups, are now demanding a wage increase to compensate
for increased living costs. Aside from the large number
of workers involved, this demand derives special significance from the fact that average hourly and weekly earnings
of shipbuilding workers are already in excess of nearly all
other groups.
Cost of foods: The BLS cost-of-foods index declined 0.8 percent in June, marking the first downturn in the index since
November 1940. Despite the decline, the index is still
12.1 percent above September 1942 level, to which level labor
demands that prices be rolled back. The 10 percent rollback in butter prices was the most important factor in
the June decline in the index.
Crop prospects: Generally favorable weather has improved
crop prospects in recent weeks and regate crop production
in 1943 was forecast, as of July 1, at 114 percent of the
1923-32 average. This compares with the record crop of
126 percent in 1942. Record or near-record production of
flaxseed, soybeans, peanuts, beans, dry pess, potatoes, and
sweet potatoes, which are regarded as "wor crops", is expected.
Steel production: Work stoppages and picketing at Pennsylvania
coal mines continue to hamper steel operations in the
Pittsburgh district, and U. S. Steel subsidiaries were
forced to bank 13 blast furnaces in the area by the end of
last week.
Retail trade: Due largely to the stimulus of heavy shoe buying,
department store sales in June failed to show the usual
seasonal decline, and the FRB adjusted index of salem rose
to 12 from 125 in May. Sales during the month (in doller
volume) ran 24 percent above last year's level.
29
-2War Labor Board warns price rise threatens wage control
The removal of the legislative threat to subsidized
rollbacks on food prices should strengthen the hand of
administrative agencies in coping with the demand of labor
groups that the "Little Steel" formula be scrapped unless
prices are rolle back. The War Labor Board, in a decision
during the past week, again warned that the failure to
stabilize living costs was threatening the maintenance of
the "Little Steel" formula. In this connection the WLB
chairman estimated that a 10 percent increase in the wage
advance permitted under the formula would add S6 billions
to the nation's payroll, with prices skyrocketing as a result.
With wage demands of the coal miners and railroad workers
still unsettled, 1,100,000 shipyard workers are now demanding
wage increases in what is said to be the largest case yet to
come before the War Labor Board. In advancing their demands,
the workers contend that they gave up automatic wage adjustment
provisions in 1942 in exchange for a promise that wages would
be adjusted if the line were not held on living costs. In
asserting that the line has not been held, it is claimed that
the cost of living in the past year has risen even faster than
the BLS figures indicate, and that a wage increase will have to
be forthcoming if the Government is to fulfill its promises to
labor.
Aside from the large number of workers involved and the
critical nature of the industry, additional significance
attaches to the shipbuilding workers' demands in view of the
high wages that are already being paid in this industry. Thus,
BLS data for April, the latest month available, reveal that
average hourly and weekly earnings of shipbuilding workers
exceeded those of any other manufacturing group, with the
sole exception of workers in the aircraft engine plents where
earnings were a trifle higher. Average earnings of shipbuilding
workers in April were $1.25 an hour and $59.81 a week, in
comparison with average earnings of 94 cents hourly and 42.48
weekly for all factory workers.
Cost of foods decline
An encouraging development in the program to stabilize
living costs was a decline of 0.8 percent in the BLS cost-offood index in June, according to confidential preliminary
figures. This decline marks the first downturn in the index
since November 1940. The index is now 12.1 percent above
30
-3the level of September 1942, to which labor groups demand
that prices be rolled back, and 51.6 percent above the pre-
war level of June 1939.
The 10 percent rollback in butter prices was the most
important factor in the June decline in the index. Prices of
fresh vegetables, however, were noticeably lower due to
seasonal downturns in prices of green beans, cabbage, lettuce,
sbinach and potatoes. In contrast, egg prices advanced 3.0 per-
cent in line with the seasonal upward adjustment in the ceiling
price. Other food prices showed practically no change.
Although it was expected by the OPA that the imposing of
community ceilings would tend to reduce food costs by discouraging black markets, the BLS figures thus for do not
appear to substantiate this theory. However, since it is
doubtful whether above-ceiling prices have been reported to
the BLS, the elimination of black market prices may not affect
the food index.
Reference to Chart 1 will show that retail and wholesale
food prices since 1940 have followed a substantially similar
pattern, although wholesale food prices have shown a larger
increase for the entire period. However, retail food prices
have risen 16.7 percent since May 1942 when the General
Maximum Price Regulation became effective, as compared with
a 10.8 percent increase in wholesale food-prices. This may
indicate more effective control of wholesale prices, but no
positive conclusions should be drawn because the indexes do
not cover the same areas nor exactly the same foods.
Marketing margine increase recently
Despite the large increase in the cost of food during the
change up until the last few months, according to figures of
the Department of Agriculture. In other words, most of the
increase in food prices went to the farmer, while the middlemen
continued to receive about the same amount of money per unit of
sale. (See Chart 2.)
past two and one-half years, marketing margins showed little
Food marketing margins, however, have increased rapidly
since February, according to the Department of Agriculture
figures. While the annual retail cost of 58 foods advanced
from 8432 in February to $475 in May (upper line on Chart 2),
only 15 of this was due to higher farm prices, while S28
31
-4represented an increased toll taken by intermediaries--apperently
going chiefly to retailers. A decline in the farm prices of
live meat animals, between February and May, while retail
mest prices actually increased slightly in that period, partly
accounted for the increase in marketing margins. Moreover,
the sharp increase in prices of apples, potatoes, and
sweet potatoes went largely to the middlemen.
Although marketing margins remained quite stable during
the war period until the last few months, labor costs of
middlemen have increased sharply. Average hourly earnings
of marketing employees have risen more than 20 percent in the
bast two and one-half years. The increase in labor and other
operating costs undoubtedly would have tended to squeeze
middlemen 1f it had not been for the increase in their
volume of business. Also middlemen have benefited from the
shift in consumer demand to many high-priced luxury foods
upon which margins are generally higher. (These items are not
included in foods covered by the Department of Agriculture' B
figures.)
Vegetable prices reduced
A rollback of 50 percent in price ceilings of cabbage
and 25 percent for lettuce WEB announced by OPA last week
as the first step in cutting back excessive prices of important
fresh fruits and vegetables. No subsidies will be used in the
rollback, but advantage will be taken of the present seasonal
decline. Ceilings at wholesale and terminal markets will be
determined by a basing point price plus freight, and retail
ceilings will be determined by a specified mark-up over cost.
The regulation provides for monthly or seasonal changes in
the ceiling prices for cabbage, but lettuce ceilings are
apparently to remain unchanged. The new ceilings become
effective July 20 and will replace previous temporary
ceilings established in February.
Generally the prices for the vegetables covered by the
order, and others which will follow, represent a rollback in
prices to the maximum amount allowed under the legal limitations
governing the pricing of raw agricultural commodities; that is
the highest price reached between January 1 and September 15, 1942
or the parity price. Allowance must be made for grade, location,
and seasonal differentials.
32
-5New mark-up program announced
An over-all fixed mark-up price program for most food
products was announced last week by the OPA. The regulation
applies to both the wholesale and retail levels of distribution and 18 designed to simplify and replace a large
number of separate maximum price ceilings which have been
previously issued. The effective date of the order for
wholesalers and large retailers is July 26, and for small
retailers, August 5.
It is estimated that 95 percent of all dry groceries
and 75 percent of all fresh vegetables are covered by the
new order. Major grocery store items not included, however,
are beer, liquors, candy, bread, milk, ice cream, fresh fish
and tobacco.
