Full text of Diaries of Henry Morgenthau, Jr. : Volume 740 : Part 2

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TO:

181-D

The Sey
This is draft
of letter to Mr. Hule.
In view of your telephone

conversation with

strimm I believe

This should he
held up for the

true being as least.

DWB

Office of the Under Secretary 6/7

FORM W. Bee 181-E

This is what

the sec. wanted
hit 2 dont Think
the facts jus tify

The tone
g could prefer meney

cuttining the facts x

saying
"now
That
al
with
has entered The juitum who
get together FROM: MR. thats O'CONNELL what My

Pres. wants

181-F

me not
DRAFT

file
June 7, 1944

Dear Cordell:

I am quite disturbed over the events which
have occurred in the last few days concerning the
proposed loan by the United States to the Dutch
Government. Under date of May 2 I telegraphed the

President regarding this matter, advising him that
I thought it was unwise at this time to make a
Government loan to the Dutch Government for the
reason, among others, that the Dutch Government should

have no difficulty in borrowing from the private investment market at reasonable rates of interest.

He replied under date of May 3 that he did not
believe that the granting of a loan to Holland on
good security in this country would establish an
undesirable precedent, but added that "I should like
to have us both give further consideration to the
matter presented in your message and also talk with
State."

Under date of May 26 you wrote the President a

letter in which you said that the proposed credit
would be desirable, and I understand from your letter

181- G

-2of June 2, 1944, that the President has indicated

his approval of your letter of May 26. The Treasury
received your letter of June 2 on the morning of
June 6.

I have been informed that Winthrop Aldrich conferred with you on Friday of last week, the same date

as your letter advising me of the President's approval
concerning a commercial loan to the Dutch Government.

I am also informed that you advised Mr. Aldrich that
this was a matter which he would have to discuss with
the Treasury and suggested that he come over here and

confer with us. This he did on Monday, June 5, at
which time we told him that we would give sympathetic
consideration to the approval of a commercial loan
by a'syndicate of American banks to the Dutch Government and that Mr. Aldrich was free to work out the
the

Duter

proposal with (this 1 Government, after which he should

confer with us further on the matter.
I am sure you can understand why your letter,
which was received the following day, was a shock to me.

As I indicated before, I am opposed to the use of
the taxpayers' money to make loans to any foreign govern-

181 - H

-3ment that can secure the funds it needs in the
commercial market. I hope the State Department

does not differ with me on this point.
I feel strongly that it is high time we set up
a procedure for the handling of applications of this
type. There will undoubtedly be others. In view
of the fact that requests for loans are matters which
are financial in character, the handling of such
applications should, it seems to me, head up in the
Treasury. We have a further interest in the matter
in that no such transaction can be put through without
a license under the Trading with the Enemy Act. I
appreciate that most of these proposals will be somewhat political in character and of course you should
be consulted on that phase before any.commitment is
made.

I shall be glad to discuss this with you if you
so desire, or go with you to discuss it with the
President.

Sincerely yours,

The Honorable

The Secretary of State.

182
June 7, 1944
9:41 a.m.
Robert

Kintner:

Yes, Mr. Secretary, Bob Kintner.

HMJr:

How are you?

I'm pretty good, thank you. And you, sir?
They tell me you've been home. I hope it's

HMJr:
K:

not serious.

No, I've been out at Walter Reed with some ear
trouble.

HMJr:
K:

HMJr:

Oh. Do you feel a little ambitious?
Well, I don't know. What is it?

I'll put it up to you. I've got the Wall

Street Journal in front of me this morning.
See?

Yeah.

HMJr:

And the left-hand column -- I don't know whether
they call that column number one in the newspaper
business

Yeah.

it says, "Invasion, in part, marks the

HMJr:

beginning of the end of the war economy. Arms
orders to be geared to drive progress, shrinking
with Allied victories. 11. And then on the righthand extreme column, 'Baruch and Hancock resign,
protest delay in conversion". In other words,
the war is over. See?
Yeah. Uh huh.

HMJr:

What?

Yeah, I see what the impression is.

HMJr:

Now, I'm starting out early Friday morning to

make some speeches. I'd like to do some good on
the home front.

Yeah.

-2HMJr:

I'd like to let the people know that the war

Yeah.

HMJr:

183

is just starting.

And I'd like to know what you could do on your
typewriter with some ideas.

Well, I'd be glad to, Mr. Secretary. I'd have

HMJr:

it at home out of my head, because I'm in what
they call "quarters".
Well, there never was anything the matter with

to -- I can't go to the office. I'd have to do

your head.

(Laughs) I'll be glad to try to turn out some

ideas because I'm home just waiting for Walter

Reed to, take some more action.
HMJr:

Well

My ear drum

HMJr:

.... what I want is your feelings on the matter.

Yeah.

I don't want a lot of statistics. We've got
plenty of statistics.
Well, I'll be glad to do that.

HMJr:

See what you can do and when you're ready call

HMJr:

up my office and we'll send a messenger up for

it.

Okay. Fine.

HMJr:

Would you like to do it?

Yeah. Sure, I'd love to, if I can do it purely

HMJr:

I understand.

I'm always scared of the Army.

HMJr:

What?

personally, of course.

-3K:

I'm always scared of the Army.

HMJr:

Of the Army?

Yeah.

HMJr:

Well, I'm not but

(Laughs)

HMJr:

...anyway...
You're Secretary of the Treasury and I'm a
Lieutenant Colonel, so

HMJr:

Well, you see

I'll be delighted to do it this afternoon

HMJr:

Well, tomorrow noon would be dead-line.

Well, how about tomorrow morning?

and if I can -- certainly have some by tomorrow
noon. Would that be in time?

HMJr:

Well, any time up 'till tomorrow noon.
Okay. I'll see what I can do.
That will be wonderful.

I'll be glad to do it.

HMJr:

My regards to your wife.

I certainly will carry them to her.

HMJr:

Thank you.

Fine.

HMJr:
K:

184

185
June 7, 1944
9:59 a.m.

Eugene

Duffield:

Yes, Mr. Secretary.

HMJr:

How are you?

Very well.

HMJr:

Gene, I don't know whether you ever heard of a
paper called Wall Street Journal.

I think I did.

HMJr:

Well, I've got it on my desk.

Yeah.

HMJr:

And in the left-hand corner -- I don't -- number
one column -- is that what you call it?