Ceiling prices of perishable commodities are figured
by all groups of retailers each Thursday for a week on the
basis of the net delivered cost of the largest purchase
received in the seven-day period before that Thursday.
Increases in the mark-up for some minor canned fruits
and vegetables, rice, pickles, and relishes are provided in
the order; however, OPA stated that the new regulation would
mointain the same general level of prices which was in effect
April 8, when the President issued his hold-the-line order.
The increased mark-ups simply restore in part a cut-back
which occurred May 17.
The regulation does not affect prices in the 200
effect. Moreover, the extension of community ceiling prices
will gradually replace the order in many places.
communities where dollar-and-cents ceilings are now in
Commodity prices fractionally lower
Commodity prices were influenced by Congressional
developments last week, and earlier price gains were wiped
out by the failure of Congress to raise the corn ceiling or
to check the use of subsidy payments. The BLS index of 28
basic commodities declined fractionally. (See Chart 3.)
Wheat and cotton prices were somewhat lower and, as a result
of heavy marketings, hog prices declined 3 percent to around
the Government support level of $13.75 per hundredweight.
With feed barley in excellent demand as a substitute for
corn, barley prices moved higher. Rosin prices increased
noticeably.
33
-6The BLS all-commodity index in the week ending July 3
declined slightly to 103.0. After three consecutive declines
the index is now 1.0 percent below the peak reached at the
end of May, although 37.3 percent above the ore-war level
of August 1939. Seasonally-lower prices for fresh fruits
and vegetables, and a 7 percent decrease in bacon prices
were largely responsible for the decline in the index.
Crop prospects improve
with the improvement in weather conditions in recent
weeks, crop prospects are now generally favorable, according
to the July 1 crop report of the Department of Agriculture.
regate crop production in 1943 seems likely to be at a
relatively high level, 114 percent of the 1923-32 average,
but considerably below the phenomenal showing of 126 percent
in 1942. The 1943 figure includes crops not yet planted or
not yet estimated, and allows for normal losses from drought
and other causes. Growing conditions appear favorable in all
except a few states and crop improvement has continued during
the first week of July, according to the latest CPO bulletin
of the Weather Bureau. A large crop would undoubtedly have
some moderating influence on food prices.
However, the crops are off to a late and uneven start,
especially in the east-central and northeastern parts of
the country. In spite of the late plantings, the harvested
acreage of the 52 principal field crops 1s expected to be
almost 347 million acres, 8.6 compared with 340 millions last
year.
The aggregate area of "war crops" (flaxseed, soybeans,
peanuts, beans, dry peas, potatoes, and sweet potatoes) shows
on increase of nearly 5 million acres over last year. Record
or near-record production of these crops is forecast.
While the area in corn has been increased 5 million acres,
the corn crop is estimated at 2,707 million bushels 0.8 compared
with 3,175 millions produced in 1942. Combining the forecasts
of corn, oats, barley and sorghums for grain, the tonnage of
these 4 feed grains seems likely to approximate 107 million
tons, which would be 17 million less then in 1942. In view
of the record livestock production this year, a harvest of
feed grains no larger than is now indicated would necessitate
some decrease in the rates of feeding and some reduction in
the number of meat animals and poultry.
34
-7
The wheat crop has improved since the June forecast and
is now estimated 8 percent above expectations a month ago.
Probable production is placed at 791 million bushels, which
would be much below the bumper crop of 981 million bushels
in 1942.
Production of deciduate fruits is forecast to be
considerably lower than 1 year and somewhat below the
10-year 1932-41 average. THE ract grapes are the only
important deciduous fruit that appears likely to be in
good supply in 1943. Peach sherry, and pear crops will be
much below average, and tue ondition of the commercial apple
crop on July 1 was only 53 percent, or 12 points below that
of July 1, 1942. Citrus fruit production, it is estimated,
vill approximate last season's crop. The total tonnage of
all fruits for marketing during the 1943-44 season may be
within 6 or 7 percent of the supply for 1942-43.
Factory employment slightly lower in
May but payrolls rose
Despite further expansion in the aircraft and shipbuildirg
industries, the total number of factory workers employed in
mid-May was about 37,000 less than a month earlier. Employment
in the iron and steel industries declined, primarily as a
result of the completion of certain Government contracts, while
seasonal decreases in employment occurred in the textile and
leather industries. Reference to Chart 1. will disclose that
factory employment has shown relatively little net advance
since the end of 1942.
In the face of the moderate reduction in employment,
factory payrolls continued to forge ahead in May and showed
a further rise of more than 1 percent. This continuing
expansion in payrolls, despite a slight contraction in
employment, indicates that the average weekly earnings of
factory workers are still rising. By mid-May estimated
average weekly earnings of factory workers (shown on Chart 4)
were nearly 81 percent above the 1939 average, and were more
than 20 percent higher than a year earlier.
Steel operations still hampered by coal strikes
Although steel operations were scheduled to rise 7 percent last week, continuance of picketing and work stoppages
in the Pennsylvania coal mines continued to hamper operations.
35
- 00 -
As a result of labor troubles in the mines producing coal
for the Pittsburgh steel mills, U. S. Steel Corporation
subsidiaries in the Pittsburgh-Ohio area had to bank 13
furnaces by the end of the week. In addition, the important
Clairton coke by-products plant was forced to operate at only
50 percent of capacity.
Slightly offsetting continued production difficulties
in the Pittsburgh district, the Carnegie-Illinois blast
furnace operations in the Chicago area were restored to full
capacity last week as the No. 7 stack at the Gary plant
resumed operations after a 10-month shutdown for rebuilding
end enlargement. The rebuilt furnace's capacity is reported
doubled, thus making it one of the world's largest.
Heavy fog and accidents continued to hinder iron ore
shipments on the Great Lakes in June, as evidenced by the
fact that shipments dropped 6 percent below the corresponding
month last year despite an increase in the size of the ore
fleet. As a result of the late start in the shipoing season
and the subsequent unfavorable weather conditions, this year's
ore movement up to the end of June was 27 percent behind the
corresponding period last year. In view of the deficit which
will have to be made un in the remainder of the shipping
season, it is fortunate that the new MacArthur lock at Sault
Sainte Marie has just been opened. This is a deep draft lock
which will permit heavier loading of the larger boats, and will
also relieve the heavy dependence of the war program on the
continuous functioning of the other locks at the Soo.
June department store sales failed to show
usual seasonal decline
Department store sales normally show a seasonal decline
in June, but the heavy wave of shoe buying in the first half
of last month provided sufficient stimulus to maintain sales
very close to May levels. As a consequence, the FRE adjusted
index of sales for June rose to 129 from 125 in the previous
month.
Following the mid-month buying flurry in June, department
store sales dropped sharply but still ran substantially above
year-earlier levels. (See Chart 5.) However, the gain of
39 percent in the week ended July 3 was partly due to the
fact that the corresponding week last year had 1 less shopping
day.
36
-9In contrast to a gain of 24 percent in June department
store sales over the corresponding month last year, sales of
mail order companies showed much narrower gains. However,
Sears, Roebuck and Company sales in June ran above the
previous year's levels for the first time since last October,
:though the gain was less than 1 percent. The comparable
gain for Montgomery Ward and Company was nearly to percent.
Indicative of the pinch of war-time goods shortages, the
new Sears, Roebuck fall and winter catalogue reveals the
elimination of around 250 articles, including such items
as cotton sheets and pillowcases, alarm clocks, vacuum jugs,
anti-freeze and wheelberrows.