I guess.

HMJr:

It says, "Invasion marks the beginning of the end of

war economy".
D:

HMJr:

I saw that myself this morning.
And then on the right-hand page it says, "Baruch
and Hancock are going to resign against -- protest
at delay in conversion. If

Yeah.

HMJr:

Now, I'm starting out tomorrow night to make some
War Bond speeches.

Yeah.

HMJr:

On the home front.

Yeah.

HMJr:

And I'd like to know -- I'd like to get some
inspiration as to why the Navy still thinks there's
a war on.

HMJr:

(Laughs) Yeah.

Now, do you suppose that you could be spared long
enough to sit down and type out a few ideas for me?

-2D:

Ah-h-h -- you're going to do it when? Now, when
are you leaving?

HMJr:
D:

The dead-line is -- is tomorrow night.
Oh, yeah, between now and then, I can, I'm sure.

HMJr:

Can you?

You bet.

HMJr:

What?

You bet. You bet.

HMJr:

I mean, why the Navy still thinks there's a war
on and why you still want people to work.

You bet.

HMJr:

At home.

You bet. I know.

HMJr:

See?

I know. Yeah. I know. Sure, we can do that for

you. I'll do it.

HMJr:

will you?

You bet.

HMJr:

Right. I mean, to answer this kind of thing in
this great paper, the Wall Street Journal.
Yeah, I saw that this morning myself. I'm -- I
agree.

HMJr:

And George Haas says you people were very helpful
and

Well

I should say, "Thank you".

HMJr:
D:

Okay. I hope we were.

HMJr:

Right.

Good bye.

HMJr:

Bye.

186

187

June 7, 1944
10:05 a.m.

DEBATE ON SUBSIDIES

Present: Mr. Vinson

Mr. Jones
Mr. Pearson
Mr. Myers
Mr. Haas

H.M.JR: I had this memorandum from the President
which asked me whether I could see our good friend
Bill Myers about these bulletins we have had coming

out of Cornell on the inflationary activities of this

Administration.

I am simply providing the battleground. I got

in touch with Judge Jones and Judge Vinson and they

agreed that they would like to have a talk.

MR. JONES: Isn't Judge Vinson going to be present?

H.M.JR: Yes, he is the one that gives me my orders,
so I had better have him here. I might make some admissions that you wouldn't appreciate, you know.

Bill and I used to take orders from you in '33.
MR. MYERS: Sure.

MR. JONES: Look what I got you into!
H.M.JR: I remember the summer of '32 when we

drafted the bill, with his help.
MR. MYERS: Thirty-three - the Election didn't come

until November.

188

-2H.M.JR: That is right.
MR. JONES: The first time I ever saw you was when
you came up to that meeting we had in the Committee Room

up there, the latter part of November or early December.
MR. MYERS: In your office on Sunday morning.

MR. JONES: Before that - I don't know whether you
were along or not when five or six came from Warm Springs

up there, do you remember?

H.M.JR: All I know, they had Rex Tugwell there to

watch Bill and me.

MR. JONES: That is the time.

H.M.JR: And to report back.
MR. JONES: I didn't take down what you fellows
said. I wish I had had a stenographer there.
H.M.JR: Do you mind?

MR. JONES: No, it doesn't bother me.
MR. MYERS: Then we went into the meeting of farm

organizations the next day to discuss agricultural
legislation, including what became of Triple A, and Farm
Credit. +hat is where we left the other bunch and went
into Farm Credit.

H.M.JR: I still think that the gentleman from-MR. MYERS: Wilson.
H.M.JR:

had a good idea. He wanted us to buy

up the land or lease it and put it into grass.

MR. MYERS: We did buy some of that poor land.

MR. HAAS: You paid for it, but didn't buy it.

189

-3H.M.JR: That is right. We used to figure out how
much it would cost to lease four million acres.
(Judge Vinson enters the conference)

H.M.JR: You have seen this memo from the President,

haven't you? (Refers to letter of May 23 from the President)
MR. VINSON: Yes, I saw it.

H.M.JR: I just made my little speech - I am just

providing the battleground.

MR. VINSON: We have enough battles. This invasion

over here - we don't want any battles, do we Marvin?

MR. JONES: We don't want any more than are necessary.

We have to find an occasional battle. Sometimes a little.
exercise makes us strong, you know. I don't mind a little

fuss, occasionally, if it is in good humor. I don't

like to see a fellow get mad.

H.M.JR: Won't you take over, Judge Vinson, seriously?

MR. VINSON: I will be very glad to.

I don't know that there is anything that all of

us don't know. We are just down here fighting the best
we can to try to keep the economy on the home front
stable, and subsidies have been one of the main weapons
that we have been using, and it sort of hit us with a

jolt to get clipped with this document. It is a pretty
strong statement when you say that subsidies are no protection against inflation, that, in fact, subsidies are

inflationary, and so forth. And we are hoping that we
can get help rather than hurt. That is about the sum
and substance of the reason for getting together.

We thought that the subsidy battle had been somewhat

completed. We had a fight last June; we had a fight last
December; we had a fight, as I recall it, continuing up
until February. And this certainly has been personal to us.

190

-4What we want, of course, instead of division on
the home front, we ought to have as united a front as
we can get.

MR. MYERS: I knew the general purpose of this

meeting, but I wasn't informed as to just what was involved. We are all looking for the right way to do
things, and when we see some weaknesses in policies

that are either in contemplation or being carried out,
it doesn't seem in any sense unfriendly to attempt
to point them out. And that statement, taken as a
whole, I think, is sound.
MR. VINSON: I am sure you think that you thought
it was, or you wouldn't have signed it.
MR. MYERS: You are referring to the february issue,
aren't you?
MR. PEARSON: I have a copy.

MR. VINSON: Yes, Farm Economics, February, 1944.

(Reading) "Subsidies are no protection against infla-

tion. In fact subsidies are inflationary. They increase

the purchasing power of consumers, which is anti-social

in times of war. If the increased purchasing power is
spent, it causes immediate. inflation through rising
prices and, if not spent, it will probably cause postponed inflation through the so-called inflationary gap."
MR. MYERS: (Reading from same Bulletin) "In addition subsidies add to the government's fiscal expenditures

which is also anti-social in times of war. The problem

is to keep down the government's non-war expenditures and

to reduce civilian purchasing power to the bone. Food
subsidies, therefore, are not a war measure as some contend. They are just as much a political measure now as

they were in the early thirties.