FOOD PRICES
1943
1942
1941
1940
PERCENT
PERCENT
1940 100, Unadjusted
170
170
165
165
160
160
155
155
150
150
145
Wholesale
145
B.L.S.
140
140
135
135
130
130
125
Retail
125
51 CITIES. B.L.S.
120
120
115
115
110
110
105
105
100
100
95
95
N
J
1942
S
J
N
$
J
J
N
$
J
J
---
Office of the Secretary of the Transart
1941
N
1940
J
M
M
J
M
M
$
M
M
M
M
1943
P-239-A
Chart 2
38
RETAIL COST OF 58 FOODS* AND MARKETING MARGIN
1942
1941
1943
DOLLARS
Per Year
LLARS
Year
Monthly
550
550
500
500
450
450
400
400
350
350
300
500
Farmer's Share
250
250
200
200
150
150
100
100
Marketing Margin
50
50
A SOND
0
J
1942
A
1941
o
1943
Source U.S.D.A
"Annual purchases by . typical workingmont family
the Secretary of the Treasury
of Research and Statistics
P-266
J
MOVEMENT OF BASIC COMMODITY PRICES
1942
1943
1944
PERCENT
PERCENT
AUGUST 1939.100
220
220
210
210
200
200
9 Uncontrolled Commodities*
190
190
180
28 Commodities
180
170
170
19 Controlled Commodities
160
160
OCT
FEB
DEC.
APR
JUNE
1942
AUG
OCT
FEB
DEC
1943
1944
PERCENTAGE CHANGE DEC 6, 1941 TO JULY 2, AND JULY 9. 1943
PERCENT
PERCENT
19 Controlled
9 Uncontrolled
Commodities
Commodities
+60
+60
+50
.50
Flavseed 6462
#Berley4412
Care 44.62
+40
+40
(Hage 3582
39
Lard 28.8%
+30
+30
CResia 2682
Wheat 2432
(Shelloc 12.3 X
Steers 2352
(Lead 111%
Print Cloth 7.8 X
+20
Cotton 2042
.20
Butter ISSI
Sugar 69%
Wool Tops 62
(Cottonseed Oil 5.9 X
(Line 3.2
0% Change
+10
.10
Hides. S.M.
Tin. Rubber
Coffee. Copper
St Screedom
St Scree up
0
o
Cocoa 8%
follow 4.12
Burlap 432
-19
10
Dec. 6
July 2
July 9
Dec 6
July 2
1943
1943
1941
July .
1943
1943
-
1941
20 Controlled a Uncontrolled previous to June 26. 1942
of -
Office of the Secretary of the Treasery
FACTORY EMPLOYMENT. PAYROLLS AND WAGES
1939=100, Unadjusted
1939
1943
1942
1941
1940 12
PERCENT
PERCENT
320
320
300
300
280
280
260
260
Payrolls
240
240
220
220
200
200
180
180
Employment
160
160
140
Average Weekly Earnings
of Factory Workers
140
120
120
100
100
80
M
1939
J
Office of the Secretary of the Treasury
Research and States
1940
M
N
S
S
J
M
M
M
1941
1942
J
M
N
S
M
J
80
S
N
1943
C-488
Chart 5
DEPARTMENT STORE SALES
1935 - 39 - 100. Unadjusted
MAR
FEB
APR
JUNE
MAY
AUG
JULY
SEPT.
OCT.
DEC
NOV.
PERCENT
T
JAN
PERCENT
Weekly
280
280
260
260
240
240
220
220
200
200
180
180
160
160
1943
1941
140
140
120
120
100
100
1942
80
80
FEB
OFFice of the Secretary of the Treasury
Dream . Research and Statement
MAR
:
JAN
IIII
11
APR
11:
MAY
III
little III LILIII
1111
JUNE
JULY
AUG
SEPT.
OCT
1
1111
60
NOV
11111
60
DEC
C-390 B
41
42
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE July 12, 1943
TO
FROM
Secretary Morgenthau
Mr. White
HOW
Mr. Alex Royce, Economic Adviser to Mr. Murphy,
and Chairman of the North African Economic Board,
spoke to a group of Government representatives,
including Treasury representatives, on July 8.
During the course of the discussion, he critiin their duties in the area, for having sent inefficient and ill-trained personnel abroad, and for
sending too many men into the area. At a later point,
he stated that the Treasury was the only division in
the area that was under-staffed and undermanned. He
indicated privately, after the meeting, that the
cized some of the Government agencies for failing
Treasury representatives were doing a good job and
that Glasser and some of the others were people who
should be seriously considered for any operations
that might be contemplated in the future.
SECRET
43
TREASURY DEPARTMENT
PROCUREMENT DIVISION
WASHINGTON
OFFICE OF THE DIRECTOR
July 12, 1943
MEMORANDUM TO THE SECRETARY:
Supplementing report to you of July 5, 1943,
the purchases against the African Program from
July 5, 1943, to July 11, 1943, totaled $875, 483.60
or a total of purchases for the program thus far of
$46,963,043.74
Attached is report giving status of shipping
against these purchases.
Clifton B. Mack
Director of Procurement
FOR VICTORY
BUY
STAMPS
(37861)
HIPPING REPORT AS OF JULY 10, 1943
Tonnage
Commodity
Asbestos sheet packing
Bearings, ball, roller
Blasting caps
Shipped to Date
From U. S. A.
Tonnage
Tonnage
Under Load
At Port
2
1.38
1
1.4
2
161.74
53.85
Brick
169
Calcium carbide
Cement
Cement, rubber
Chemicals
Coal cutters
Copper, tubing, sheets
rods, cable, and wire
Corrugated boards
Clothing
Copper sulphate
Cotton thread
Cordage & twine
Drugs
Electric motors
Electrodes
Envelopes
Files, steel
Fullers earth
Gelatin
Glass, window
1.21
10.5
47
Brass rods and sheets
Babbitt metal
Cable insulation winding mach.
To Port
19
Boiler tubes
Books & booklets
En Route
5.5
Belts
Bone glue
On Hand at Port
Waiting Vessels
Tonnage
14.82
36.5
23.06
4.5
46.22
554
2105
907.67
47
21.5
1206.89
178.52
191.03
79.88
72.07
106
19.4
22
10.79
3029.11
631
12
2472.58
5697.7
75.65
241.55
40.08
4.8
18.41
13.94
15
99.7
27.9
188
47.5
23.6
22.95
.33
2.56
32
1
4.5
10.78
12.68
5.5
.4
15
72
2
99.6
2
21
195.3
-2-
SEC RET
15
Tonnage
Commodity
Glass, lamp chimneys
Glycerine
Grass hooks
Hooks, eyes, buttons, needles
Horse-shoes & nails
Hosiery
Jute bags
Lamps
Light bulbs & sockets
Lithopone
Lumnite
Mach. finished book paper
Matches
Newsprint
Shipped to Date
From U. S. A.
Paper bags
Paint pigments
Piece goods, textiles
Pig iron
Pig tin
Powdered milk
Printers ink & supplies
Raw sugar
Refined sugar
Shoe tacks
Spare Parts for autos,
tractors & harvesters
Spark plugs
At Port
On Hand at Port
Waiting Vessels
12.75
1.27
17
197.31
31.56
751.19
5.18
11.68
10.2
Tonnage
En Route
To Port
29.91
3.5
33.55
5.5
30.06
20.1
6.5
10.72
555
13.2
16.8
84.64
62.35
30
2
394.38
1529.13
8
52
14
100
9
9.5
2.5
oil, insulating
Paper products
Under Load
Tonnage
17
Nipples, bottles, eye cups
Padlocks
Tonnage
889.58
95.32
28.33
11,999.22
65
430.09
114
190.6
34.5
250.5
12.2
1,488.3
490
37.67
1
3,612.95
121
64
119
11.5
1545
4196.5
19.54
1062.76
4.5
9
134
426.86
398.53
.2
5
-3-
Tonnage
Shipped to Date
From U. S. A.