"Subsides and taxes are as opposite as the poles in
their effect on inflation. Taxes reduce the purchasing
power of consumers and transfer that purchasing power to

191

-5-

the government. Subsidies increase the purchasing power
of the consumer and decrease the purchasing power of the

government. Shifting purchasing power to civilians from
the government results in immediate or delayed inflation
which is ultimately a tax on consumers. The bigger the
wartime subsidies, the greater the inflationary force.

Ultimately, despite rigid controls, inflation will operate
as a tax to partially offset maladjustments created by
mounting subsidies. Wartime inflation is a flat tax and
is no respecter of persons.

MR. HAAS: Isn't the point, Judge Vinson, that
if we didn't use subsidies, you would have no basis
for stabilizing your wage spiral?
MR. VINSON: That is the fundamental, basic, and
only reason that I know of, why we have insisted upon
subsidies.

Now, as far as the inflationary - between taxes and
subsidies, as far as syphoning off purchasing power, of
course taxes rank one. This was written February, 1944.
We were trying to get more taxes.
The Secretary here, and I can speak for myself - we
went to the mat for more taxes, but if you hadn't had

subsidies the cost of living, directly, would have increased several percent. I have seen different figures,
but there would have been an indirect effect that would

have caused even a greater increase. I have seen the

figure where it is as high as seven points in the cost of
living index. I can say to you that the pressure on
the wage front is tremendously severe, and the weapon

that they have been using against us is the living cost.

Last June, a year ago, when we had the roll-backs
on meat and butter, why we got some surcease that
never was discontinued. When the cost of vegetables
went up during the summer, which was rather unusual,
because of the season, why the tax was renewed. And I
just think that subsidies have been one of the most im-

portant factors in the stabilization program.

192

-6MR. MYERS: It seems to me that primarily, from
the angle of the food problem, but also considering the

general welfare, that the roll-back on meat and butter
was an unfortunate policy; that it made products cheaper
to consumers - products that were already scarce - and
made rationing more difficult. It tended to discourage
production of those things which we needed the most.

At the same time it had the undesirable physical
effect of increasing general expenditures and of increasing consumer purchasing.

MR. VINSON: But you don't even mention - I know

that you have thought about it aside from your statement but in your statement you don't even mention the effect
of increased prices on the wage problem, and if wages go
up, why then prices go up, and then wages go up, and
prices go up, and you are off to the races.
There is nobody that wants to spend Federal dollars

just for the pleasure of spending Federal dollars, but
I am just as certain as I am living that the subsidy
program has been a very, very material factor in the

stabilization program, in the cost of living. I haven't
the slightest doubt about that. If I don't know that,

I just don't know anything.

MR. JONES: Well, it seems to me that we are in an

entirely different position now than at the time we
started. There might have been some debatable basis at
the beginning of the thing, as to where to start from,
but having put our hand to the plow and gone half way
across the field, I don't think there is any very good

way to turn back.

I rather think that somewhere a price line had to
be drawn; maybe it wasn't drawn just the way it should
have been, but it was drawn the best the fellows knew,
that were in control at that time. It doesn't seem to
me that at this time it is particularly important whether
it was drawn at the exact place, unless with all the

193

-7purchasing power, and with our inability to get the
essential taxes - and I think every thinking person
would agree there should be increased taxes, but everyone who is familiar with the public affairs knows the

limitations on our ability to do that - so with that
free purchasing power, somewhere along the line there

had to be a price line on wages as well as on other
things. Now, having established it, you have to hold
it somewhere, or have a formula for its maintenance.
I think with the tremendous number of farm commo-

dities that are essential to the carrying on of the war,
it was impossible to hope to get that line drawn exactly

right. There are so many uncertain elements in the
makeup, uncertain elements in the productive cost, the
weather conditions, the labor, the machinery, the labor
price, the demand, the shifting needs abroad. We have
found in trying to help estimate the needs of any
particular commodity, that the shifting scenes of war
cause a great change in the demand of the commodity.

So we find ourselves guessing wrong, sometimes - estimating wrong - whatever you want to term it - and we find
some things on our hands that we didn't expect.
Sometimes the farmers responded a little more

quickly or a little more liberally than we expected,

or nature favored us, and we get extra amounts on hand.
Now, there are elements on those costs, especially in
the added production, that you can't quite figure.
For instance, a man who is accustomed to planting

fifty acres of a particular crop - maybe his family,
his help, the machinery that he has, is geared to that
fifty-acre production. With all-out effort he increases
that to seventy-five acres; that extra twenty-five acres
is all extra cost - hired labor, extra machinery-MR. MYERS: Assuming he was up to capacity before.

MR. JONES: And in some instances, he wasn't. But

there is that shaded element in it, you will concede.

194

-8-

Now, if you want to establish a price line, it

seems to me that selective subsidies do take care of

that tua tion, takes care of that added cost, or that

cost that can't be accounted at the beginning of the war,
and it may vary from year to year. If you go tinkering

with the price line, it is just like boring a hole in

the dam; you lose control. But if, with the judicious,
intelligent use of subsidies, you can hold that line, it

seems to me that regardless of the merit of any particular subsidy, having established the price line, there
isn't any sound way but to use the subsidy.

MR. VINSON: And the price line was established;
Congress established the price line as of September 15,
1942; and then the President came along on April 8

with his hold the line order, which was a clarion call
to the country. And if inflation doesn't come it will

be because of his appeal to Congress that resulted in
the Act of October 2, 1942 and the hold the line order.
Now, those thingshappened before I got here. I
say frankly to you, I was once upon a time a lawyer, and
I was a member of Congress, and for a time was a judge,
and I respect the law, and I respect the acts of Congress
and the Executive Orders which implemented the acts of

Congress. And that hold the line order said hold the
line.

Now, I felt, and still feel, that we should use
all the tools that are provided. Subsidies were provided;
subsidies were authorized. And you take your relationship in prices; if you have one price going up in one
form of commodity, by golly, it can throw the production
out in other commodities.

MR. JONES: It seems to me it is relatively unimportant who is responsible. It had to be done, and somebody
had to be responsible. You have recited correctly the

way it was done, and I think it is well that you did.