Commodity
Tonnage
Under Load
At Port
Tonnage
On Hand at Port
Waiting Vessels
Tonnage
En Route
To Port
161
Spiegeleisen
Storage batteries & flashlights
Steel, pipe, bars, angles, wire
Shoes, boots & soling
Sulphur commercial flour
Tin plate
Tires, tubes & tape
Tools
Tooth brushes
69.27
3860.50
338.06
21.5
994
100.25
2312
184
845
274.64
306.24
85
121.9
229.8
Trucks
Typewriter ribbons
Wire cloth
Wire nails
Wire rope
3539.63
301.68
652.2
7
1068.72
116
3759.5
208.87
356.80
452.02
650.3
.75
171.75
Tea
42.99
88.5
166
22.46
.5
3.5
3.45
100.5
88.5
19
17
7
18
X-Ray film
1
Brake fluid
Zinc rolled sheets
Grain drills
Pump installations
Welding rods
2.37
.2
27.5
22.46
12.85
14.8
.31
28
Sodium silicate glass
1.2
Hardware
Lignumvitae planks
2
Transformers
7
1.27
Electrical appliances
2.29
Sprayers
Totals
9
44,208.20
6,704.87
10,329.20
11,850.44
47
SECRET
TREASURY DEPARTMENT
PROCUREMENT DIVISION
WASHINGTON
OFFICE OF THE DIRECTOR
July 12, 1943
MEMORANDUM TO THE SECRETARY:
There is submitted herewith the operating report
of Lend-Lease purchases for the week ended July 10,
1943.
The Procurement Division is preparing a statement
for the Office of Lend-Lease Administration based on
expediters' reports received from the field offices
which will show the present status of all requisitions
prior to January 1, 1943, with particular reference
to undelivered balances. This information will be
used for the purpose of review with the requisitioning countries to determine whether the original need
exists or whether the requirements should be revised.
your
cifyton of Z Procurement lack
Director
PORVICTORY
BUY
BILLE
(37861)
SECRE
I
LEND-LEASE
TREASURY DEPARTMENT, PROCUREMENT DIVISION
STATEMENT OF ALLOCATIONS, OBLIGATIONS (PURCHASES) AND
DELIVERIES TO FOREIGN GOVERNMENTS AT U. S. PORTS
AS OF JULY 7, 1943
(In Millions of Dollars)
Administrative
Russia
China
$1557.0
$103.4
(1926.8)
(1557.0)
(103.4)
$2834.1
$1543.1
$1140.2
$40.5
tions (Requisitions)
(2801.3)
(1526.0)
(1129.1)
(40.3)
Requisitions Cleared
$2750.2
$1493.1
$1112.5
$40.0
for Purchase
(2721.0)
(1474.8)
(1103.6)
(40.0)
Obligations
$2660.4
$1461.0
$1070.7
$40.0
(Purchases)
(2626.3)
(1450.8)
(1048.8)
(40.0)
Deliveries to For lign
$1160.3
$811.6
$317.3
$18.6
(1148.9)
(806.0)
(311.7)
(18.6)
Total
U. K.
Allocations
$3958.5
$1926.8
(3958.5)
Purchase Authoriza-
Governments at U. S.
Ports
Miscellaneous &
Expenses
Undistributed
$10.2
$361.1
(10.2)
(361.1)
$110.3
-
(105.9)
-
$104.6
-
(102.6)
-
$6.6
(6.4)
-
-
$82.1
(80.3)
$12.8
(12.6)
Deliveries to foreign governments at U. S. Ports do not include the
tonnage that is either in storage, "in-transi t" storage, or in the
port area for which actual receipts have not been received from the
foreign governments.
Note: Figures in parentheses are those shown on report of June 30, 1943.
49
BRITISH AIR COMMISSION
1785 MASSACHUSETTS AVENUE
WASHINGTON. D. c.
TELEPHONE HOBART 9000
ASE QUOTE
FERENCE NO
With the compliments of British Air Commission
who enclose Weekly Statement No. 111 covering
Aircraft Flight Delivery as at July 6, 1943.
The Honourable Henry Morgenthau, Jr.
Secretary of the Treasury
WASHINGTON, D. C.
July 12, 1943.
MEM
U.S.
100 REPORT NO. 111
(Covering Hovements through July 6, 1943)
2
(1)
A
O
n
HXTO
(BAG)
UNITED KINGDOM
- EAST
20
(mo)
96
(BAG)
(6)
VENT.
(5)
(1/2)
(IMA)
308
140
432
(7)
(8)
(9)
(10)
(11)BRITISID
NOT
SOST.
RALE.
BATE, F
B20
(1/2)
an
(1/L)
172
372
9
64
1
ROOSTOSEOREI
B25
(a.m)
(A.R)
182
135
(L/L)
(A.R)
95
5
4
30
48
31
TOTAL
1,958
179
127
127
SOUTH AFRIGAA
92
92
FREETOM
MUSTRALIA
27
27
9
STREATORS
9
INDIA
3
3
OTH'S IN CANADA
6
45
285
165
13
as
ROAD
45
16
1
18
NASSAS
13
7
Account
its reaste Occurrence
6
3
Genier, - etc.
459
1
2
,
GRANNED AFFER EXPORT
1
20
18
19
4
2
9
97
560
20
77
5
2
1
32
15
1
4
1
1
2
1
4
Special deliger
Mentreal
1
43
1
1
- or Bermale (on reste)
44
9
45
"
2
22
9
38
15
1
8
5
,
5
18
In reate expert
2
3
133
.
2
1
At installation center
At notification easter
is reste notification center
1
40
4
,
45
105
30
50
17
11
32
Special duty in U. s.
Veter repair
3
2
1
1
2
20
2
1
5
50
20
201
165
530
663
25
1
12
2
2
4
58
7
351
1204
60
838
200
976
Deleting - transferred to U. S. after delivery to U. K., which has been shown as diverted to U.S.
- In Canada, Bermada, or Nassom.
5
1
2
1
1
DIVERTIS TO U.S.
1
1
as starting paint (In Bookh,eto)
GRASHED IN U. S.
TOTAL
69
52
6
FARRY SERVICE
.
SECRET
July 7, 1943
LOCATIONS OF OCENITO DELIVERY ATRORATE
"
293
232
72
PLANNING AND AIRFRANK SUPPER
BRITING AIR COMISSIEN
KASHINGTON, D. C.
an
322
51
BRITISH AIR COMMISSION
-
1785 MASSACHUSETTS AVENUE
WASHINGTON D. c.
TELEPHONE HOBART 9000
LEASE QUOTE
EFERENCE NO
With the compliments of British Air Commission
who enclose Statements Nos. 92 and 93 - Aircraft
Despatched -- for weeks ended June 29 and July 6
respectively.
The Honourable Henry Morgenthau, Jr.
Secretary of the Treasury
WASHINGTON, D. C.
July 12, 1943.
52
MOST SECRET
STATEMENT NO. 92
AIRCRAFT DESPATCHED FROM THE UNITED STATES
NEEK ENDED JUNE 29th. 1943
DESTINATION
ASSEMBLY
POINT
CONSOLIDATED
Liberator III
Catalina IV
CURTIBS
India
India
U.K.