And yet, whoever is responsible, whether it is thoroughly
understood, or whether it is interpreted thoroughly, we
have passed that one-way street, or one-way shift, or

195

-9whatever you term it. We are way up here at the point
now - we are far along in the movement, and you can't
shift the tide of battle and go back to the beginning
and start over again.
I don't know whether I understood the purpose or

not - this is just to frankly talk this over and see

if in some way we couldn't recognize that whatever might
have been the merits or demerits of the argument at the
beginning, that from here out, we have gotten so far along

with the war, and it is going so good, and the gearing
is all set, and the machinery all in motion, that whatever might have been the case back there - and every
thinking person must admit that there is argument on
both sides of this thing - you can think you have
exhausted the argument, and somebody brings up a new

question - we have found that, Fred, many times. But
whatever may have been the relevant merits, or however
wise the setting, and whoever is responsible for it and

figured it out, it was a difficult thing to do, and

nobody, probably, could have done it perfectly.

But we have gotten so far along, and everything is

going so good, that I think we had just as well fight it
out along this line and finish up now. Whatever the

merits may be in some phases of this discussion, or
might have been at one time, I don't think it applies
now.

I don't think you can quit this thing right in

the middle and say we are going to stop the whole
works now and go back to the beginning and start all
over again, while the whole swing is on over yonder, and
while we are as far along as we are.

It looks to me like we have passed clear along and
far beyond the place where there was a basis for argu-

ment. I believe in free discussion, and free opinion.
There is no disposition, I suppose, on anybody's part,
to eliminate free discussion, but I am just talking
about the nature of the policy; that whatever strength

196

- 10 -

there might be in your argument, I don't believe that
applies today to the practical situation that we have
now.

I would just like to see us all say, Well, I may not
agree with everything down there, but we have the friction
of one mind upon another at arriving at the truth, and
we have gotten the best thing we could under difficult
circumstances. We have gotten this far, and it seems to
me the hope would be that we sort of all tune in, now,
whether we fully believe in the program or not.
That is my thought.

MR. MYERS: "ell, of course, the policy is being

shaped and changed from time to time, and everything.

Criticism - there is nothing personal about it. If it
is fair and shows some light, I don't regard it as out

of place.

MR. JONES: I agree with you on that. I think,
however, that this particular argument would have fitted
much better into the pattern of a year ago than it fits
today.

MR. MYERS: I would say that I think the pattern
has been fairly consistent.
MR. JONES: I think it has changed a good deal.
MR. MYERS: I mean the pattern of argument.

MR. JONES: Yes, but we are faced with a far different situation both at home and abroad.
MR. MYERS: Of course.

H.M.JR: May I interrupt a minute? Would you mind

stating what I call the Cornell position? I think these

gentlemen are only arguing with you on one segment. Would

you state where you people stand at Cornell? I would just

like to hear it stated as an over-all policy. I think

197

- 11 -

you will be interested. You may have heard it. I think
it is exactly the same position that Chester Davis took

when he was here.

For my own benefit - these people may be entirely

familiar, but I would like to have you state what I call

the Cornell formula on the production and price business,

and where you are today. I think it would be interesting.
I think you are only getting a piece of that.
MR. MYERS: I think the argument of subsidies and

the control of inflation omits consideration of longerrun effect; that we aren't out of this mess yet, and that
further addition to consumer purchasing power that isn't

taken out by taxes--

MR. VINSON: And war bonds and savings.
MR. MYERS: And the war bonds are less permanent,

but I am highly enthusiastic about that, as you know.

They present a threat to our economy that, in the
long run, is just as serious as what happens during the
war; that the so-called consumers' gap, or whatever
you want to call it, that is increased by the amount of

subsidies, is a threat to the stability of prices that

may become very evident - we hope not - in the period
after restrictions are removed.

The other angle is that of course there isn't any
such thing as the ornell point of view, because we

are individuals, and we have disagreed among ourselves.

We try to follow the study of prices and their effect
on production without reference to any dogmatic pro-

nouncements.

Frank, you have kept awfully quiet. Why don't you
try to present the answers?
MR. PEARSON: The answer is, Mr. Morgenthau - is I

don't quite know what the question is. The relation of
production and prices, Mr. Morgenthau?

198

- 12 -

H.M.JR: You people have had an attitude, the way

I interpret it, that if there were no limitations on

production, that the price situation would take care of
itself. I have the impression that you people are
against all regulations as to production and any ceilings
on any food prices. And the question of production, the
question of limitations on any particular crops, any
ceilings on prices and the impact on the general price
level and on the farmers' purchasing power - it may be
a misnomer, but it is always the same song that has
been consistent, and you people haven't changed any

as far as I can tell from reading - you haven't changed
your tune any in the last year or two. It has been
perfectly consistent.

I am not sure that I understand it, but at least
for my benefit, if these other people wouldn't mind,

would you explain it?

It is so divergent from what the Administration is
trying to do here, I think we might just meet it face
on and get the over-all thing, because it isn't just a
question of this business of subsidies; it is much deeper
than that.

MR. PEARSON: Cornell has no point of view on price-

fixing. I suppose most .of the professors up. at Cornell
University are price-fixers. What I have to say is my
own view. I feel that in times of war there is such a

great demand for commodities and such a decrease in pro-

duction, that prices inevitably rise; inflation is inevitable.

The thing to do is to conduct theeconomy on the

basis that you are going to have inflation, and use in-

flation rather than try to stop it.

Now, by the process of stopping inflation, you increase the purchasing power of civilians, you add to the
Government debt, and you employ large numbers of people

administering various policies, which is a drag on manpower, which is always scarce in times of war.

199

- 13 -

So, to state it very briefly, I have felt that the

time-honored way of conducting wars has been to let

prices run their course. It liquidates the consumer,
which is necessary in times of war, and this is the first
time in history that all the world - practically every
country in the world - has attempted to prevent inflation

in times of war. I think it is impossible.

MR. JONES: It is the first time in history we

have had this kind of war.

MR. PEARSON: Well, for the size of the world,
those were quite good wars, World war I, the Napoleonic

Wars--

H.M.JR: I want to get this out in the open.
MR. JONES: I am not going to argue with you. I
would like to ask this question so that you may develop
it as you go along. Without arguing whether that would
have been a better method to start with, do you think
we still ought to abandon everything we are doing and
release all prices right now?
MR. PEARSON: That is a tough question.

MR. JONES: It is a question we have to face.
MR. PEARSON: I don't think you have to face that
question. The machinery is set up and you're going right
down the regimentation pattern. There is no argument
about that, and there is no turning back after you once

start it. There is no turning back and even after the

war is over, you are going right down that path.

MR. VINSON: It seems to me that that may at one time
have been a theory that might be presented, that inflation
and all the consequences, was inevitable; but I think
you have overlooked one major factor without which our

dollar - the position of the dollar here in this country would not be what it is today, and that is the restraint
of the American people.

200

- 14 -

There is no question on earth that when the program
started in Congress and out of Congress, the idea of
controls had few supporters. I don't know that the
people, generally, would have spelled it out like you
have,Mr. Pearson, that inflation was inevitable and had

to run its course like a disease.

It was once thought that tuberculosis had to run
its course, and the end was death. Science stepped in
and found out something about it, and medical science
was provided, both preventative and remedial.
The people of this country, in my opinion, have been
educated to the point that they feel and know what inflation has done to them and can do to them. The farmers
particularly - because of the experiences in World War I
and immediately following - know what it has done.
When you had your inflationary spiral, and you had
your abnormal prices for lands, and you had the loss of
farms and homes, when the inevitable deflation followed,
they saw, and we saw, the results not only as to their
individual economy, but we saw the effect upon a thinking
people.

I know you gentlemen will remember when they pulled

the Judge off of the State Bench in Iowa and escorted him
out of his town and put a rope around his neck and threw
it over a limb because he signed what we call a default
judgment - an order of sale - where there would be no
defense, submitted to an action in debt, to foreclose a
mortgage lien. The restraint of the American people has
been demonstrated. I know here and there you have got
chiselers - you have got folks who have got the money
and pay prices that are not in conformity with the law -

but I believe that when you say that inflation is inevitable, and when I say inflation, I mean disastrous inflation, 1 just can't go wi th you, and I don't believe
that the history of this period demonstrates that it is

inevitable. If it is inevitable, we can only do just
the best we can, and if you are right and it is inevitable,

why of course it is going to come.

201

- 15 But the history of our economy today, as compared

to the comparable period during World war I certainly
is very favorable towards the position that disastrous

inflation is not inevitable. Now, of course, if you

are right, it doesn't make any difference what happens.

If it is inevitable, it is inevitable, but God help us
if it is inevitable. I think it is not only important

so far as the home front is concerned, but I think that
our being in a strong position - our economy being strong that we would be in much better position after the guns
quit firing to try to have an enduring peace and assist
in the rehabilitation of the world.
If we have run-away inflation, all of the "isms"

that can be presented to an unhappy people will be
presented, and I just hope that you and the economists

that feel that disastrous inflation is inevitable are

a hundred percent wrong.

MR. PEARSON: I hope they are, but I don't think

anybody--

MR. VINSON: If you let prices, as I understood

you, that it was inevitable, that you just let nature
take its course, let the disease run - I may have misunderstood you - let the disease run, and as I see it,
if the disease runs its course--

MR. PEARSON: Do you call the rise in prices during
World War I in England and the United States disastrous
inflation?
MR. VINSON: There is no question but what it was

disastrous. I think the effects, subsequently, demonstrated that.
MR. HAAS: Of course, in this situation you would
have a much more severe inflation because of the percent
of the national production which is going to war is much
higher than it was in the last war.

202

- 16 -

MR. VINSON: Fifty percent of our production is
going to war, with twenty-five going to war before, and
then the amount of our total production, which makes our
fifty percent very, very much higher-MR. HAAS: That is new to me, Frank. I never knew
you had that opinion.

H.M.JR: I knew it.
MR. PEARSON: I want to define very carefully this
disastrous, wild inflation.
MR. JONES: Mr. Pearson, your position interests
me. You say you wouldn't have any controls on your
prices. Would you have any on your money - on the amount
of money? Do you believe in turning everything loose
without any rules and regulations of the Government at
all?
If you are going to have complete freedom on the

price line, on the farm products line, are you going
to take all the other controls off?
MR. PEARSON: You mean off production of farm

products?

MR. JONES: You said on production of farm products.

I understood you were going to take those off.

MR. PEARSON: Yes, I would take those off.

MR. JONES: Would you take off the tariffs?
MR. PEARSON: I have not studied that problem.

MR. JONES: It is all related.

H.M.JR: If I may say so, that is my criticism of
the whole thesis - if you don't mind my saying so. I

don't mean to be personal, but in approaching this thing

203

- 17 -

I think you have blindness on this particular thing to get
the farmers higher prices and to hell with the rest of
the world.

MR. JONES: I don't believe you and Bill see eye to

eye on all this stuff.

MR. MYERS: I don't think you can take any group of
six or twelve men and see a hundred percent. We never

write an article that we don't give and take. Isn't
that right?

MR. PEARSON: certainly.

MR. JONES: But I don't see how you are going to

turn - take all the restrictions off the farm production
and have the artificial regulations of the business end.
The whole thing is tied together; they are inter-dependent,
inter-related.
MR. VINSON: What about wages? No controls on wages?

If there would be a letting down of the bars and no
price
control, what is your attitude in regard to wage
control?
H.M.JR: And no crop control.

MR. VINSON: I just put the price control-H.M.JR: I am sorry.
MR PEARSON: I would say, on the record, that with
or without wage controls, wages wouldn't be much different
than where they are now.

MR. VINSON: Well, that is really funny. That is
really funny. Leave the smile off and say that is really
funny.

MR. HAAS: Well, Frank, look at the over-all picture
in the last year; there has been a good deal of stability

204

- 18 -

in prices - in the cost of living. Now, you may argue
about both indices, but in view of the thing which has
developed, like excess purchasing power, and so forth, I
don't think - as a technician, I wouldn't argue with
what you say. I agree with that, that subsidies create

excess, but I would say that Judge Vinson and the people

who are working on it recognize that. But what is the
alternative? Their real job, and the real generating
power of inflation is in this wage spiral.

All right, you take the whole thing together; if
by granting this subsidy which is inflationary, you stop
a spiral of inflation which is much more disastrous than
the small amount of inflation which the subsidy itself
provides - and the article does not take in the key
point at all - that would be my main criticism. That is
where I would leave it. Technically, I couldn't argue
with what you said, but I would say you didn't go far
enough, and weren't fair to the stabilization people
in taking in the main point. And the main points of
discussion on the Hill have been on that end.