U.K.
BY
BY
SEA
AIR
2
TYPE
1
Kittyhawk
Kittyhawk
S. Africa
Capetown
New Zealand
Wellington
Kittyhawk
Kittyhawk
Sydney
50
M.E.
Port Sudan
15
U.K.
U.K.
5
Australia
21
DOUGLAS
M.E.
M.E.
U.K.
U.K.
M.E.
M.E.
U.K.
U.K.
1
S. Africa
5
India
S. Africa
3
India
6
Dakota III
Dakota III
Dakota III
akota III
LOCKHEED
Hudson IIIA
2
GLENN MARTIN
Baltimore IV
4
GRUMMAN
Helloat
9
NORTH AMERICAN
Harvard
"arvard
Arvard
S. Africa
Capetown
M.E.
Port Sudan
S. Rhodesia
S. Rhodesia
1
Mustang
U.K.
U.K.
2
Mitchell II(
U.K.
Nassau
U.K.
U.K.
1
Mitchell II(B25C) U.K.
Mitchell II(B25D) Bahamas
18
11
6
8
VULTEE
Bombay
Australia
Melbourne
S. Africa
S. Africa
18
6
Karachi
India
India
6
Vengeance
Vengeance
Vengeance
VEGA
British Air Commission,
Movements Division,
July 3, 1943.
TOTAL:
1
Ventura GR V
173
29
-
FLIGHT DELIVERED
FOR USE IN CANADA
53
MOST SECRET
STATEMENT NO. 93
Aircraft Despatched from the United States
Week Ended July 6th. 1943
ASSEMBLY
BY
BY
DESTINATION
POINT
SEA
AIR
W'Africa
W'Africa
U.K.
U.K.
S'Africa
New Zealand
Capetown
Anokland
U.K.
U.K.
Boston III A
U.K.
Dakota NII
M.E.
U.K.
M.E.
Dakota III
Dakota III
India
India
U.K.
m.K.
Algiers
Algiers
Ventura
New Zealand
Auckland
Hudson III A
U.K.
U.K.
Baltimore III A
M.E.
M.E.
Baltimore IV
M.E.
M.E.
DOUGLAS
18
5
1
Seamon
10
4
Kittyhawk
Kittyhawk
1
CURTISS
1
8
CONSOLIDATED
Liberator GR V
Catalina 1B
4
TYPE
FLIGHT DELIVERED
FOR USE IN CANAD
FAIRCHILD
LOCKHEED
10
2
1
Fairchild PT 26
GLENN MARTIN
1
7
NORTH AMERICAN
S'Africa
Harvard
Harvard
New Zealand
Auckland
India
Bombay
Mitchell II(B25C)
U.K.
U.K.
U.K.
U.K.
Canada
Canada
13
1
1
2
B 25 G
Capetown
8
Harvard
VEGA
S'Africa
M.E.
M.E.
Canada
Canada
1
S'Africa
S'Africa
India
Karachi
Australia
Melbourne
18
U.K.
U.K.
11
VULTEE
Vengeance
Vengeance
3
Ventura
Ventura
S'Africa
1
1
Ventura GR V
Ventura GR V
Ventura GR V
16
STINSON
Stinson
TOTAL
British Air Commission,
Movements Division.
July 10, 1943.
102
36
2
54
THE FOREIGN SERVICE
OF THE
UNITED STATES OF AMERICA
AMERICAN EMBASSY
AIR POUCH
London, July 12, 1943.
No. 60
Dear Mr. Secretary:
AM
This is in belated reply to your telegram 3722
concerning "the significance and background of the
defeat of Herbert Morrison as Treasurer of the British
Labor Party".
It is my belief and that of other observers here
that Morrison's defeat is not of itself particularly
significant or portentious. In the first place the vote
was close when one considers the effect of "block-voting".
Ernest Bevin appears to have taken a meticulously neutral
attitude toward the candidates in that he did not openly
try to influence the vote of his Transport and General
Workers' Union delegation in either direction. It is
reported that the pre-election caucus of this delegation
decided for Greenwood by a majority of only one vote.
Had this one vote gone the other way, Morrison would
have won.
From the enthusiastic reception given Morrison at
the Conference, both before and after the election, there
is every reason to believe that he retains the admiration
and high regard of the labor movement generally. It is
not believed that Morrison's defeat necessarily means the
defeat of the general post-war program he has been preachin
ing. It is true that as Treasurer he would have been
a position to help finance the election to the Party
Executive of persons who agree with him, but this influence
is not decisive and in any event would take a considerable
period of time to produce any effects. At the same time,
were other circumstances favorable, there is no reason to
suppose that Greenwood, at one time in charge of post-war
planning and believed to be in agreement with many of
Morrison's ideas, would not exercise his power to
influence elections with the same general objectives in
mind. In short, the Party might have accepted Morrison's
program
The Honorable
Henry Morgenthau, Jr.,
Secretary of the Treasury,
Washington
55
-2program while rejecting him for office and it might have
elected him to office while rejecting his program. As it
happens, the Party "rejected", or at least failed to
sanction, both the man (by a narrow margin) and much of
his program.
Morrison himself has said, and observers have agreed
with him, that his removal from the Party Executive will
not lessen his influence within the Cabinet but that, on
the contrary, he might even feel more free to exercise
pressure when not a responsible, mandated Party official.
Specifically, here are some of the reasons commonly
given for Morrison's defeat. All probably carried some
weight with one section or another of the delegates but
it would be impossible to evaluate them.
1. Greenwood's immense personal popularity. He has
long, devotedly and for the most part ably, worked for
the interests of the Party and the labor movement generally
and is personally known and liked by an unusually wide
circle of individual rank and file members.
2. There is a feeling that Greenwood was badly treated
when removed from the Government and that he deserved the
Party office as a consolation and as a sign of the
continued loyalty of his followers.
3. Many give Greenwood the credit for instigating
(when he was Minister without Portfolio in charge of
post-war planning) the Beveridge investigation and Report.
Morrison, on the other hand, was later put in the awkward
position in the House Debate of having to defend the
Government's cautious and non-committal attitude on the
Beveridge Report.
4. It is stated that Morrison's program and his many
forthright speeches are largely his own work and that he
has not sufficiently consulted the trade union elements
in the Party concerning them. This is said to have caused
resentment and the feeling that Morrison is moved by
personal ambition rather than a desire to carry out the
wishes of the rank and file.
5. Morrison's background and support lie principally
in the local Party groups rather than in the trade unions
and it is a fact that the Party or political movement
today is dominated by the trade unions.
A
56
-A considerable number of individuals and publications
with "left" tendencies profess to see in Morrison's
defeat the doom of the Labor Party. It may be a symptom
but in view of the closeness of the vote and of the
various conflicting and politically irrelevant factors
noted above, I do not consider the election per se as a
major symptom. That the recent Conference was a rather
hollow affair and that the prospective position of the
Labor Party in the post-war period is extremely precarious,
I fully agree. But in my view the situation would not
be much different if Morrison had been elected.
The "highlights" of the Conference were the rejection
of Communist affiliation and the continuance of the
electoral truce - both, as Morrison himself said -
negative acts. Almost nothing was done by way of hammering
out a concrete positive program. In any event continuance
of the truce prevents the Party from taking steps now
to implement any such program, although many commentators,
including Morrison, are urging the importance of a
concrete implemented program before the end of hostilities.
It seems to me that the Tory majority in the Government
remains in a position to delay action on social legislation
at present on the grounds that the war must be won first
and then, when the time is ripe and open opposition can
be tolerated, to hold a general election in the atmosphere
of post-war hysteria in which they can count on Churchill's
immense prestige and yet can still use the argument that
"things are uncertain and we must wait yet awhile".
The Labor Conference did manage to extract a promise
from Atlee that another Conference will be held after
Germany is defeated or "when there is any questi on of
a
General Election". The wording does not make clear
who will raise the "question of a General Election" but
one infers both from the wording and from the nature of
the situation that the Tory majority will raise it. Any
attempt on the part of Labor to precipitate a General
recent motion to abandon the electoral truce - "Its not
the time yet". This means that the time will be chosen
by the Conservatives and will naturally be made to occur
Election would meet resistance on the same grounds as the
under circumstances as favorable as possible to themselves.
In short the essence of the Conference which was
"Remain loyal to the coalition for the duration but be
ready to go to the people and into the opposition as soon
as the emergency is passed", strikes me as very unrealistic.
I
57
4-
believe that in refusing to formulate a specific
I program now and in refusing to take it to the people now
in the by-elections, means that the Party will one day
be confronted with"the question of a General Election"
without a known program and policy and at a time and
under circumstances heavily weighted against it.
Incidentally a thought has frequently recurred to
me in recent days concerning the much-admired political
unity of the British in comparison with the political
difficulties our own Administration is experiencing.
(Much has been said on this in the British Press in the
past week or two). The thought is this: I wonder if
the British Tories would behave as nicely as has British
Labor if the position of the two parties in the Coalition
were reversed? (which is roughly the situation at home)
Of course the political machinery in Britain is not
comparable with that in the U.S. but I have the feeling
that if, say, Morrison or Cripps had been Prime Minister
for the past several years with a bare Labor majority
in the House and a large minority Conservative "opposition"
and the Electoral Truce
would
not have
in theplace) stand be and
the (and
Coalition
wouldbeen
here created
first not would
that, consequently, the political scene
just about as difficult as it seems to be now in the
United States.
Yours sincerely
DIA or
nor so 1013
LIGHEHLA
COPY
58
PARAPHRASE OF TELEGRAM RECEIVED
FROM: AMERICAN EMBASSY, CHUNGKING
TO : Secretary of State
DATE: July 12, 1943, 2 p.m.
NO. : 1158.
CONFIDENTIAL
Conditions at Hong Kong were described in a letter written
to an American firm by a Chinese employee who on November 14
escaped. This letter was given to a consul in Kweilin a a
rigking.
July 9 was delivered to a representative of the firm at
These conditions are reported as follows:
1. Four Hong Kong dollars was the exchange value given to
military yen in July 1942. CX dollars 3 was the value of the
Hong Kong dollar in May of this year. The American dollar at
the same time was worth, at the black market rate, about three
military yen.
2. A three-fold increase was seen in commodity prices last
year and they are still rising. Rationed rice in May of this
year sold for 30 sen per catty but the price was approximately yen
1.90 in the black market.
3. It is indicated on every side that the Japanese find
getting commodities into Hong Kong increasingly difficult. Open
admission of this fact in the newspapers was made by the adminis-
tration. The use of coal and electricity, in April of this year
were restricted.
4. The purchase of houses is being made by many Japanese
who assume Chinese names for the purpose.
5. Taxes are recollected as from 1943 on luxuries.
Establishments whose income in a year is more than 5,000 military
yen are subject to the same requirement. A tendency toward
inflation, while not yet marked, is visible.
6. It was stated by the author that operation of the Japanese
civil administration is smooth and efficient and that a lot of
Chinese people in Hong Kong are prevented from going to free China
because of inflationary prices and, due to the impossibility of
finding work, fear of starvation.
ATCHESON
Copy:bj:7-28-43
59
OFFICE
OF
TREASURY
SECRETARY
1943 JUL 13 AM 11 32
EASURY DEPARTMENT
NOT TO BE RE-TRANSMITTED
COPY NO. 13
BRITISH MOST SECRET
U.S. SECRET
OPTEL NO. 225
Information received up to 7 a.m., 12th July, 1943.
1. AIR OPERATIONS
SOUTH WEST ITALY. 10th. Liberators dropped 56 tons at
VUBQ VALENTIA Airfield.
SICILY. 9th/10th. About 70 tons were dropped at
SYRACUSE, CATANIA, NOTO and other objectives.
10th, Spitfires flew 861 sorties over objectives in the
landing area. 59 other Spitfires escorted bombing raids. Mitchells dropped
total of 137 tons at SCIACCA and TRAPANI . MILO Airfields and at PALAZZOLO.
78 Fortresses bombed CERBINILLanding Ground. Casualties: Enemy - 10, 3, 10.
Allied - 12 missing.
CRETE. 9th. Liberators dropped 56 tons at HALEME Airfield.
Enemy casualties: 5,1,5. 1 Liberator missing.
LATE NEWS
A 20,000 ton transport and a 16,800 ton transport, each
carrying about 300 (8) troops in an escorted Southbound convoy were set
on fire by Focke Fulf Aircraft off CAPE FINISTERRE last night and sunk.
1,815 survivors so far rescued.
60
July 13, 1943
9:15 a.m.
GROUP
Present: Mr. Bell
Mr. Sullivan
Mr. Thompson
Mr. White
Mr. Smith
Mr. Haas
Mr. O'Connell
Captain Kades
Miss Chauncey
Mrs. McHugh
H.M.JR: Well Norman, McNamara - what about him?
MR. THOMPSON: He is due in this morning. He hasn't
arrived yet.
H.M.JR: Good. I liked his looks. He was very
suspicious, I think, that we were trying to move him
out of the Bureau for political reasons, but I assured
him that we only-(Mr. White entered the conference.)
MR. SULLIVAN: Political reasons?
H.M.JR: Yes. Do you know McNamara?
MR. SULLIVAN: Yes, I do.
H.M.JR: What do you think of him?
MR. SULLIVAN: I think he is so good I hate to see
him leave my shop.
H.M.JR: I told McNamara I would take the man wherever
I found him.
61
-MR. SULLIVAN: I understand that.
Are you going to call Guy?
H.M.JR: He is going to see Thompson. He has got
to see - it will take him a day or two. When I make up
my mind I will call Guy.
MR. SULLIVAN: That is what I meant.
H.M.JR: I won't call him; I will send him a telegram.
(Mr. Bell entered the conference.)
H.M.JR: I am going to take anybody wherever I find
him to help me put over the war bonds.
MR. SULLIVAN: There are different ways of doing it.
I would like to see you afterwards.
H.M.JR: Wherever I can find anybody to help us
straighten out this organization I am going to do it.
MR. THOMPSON: He is getting sixty-five hundred down
there.
H.M.JR: If I want Bill Heffelfinger, I will take Bill
and Bell will smile. (Laughter)
MR. BELL: Over my dead body. (Laughter)
MR. SULLIVAN: You see, now, there is the difference.
I am willing to let you have him, but I want to prevent
something else that I think can be prevented with a tele-
phone call.
H.M.JR: Well, I see Dan feels perky this morning.
(Laughter)
Anyway, I think the thing to do is to get him and Ted
Gamble together.
62
-3MR. THOMPSON: That is what I thought. I have a
tentative organization chart drawn up for the organization
which is quite good.
H.M.JR: Could I see that right after this meeting?
MR. THOMPSON: Yes. I was going to take that up
with Ted.
H.M.JR: Ted isn't here again this morning.