MR. PEARSON: Mr. Haas, because there is a lot of

discussion on the Hill that wages make prices and prices
make wages, do you really believe that philosophy?

MR. HAAS: I believe this, that if you get wages
going up, your prices will have to go up.
MR. VINSON: Or vice versa.

MR. HAAS: We have had illustrations. Another

thing I will say - I mean on our philosophy of letting
things go - the key thing in the war is to produce this
armament. All the things we are scussing in this

room are man-made situations. They could be handled, and

I think the world has demonstrated to date that they can

be handled this time better than last time. I think in
another war we will still learn a lot financial-wise.
If you didn't have these controls, I don't think the

great increase in production that has taken place would
have taken place. You would have had so much discontent,
it would not have happened.

205

- 19 -

Not only discontent currently, but discontent as
to the future. The outlook would be so black you could

not get the enthusiasm.

MR. VINSON: And on the farm front, when you take

into consideration the fact that in '43 the farm income
was twelve billion seven hundred and seventy-five million
dollars, according to the figures that are presented to
me, which is a peak--

MR. MYERS: You mean net?

MR. VINSON: Net after operating expenses, taxes,

and so forth. I think I can say that the real farmers,
fellows who actually produce the stuff, aren't responsible
for the clamor for higher prices. It is actually the

professional farmer, and when I say professional farmers,
I refer to so-called representatives of the farmers here
in Washington, that are the ones who are clamoring for
higher prices.

I see a lot of farmers, real honest-to-God farmers,
and they tell me that prices are too high. You take the
cattle prices; I have been told that for a year by producers of cattle, and by some of the representatives of
the livestock growers.
I think that the clamor that comes from the professional farmers rather than the farmers themselves, because I believe the farmer realizes that he catches it
probably first, and probably the hardest, when you have
the deflation that follows.

My thought is that the higher the inflationary
spiral, the longer is the drop that comes, because no

one can say that deflation ill not follow inflation.

Do we agree on that last statement?
MR. PEARSON: Yes.

MR. JONES: Bill, you started to say something.

206

- 20 -

MR. MYERS: I say that after we see the experience
of this war period, including what happens to the inflationary gap after fighting stops, then we can evaluate
better the effectiveness of the program this time as
compared with the last war.

That is, the evidence is not by any means, all in,

and what happens, or what will happen to the excess
purchasing power in the hands of consumers when controls

are removed, is a part of the picture.

MR. VINSON: And those in charge of the stabilization program, as far as I know, are unanimous in the
thought that their controls should be retained for a
reasonable period after the fighting stops.
The cases for increased wages in this country run -

oh, I would like to check this figure, even for our discussion, because I am not certain about it now - but the

number of cases that comes to the War Labor Board where
management has either asked for the increase, or signs
the agreement for increase, as compared to dispute cases,

I would say, within a year period, twenty-five or thirty
to one. And if you didn't have wage stabilization, I

think the sky would be the limit, because they would
want, where they are short in manpower, to bid them up;
then the other fellow, in order to defend himself, would
bid them up, and the sky would be the limit.
There were five thousand, plus, dispute cases
before the War Labor Board in a certain twelve-month
period. The exact date of that twelve-month period, I

don't recall - I think probably it was the end of the
year, but it might have come over into this year; and

the number of non-dispute cases, my recollection was
one hundred and eighty-five thousand. And to me that
shows what would happen if you didn't have wage controls.

H.M.JR: Could you gentlemen go on? I have an
appointment with General Marshall.

MR. VINSON: I have one at eleven o'clock, too, Henry.

207

- 21 -

H.M.JR: I don't want to break it up, but I have to

keep this appointment with General Marshall.

MR. VINSON: I think it has been very nice to have
this get-together, and I had a general notion about what
Mr. Pearson's idea was in regard to the situation, and

if you start from the premise that the inflation, the
disease, must run its course, then of course it is clear
that - speaking still in terms of diseases - that death
or ruin inevitably follows.

As far as I am concerned, I just hope and pray that
theory that you feel is sound, may prove incorrect. I
believe that the good sense and the restraint that the
American people have shown in not going on big sprees and that has been demonstrated beyond question--

MR. MYERS: So far. we hope it continues.
MR. VINSON: But in that demonstration, you must

not overlook the controls and the education that they
have received, because I believe the American people
are more familiar with the dangers of inflation today
than they were ever before, and to prove that point you rarely see a person - or at least I rarely see a
person - who will not say, vehemently, that they are

for the stabilization program, that they are against inflation, that inflation must not come, that they a re
doing everything on earth to prevent it. but the parti-

cular segment of our economy that they represent, increased prices and increased wages there will be of such
small
consequence that that particular inflation will not
be
hurtful.

For instance, Ed O'Neal, Chairman of the Farm Bureau,

says there ought to be a little inflation for the farmer.

He made that statement to me; 1 heard him.

I just don't believe that we could have a little
inflation without fire spreading.

207-A

June 7, 1944

My dear Mr. President:
In reply to your memorandum of
May 23, I had Fred Vinson, Marvin Jones,

and Bill Myers and Pearson of Cornell
here this morning.

I doubt very much whether we made
any dent on Myers and Pearson.
Pearson

has a closed mind. But at least we made
an honest effort.
Yours sincerely,
(Signed) E. Morgenthas, Jr.

The President,
The White House.

NEW YORK STATE COLLEGE OF AGRICULTURE
AGRICULTURAL EXPERIMENT STATIONS
CORNELL UNIVERSITY
ITHACA. NEW YORK
EDMUND EZRA DAY. PRESIDENT

WILLIAM 1. MYERS, DEAN

May 29, 1944.

OFFICE OF THE DEAN

Honorable Henry M. Morgenthau, Jr.,

Secretary of the Treasury,
Washington, D.C.
Dear Henry:

This will confirm the engagement of Pearson

and myself for lunch at your office at one o'clock on
June 7. We will arrive in Washington that morning and
if there is someone that you would like to have me talk
with prior to our luncheon engagement, please let me
know. Otherwise, I shall probably spend the major part
of the morning with Bob Coyne and M. L. Predmore going over
the farm war bond program.