MR. THOMPSON: I understand he got in at eight this
morning.
MR. BELL: His train didn't get in until eight-thirty,
something like that.
H.M.JR: Anyway, I would like to see that.
Mr. Bell?
MR. BELL: We are starting this morning to print that
occupational currency. While I was in Boston I called up
Forbes Lithographing Company to help us out in case we
got in a jam. They said they would turn over their whole
plant to us if necessary, so we are all set to go. We
have about a hundred and - a little over- hundred million
dollars of yellow-seal currency in Africa, and a hundred
million in reserve.
H.M.JR: I think if I could get - we have an eleven
o'clock meeting with the Open Mark. t Committee, don't we?
MR. BELL: Yes, sir.
H.M.JR: Could I get together with you and George and
George's brain trust around ten-thirty?
MR. BELL: Yes, sir.
H.M.JR: You can pour it into me.
John?
63
-MR. SULLIVAN: The associate director of the National
War Fund was in last week and wanted to know whether it
would be proper for Winthrop Aldrich to invite me to become
sort of a special advisor to that board.
H.M.JR: I thought - on the Chase Bank? (Laughtr
MR. SULLIVAN: No, no. This is the national campaign.
I think it was very nice, but I am afraid it would become
involved in the problems of the-H.M.JR: If you have any good ideas, give them to
war Finance. We can use them.
MR. SULLIVAN: All right. Yesterday evening the
forms for the September 15 income tax returns went to
press. I went over it with Mr. Mooney and Mr. Suman. I
have a copy here if you would like to make out your own.
It is far from satisfactory, but I am convinced it is the
best that can be done to comply with the law.
I got out my old return and assumed that my income
this year would be the same as last; and with Mooney and
Suman and myself I succeeded in completing mine in just an
hour and thirty minutes flat.
H.M.JR: What does a fellow like me, who is just a
man on the street-- (Laughter)
MR. SULLIVAN: I know what you are going to do, and
I am not worried about you at all.
H.M.JR: I was asking Mrs. McHugh this morning - she
said, "Ask Sullivan; he can tell you in two seconds.
"
(Laughter)
MR. SULLIVAN: Well--
H.M.JR: Didn't I talk to you about that this morning?
MRS. McHUGH: Certainly, that part is right. (Laughter)
64
-MR. SULLIVAN: Anyway, here is a copy if you are
interested.
Income tax form handed to the Secretary by Mr.
Sullivan.)
H.M.JR: Whose fault is this?
MR. BELL: I thought it would be just six lines.
MR. SULLIVAN: Six lines is what you file, but the fifty-
five computations you have to make to get the answers you
put on the lines are in here (indicating papers).
MR. BELL: Why are you worried about the computations
until March?
MR. SULLIVAN: Because you have to file this estimated
declaration September 15.
H.M.JR: Now look, John, I wish that you - the minute
you and Fred Smith are both free this morning - and not
later than ten o'clock - I wish you would get together on
this thing and see what we can do with the public, because,
after all, through the Treasury representatives we have to
meet the public, the Congress doesn't. And you are telling
me, then dumping this on my desk - telling me it is Congress
doesn't convince John Doe or anybody else.
MR. SULLIVAN: No, no, we are going to get the blame
for this. I have known that all spring.
H.M.JR: I would like you and Fred Smith to get in a
huddle on this. I am sorry Gaston isn't here, but I want
everybody else - I don't think it is necessary to put it
in writing, but Fred Smith's job is the relation between
the Treasury and the public over-all, not just war bonds.
MR. THOMPSON: That is what I understand.
65
-6H.M.JR: Besides his job of trying to keep me happy -
I mean, he is working for me, but, after all, my job is
to try to keep the Treasury and the public happy, and he
advises me on that.
Now, any of these things that come in - and then
speeches - from now on I want to go both to Gaston and to
Smith. Will you take care of that, please?
MR. THOMPSON: Yes, sir.
H.M.JR: So that somebody doesn't go off, "Well, I
made a speech; the public is supposed to understand it.'
But you had better put the old bean on this, Fred. It
doesn't help us one darned bit to sit back and simply say,
"This is Congress. "
MR. SULLIVAN: Well now, Mr. Secretary, I wasn't
suggesting to say that, because there isn't anything we
can do about it.
MR. SMITH: The OWI has asked to do something on that.
We may drag them in and see if they can give us any help
through OCD and that bunch.
H.M.JR: If you don't mind, I don't want to take that
defeatist attitude. I mean, we have got it; now let's see
what we can do about it. See, John?
MR. SULLIVAN: I agree with you, and I have in mind a
plan of publicity just as we had in March for this very thing.
H.M.JR: But the difference is this: No Bureau or anybody in the Treasury is going to go off by themselves now good as the job was before - I mean, it has got to be-MR. SULLIVAN: I think it should be.
H.M.JR: Fine. That is the way I want it. That is
Smith's job. Whether Harry White has got-MR. WHITE: I think we might also take him in on this
TFR-500. We have had some trouble up to now. I think we
have made it satisfactorily, but I think in the light of
what you say--
66
-7H.M.JR: I mean, take your job, for instance, on this
question of stabilization, world bank. I mean, I have got
to know about it; and if I have to know about it, I want
Smith to know more about it. See? And if he gets too much,
he can get a partner to help him. But it is my responsibility
that we meet the public, and I want him to have plenty of
time - not rush him - so he can think about it. And it will
be helpful to everybody, because he has been helpful to me.
MR. SULLIVAN: I have a copy of that advertisement,
including Justice Stone' picture. He was at Isle au Haut,
and there is no telephone connection there. He will be on
his way to Sugar Hill, and will be there this afternoon,
and I will call him there. (Copy of advertisement handed
to the Secretary.)
H.M.JR: Do you mind if I just say something? I
appreciate what you have done - I want to use you as an
illustretion. May I?
MR. SULLIVAN: Certainly.
H.M.JR: Without your taking offense?
MR. SULLIVAN: Not a bit; go ahead.
H.M.JR: Well, I ought not to be bothered with this
kind of stuff, see, John. I told them, Smith and Louis Jack Louis - I told them what I wanted. I told those boys,
you see. I mean, just for the future-MR. SULLIVAN: To go ahead with what?
H.M.JR: I told them to handle it.
MR. SULLIVAN: Yes, but - excuse me, Mr. Secretary the reason I called you was because the Chief Justice wrote
you a letter. There was no talk, no permission by him for
the use of a picture.
H.M.JR: Yes, John, again, granted, but you could have
said to these boys, "Now wait a minute, I will get his per-
mission," and not bothered me, see?
MR. SULLIVAN: Yes.
67
-8H.M.JR: That is the point, why should I be bothered
with it. Simply say, "Boys, I have to get his permission. "
Then get it. Do you mind?
MR. SULLIVAN: Not a bit.
H.M.JR: I mean, using you. I think this is very nice.
I am very much pleased with it. I think it is wonderful
to have gotten the Chief Justice. I never would have had
the temerity to go after him myself. I think this is swell;
I am very much pleased.
What else?
MR. SULLIVAN: That is all.
H.M.JR: Harry?
MR. WHITE: We have this letter from McCarran on silver.
Berle called me yesterday to say that Senator Thomas - not
Elmer Thomas, but the other Thomas of Utah, who wasn't there -
called him with respect to the silver, saying he was quite
disturbed.
H.M.JR: Start over again, will you, please?
MR. WHITE: We have this letter from Senator Elmer
Thomas enclosing a letter from McCarran in which McCarran
recedes from the position which he took at the Committee
where he wasn't enthusiastic, but he certainly didn't oppose
it. And here he strongly opposes it and goes on the record.