I am very sorry if our article in Farm Economics
has caused you any annoyance or difficulty. I am enclosing a copy of the issue of Farm Economics and if you are

interested you will find the article in question on page

3567, entitled, "Food Prices and Earnings of Factory Work-

ers." It points out that index numbers do not reveal ac-

curately present levels of costs because they do not include

the prices of articles which sell above legal ceilings. I

guess the difficulty arose from the fact that somebody
wrote a piece about this article for the New York Times
which has been used by the CIO in its attempts to increase

wage ceilings.

We rejoiced with you that Bob was picked up safely
after his ship was torpedoed in the Meditermanean. I hope that

he is none the worse for this thrilling experience.
With warm personal regards, I am

Sincerely yours,
W. I. Myers
Dean

P.S.- In accordance with Mr. McHugh's note, just received, we will be
in your office at 10.00 A.M. on June 7 to meet with yourself,
Judge Vinson and Mr. Marvin Jones.

W.I.M.

207-B

207 -

Hong

FARM ECONOMICS
Department of Agricultural Economics
NEW YORK STATE COLLEGE OF AGRICULTURE
CORNELL UNIVERSITY, ITHACA, N. Y.
Published and distributed in furtherance of the purposes provided for in the
Act of Congress of May 8. 1914 L. R. Simons, Director of Extension Service

No. 140

APRIL 1944
United States food
Prices

Farm prices
Farm

40 basic

Year

Retail
prices

com-

New

modities

York:

United
States

prices

1915

106

1916

132

114

118

180

1917

Prices

Costs

Cost

Costs

articles

distri-

dairy

living

Earnings
factory

workers'

farmers

farm-

bution

buy+

ing

107

106

107

104

102

104

120

117

100

125

116

112

116

175

182

156

127

148

141

128

132

173

161

153

164

197

169

1918

213

186

204

201

1919

218

206

215

214

194

173

198

178

174

190

1920

243

217

211

212

207

203

202

201

204

227

1926

150

159

146

154

174

192

168

170

178

234

1933

106

141

120

105

132

176

1934

101

122

158

129

114

136

187

1935

112

102

109

143

175

130

120

139

196

1936

118

113

114

116

146

173

128

124

140

204

115

122

124

152

181

134

136

145

221

139

174

127

129

143

2II

1937

131

158

100

101

103

132

168

123

124

140

222

1939

110

101

135

171

125

127

141

220

1940

116

107

100

101

136

167

126

128

142

228

1941

137

123

124

148

167

133

144

149

267

1942

156

152

I59

157

171

179

151

172.

165

323

193

192

186

184

171

164

206

175

376

1938

Aug.

167*

1943

Nov.

42 157

164

170

167

173

180

155

180

169

343

Dec.

160

162

177

169

174

188

156

191

170

349

163

172

181

176

181

186

157

194

171

354

164*

174

184

180

185

186

195

171

362

201

174

371

Jan.
Feb.

Mar.
Apr.
May

167*

183

192

185

192

189

159
160

167*

194

197

189

194

187

162

202

176

375

167*

207

194

193

197

182

163

205

1.77

373

June

167

218

195

194

191

170

164

207

177

376

167*
168*

202

193

191

181

154

165

207

175

371

185

192

188

179

151

165

206

175

379

170*

186

193

186

178

158

165

209

175

382

169*
168*

204

194

187

178

162

166

212

176

388

194

186

175

159

167

214

176

393

198

196

186

176

389

Jan. 44 170*

203

196

Feb.

206

July
Aug.
Sept.
Oct.
Nov.
Dec.

170*
171*

205

195

174

165

169

226

184

177

169*

169

226

176

395

184

180*

167*

170

225

175

398

Index numbers on pre-World-War-1 base. Footnotes on page 3529-30. *Preliminary.

3563

3562

Although the numbers have been increasing and are very large there are
Indications that a change is in order. The numbers of most classes of livestock are increasing at a decreasing rate (table 3). In the past, such trends
were the forerunners of liquidation. The purchasing powers of most types
of livestock are decreasing. If the purchasing powers are of any value2, they
are further indications that liquidation will follow
Feed is the basic factor which calls for liquidation. There are more hayconsumers than there is hay, more pasture-consumers than there is pasture,
and more grain-consumers than there are grain supplies. Despite regulation to the contrary, prices of feed and hay will rise relative to livestock

LIVESTOCK
RECENT TRENDS

During the past six years, the livestock industry in the United States
has been characterized by rapidly increasing numbers, rising and high
prices and purchasing power per head, advancing aggregate values, and
unusually abundant feed supplies. During this period livestock numbers
increased about 50 per cent. Hogs and chickens increased the most, and
milk cows and sheep the least (table 1).

prices.

TABLE PER CENT CHANGES IN LIVESTOCK DURING THE LAST SIX YEARS

TABLE 3.-RECENT AND PROBABLE TRENDS IN LIVESTOCK

JANUARY 1. 1038 TO 1944

Numbers

Purchasing
Aggre-

power of

gate

aggregate

price

value

Purchasing

Class of livestock

Numbers

Prices

Class of
livestock

Recent trend

Probable trend

increasing at decreasing

Hogs

Purchasing power
Recent trend

Probable trend

liquidation

decreasing

liquidation

increasing

decreasing

rate
+88

Hogs

Chickens

+194

+47

Beef cattle*
Milk cows

+34
+13

+38

+101

+28

+102

+127

+100

+111

Chickens

rate

Heef cattle*

All meat animals!

+51

*Including dairy cattle under two years.

rate

+1.30

The supplies of feed grains and hay increased 37 and 27 per cent
PRESENT POSITION

As a result of these accumulating numbers and wartime prices, the total
values of all classes of livestock are high. or the highest in history (table
2). Furthermore, the purchasing powers of the aggregate values of most

Aggregate

of price

Purchasing power
of aggregate value

value

Hogs

highest in history

Chickens

highest in history

second highest in
history

in history highest in history

fourth highest

in history

highest in history

second highest
history

highest in history

Sheep

high

All meat

highest in history third highest in approximates

Animal units

higher

in history

history

Last year was the highest in history.