Senator Thomas of Utah called Berle to say that he was
disturbed about this hundred million ounces to India. Apparently
Senator McCarran got to Senator Thomas of Utah. That is my
guess. Now, Senator Thomas of Utah is a very reasonable per-
son, and I am quite - I am almost positive that if it were
explained to him - not by McCarran, but by ourselves - that
he also would go along. And in view of the fact that McCarran
is making this, I suggest that I get in touch with Senator
Thomas of Utah, at Berle's suggestion.
H.M.JR: Sold.
68
-9MR. WHITE: Sir Harry Kisch, Economic Advisor to
India, is coming here about the silver matter. In the
light of McCarran's opposition, I have this suggesti
that we might talk to him and that would give us add.
protection. Suppose we get an understanding from In
that they will not sell this silver below a certain price.
Now, we can decide on the price--
H.M.JR: Is he an Indian - this man Kisch?
MR. WHITE: He is Economic Advisor to India - British.
If we could get that we could either make it seventyone cents or even a dollar. That would give us complete
protection against McCarran and the other claims.
Is that satisfactory?
H.M.JR: Yes. There is a call in from Halifax.
MR. WHITE: What is that?
H.M.JR: Halifax is trying to call me.
MR. WHITE: Do you intend to postpone letting Halifax
know about this in view of McCarran's opposition?
H.M.JR: No, I thought about it last night, Harry,
and when I get ready to do it, this, if I am right, is
something to keep the Indians happy and as such it is
very important for the war effort. And I want to write
a letter to Senator Thomas of Oklahoma and say that with
India in such a strategic and critical position, I con-
sider it very important at this time to make the loan as
a war measure, and I am going to do it in the light of
the fact that when I appeared nobody at that time raised
any objection.
MR. WHITE: We will draft a letter for you.
69
- 10 -
H.M.JR: This is either bad or good for the war. I
think it is good and therefore I am going to do it, and
if they don't like it, to hell with them. We will put
it strictly as a military measure. I brought it all up
at Cabinet. I played safe.
MR. WHITE: Everybody was with you except McCarran
and even he didn't--
H.M.JR: If it is good for the war, I am willing
to take the criticism from McCarran or anybody else.
What else?
MR. WHITE: That is all.
H.M.JR: Haas?
MR. HAAS: I have nothing.
H.M.JR: How can they just roll back cabbage and
lettuce fifty and twenty-five percent? If they can do
it for cabbage and lettuce, why can't they do it for anything else, which gets back to the original thing I told
you when you (Kades) first came in here. If they can
simply get out an edict that cabbage and lettuce goes
back twenty-five and fifty percent, why can't they roll
back anything?
MR. KADES: In cabbage and lettuce they feel the
farmers are making exorbitant profits at the present time
and that all along the line the profits are far in excess
of any other foods, such as meat, butter, and coffee.
Consequently, even if they roll those back there is still
a substantial profit left to everybody all along the line.
H.M.JR: You are begging the question. I asked you
how can they do it. I mean, if they can do it for that,
why can't they do it for anything? Is it a difference
between the controlled and uncontrolled prices?
70
- 11
MR. HAAS: I think this isn't a rollback, specifically. It is a change in ceiling.
CAPT. KADES: But it amounts to a rollback, but it
doesn't squeeze anybody, and that is why they can do it
without a subsidy.
MR. BELL: They have a big margin of profit.
MR. SULLIVAN: I think the Secretary is inquiring
about authority. If they have authority to do it in
one case, why not in another?
CAPT. KADES: There is plenty of legal authority
to do it in everything. I thought you meant how could
they do it without a subsidy.
H.M.JR: John pointed the thing up. If they can do
it for cabbage and lettuce, why can't they do it - well,
let's take the difficult one, beef.
CAPT KADES: They can, legally, but when they roll
back beef, in view of the fact that there is a very narrow
margin of profit, they squeeze the man in the middle,
the processor, wholesaler, or retailer, who has bought his
beef at the higher price. When the price is rolled back
he must sell at a loss. When the price of cabbage is
rolled back, he doesn't have to.
H.M.JR: Supposing you said - let's say, for argument's sake, from the time beef leaves the hoof until it
goes to your stomach, let's say it takes a month - I don't
know. All right, then if your argument is they are
worried about the fellow, why can't they say, "Effective
August 13, the price of beef will be five cents a pound
less" - giving everybody a chance to clear their shelves?
CAPT. KADES: They can, Mr. Secretary, but the result
of that is that in that intervening period no one buys
anything, and there is a shortage created. That was one
of the reasons why beef is short now.
71
- 12 H.M.JR: Who, when you say nobody buys--
CAPT. KADES: The wholesaler doesn't buy, and the
processor doesn't buy, because he wants to keep his
shelves bare until after the new ceiling takes effect.
MR. WHITE: Isn't is possible to take care of that
the way we do with silver - to let him sell the beef
that he has bought up to a certain day to allow for the
lag which takes place in the distribution process - give
him the benefit of the doubt - 80 that any meat which he
has bought at the higher price, up to a certain date he
is permitted to sell at a higher price?
The only one who would hold back - and he certainly
wouldn't because he will say, "Next month I can get beef
cheaper," that isn't going to make him buy less beef to-
day. So if that is the reason, you could take care of it.
We have that same problem in silver - did have it.
CAPT. KADES: I don't know how you handle silver,
but if you do that, the result is - if you say, for
example, "I can sell beef at the old price up to the first
of August," I clear out my shelves between now and the
first of August, but I am not going to take on new beef
at a higher price until after the first of August when
the price is reduced.
H.M.JR: If you don't mind, I don't think your argument is all good because first you said you can't do it
because the fellow has a lot of beef on his shelf. Well,
the thing to find out is how long does it take him to
clear it, and if it takes him one or two or three weeks,
you give him the normal time - and supposing there are
three or four days they have no beef? I mean, I just it seems to me, sitting here, the perspective not being
so close, and from watching what is going on in New York
where there is a wholesale butcher selling to retail and
doing a land-office business. He is handling fifteen
thousand pounds a day from a Washington market, just doing
a little Connecticut butchering, and he is doing a beautiful business.
72
- 13 I mean, it looks to me as though they are too much
worried about the middleman's profit. I didn't know this is the first time I had heard, and I questioned you am bold - I questioned whether they have the legal
I
authority, unless you are positive, to put - just automatically put a ceiling on anything. Are you sure of
your facts?
CAPT. KADES: Mr. Secretary, they can put a ceiling
on anything that has reached parity.
H.M.JR: Oh, well, that is different. That is
different.
MR. HAAS: On retail, even if it hasn't, can't they?
MR. O'CONNELL: They may fix the retail price to
reflect itself back so as not permit the farmer to get
parity. That is the limitation on farm prices.
CAPT. KADES: Wheat is within a few cents of parity,
and cotton hasn't reached parity, but almost everything
else is above parity.
MR. WHITE: Would it be parity if you rolled it back
and if the lower price was passed on to the producer -
you could still roll it back?
CAPT. KADES: That is right. You are using rollback
in two senses.
MR. WHITE: I mean, could you reduce the ceiling?
CAPT. KADES: Yes, so long as the reduced ceiling
reflects parity to the producer.
MR. WHITE: And it still could with beef? How much
leeway do you have, generally - large amounts?
CAPT KADES: Hogs are more than double parity.
(The Secretary held a telephone conversation with
Lord Halifax.)