Including concentrates

history
second

average

previous peakst

second highest in
history
highest

highest

history

decreasing

Animal units

The industry will soon enter a period of liquidation, and much less
abundant supplies of feed. Normally during such periods, the price and
purchasing power of livestock decline. The course of prices and purchasing
power is confused by price fixing, black markets, rationing, the duration
of the war, Lend-Lease, rehabilitation, and the impending inflation.
The forces making for higher prices-Lend-Lease, rehabilitation, black
markets, and impending inflation- will be equal to or greater than the
forces making for lower rices-increasing supplies and government regulations. Regardless of whether prices continue to rise or start to decline, the
"true" purchasing power of livestock will continue to decline.

second

highest

history1

**Including dairy cattle under two years

5 years. The length of the cycles is dependent on the time required to
create a surplus and then to liquidate it. The cycles are biological as well
as economic. Some of the more important biological considerations are the
rate of reproduction and the rate of growth which is closely related to the
time required to reach the reproductive age.
The horse produces a colt a year which does not reach maturity for
several years. Consequently it takes many years to create a surplus of
horses. It also takes a long time to dispose of a surplus. We do not eat horse

history
average

second

decreasing

rate

history

highest in history

history

second highest in
history

second highest in

Milk cows

decreasing

cycle 15 years, the sheep cycle 10 years, and the hog cycle a little less than

second highest

Beef cattle**

increasing at decreasing liquidation

decreasing

Livestock cycles vary in length from a quarter of a century to a few
years. The approximate length of the horse cycle is 25 years, the cattle

TABLE -LIVESTOCK SITUATION JANUARY 1. 1944

since 1020

All meat

decreasing

liquidation

LIVESTOCK CYCLES

classes of livestock are high.

hight

increasing at decreasing
liquidation

*Including dairy cattle under two years.

respectively.

Price

Milk cows
Sheep

animals?

decreased

Numbers

decreasing

rate

all
Due to increasing numbers and rising prices, the aggregate value of
livestock more than doubled. The greatest increase occurred in the value
of hogs which approximately trebled The purchasing power of the aggregate value of all livestock increased about 60 per cent. The aggregate
purchasing power of hogs and beef cattle increased the most, and sheep

Purchasing power

decreasing

Animal units

sheep declined

Class of

continuation of increasing numbers at decreasing rates, followed by liquidation

Prices of all livestock rose over 50 per cent. Cattle rose the most: and
sheep, the least (table 1). The purchasing power of the prices of all livestock rose 7 per cent. The purchasing power of cattle rose the most, and

animals)

increasing at decreasing

+ 44

Sheep

livestock

increasing at decreasing

flesh and it takes a long time to wear the horses out. Sentiment prolongs
their life even after they are no longer useful.
it is difficult to measure the exact position of purchasing power of livestock. If one is not certain of

the approximate level. it is impossible to determine the farmers response.

(Continued on page 3566)

3564
3565

NEW YORK
Corn Oats Wheat Barley Buck. Beans Hay
bu.

bu.

Pota. Apples Horses

ton

bu.

NEW YORK

PRICES PAID TO PRODUCERS FOR FARM PRODUCTS
head

PRICES PAID TO PRODUCERS FOR FARM PRODUCTS

Hogs

Chick

cwt.

Butter

Eggs
dos.

Butter

Milk

Veal
calves

Beel

attle
cwt.

Sheep Lambs Wool
cwt.

14.10

132

February

INDEX NUMBERS (CORRESPONDING MONTHS, 1010-14 100)
Corn

Oats

Wheat

Barley

Buck.

116

Beans

Pota

Apples

Horses

Hoga

INDEX NUMBERS (CORRESPONDING MONTHS, 100)
Chick Eggs Eggs Butter Butter Milk Milk Veal Beef Sheep Lambs Wool

Includes subsidy

3566

3567

(Continued from page 3563)

The hog cycle is much shorter. The rate of reproduction is high-about
six pigs per sow and one or two litters per year. Pigs grow rapidly reaching
a reproductive age in a relatively short time. Consequently little time is required to produce a surplus. When a surplus is created, there is no difficulty
in disposing of it. We just eat a little more bacon, pork-chops, and sausage.

The length of livestock cycles is also affected by the cost of making
adjustments. It is more expensive to reenter horse and cattle production
after liquidation than is the case with hogs and chickens
The actual livestock cycles do not always follow the biological cycles.
Abundant feed supplies will lengthen the cycles beyond their normal biological time and scarcity of feed will shorten them.
POULTRY CYCLE

There is no clearly defined poultry cycle. The rate of reproduction-

150 eggs per hen per the fact that chicks reach a reproductive

age in six months indicate that the biological poultry cycle would be very
short. A surplus can be created quickly. Since few people ever have enough

roasted and fried chicken, there is no difficulty in disposing of a surplus.
The periods of expansion and contraction in the poultry industry, however,
vary from one to three years and appear more like the hog cycle than a
biological poultry cycle (figure 1).
Both hogs and chickens are com-

petitors for grain. Feed grains and
concentrates probably represent

over 90 per cent of their diet. In the
aggregate, hogs eat about twice as
much grain as poultry. The poultry
cycle, then, becomes a compromise
between the short biological poultry
cycle, the longer biological hog cy-

Hogs

cle, and irregular fluctuations in

1909

1919

1929

1939

FIGURE PERCENTAGE CHANGE IN
THE NUMBER OF HOGS AND CHICKENS

1909 TO 1943

Changes in the number of chickens are facsimile of the hog cycle.

grain supplies. Since poultry is not
so important as hogs and because of
its shorter cycle, the changes in poultry numbers tend to be a reflection
of the hog cycle (figure 1). During
the past three decades the poultry
cycle moved in the same direction
as the hog cycle about three-fourths
of the time. The changes in the poultry cycle are about half as violent as
in the case of hogs.

NEW YORK

The hog cycle and the size of the corn crop are, therefore, two phases of
American agriculture that are of particular interest to New York poultrymen. Of course the dairyman's important cycle is the cattle cycle. The
purchasing power of dairy COWS fluctuates with the purchasing power of
other cattle and the periods of expansion and contraction in the dairy industry fluctuate with beef cattle. As the national livestock goes, so goes
New York. The only difference is that in the past New York fluctuations
have been much less violent than for the nation as a whole.
F. A. PEARSON AND W. I. MYERS
'The standard deviations of the percentage changes for poultry and hogs were 5-3 and 10.9 respectively.

FARM PRICES FOR VARIOUS STATES
During 1943 the highest prices prevailed in the Border States just south
the Mason and Dixon Line; and the lowest, in the deep South. If the
agriculture of these areas were to be characterized by one crop, it would be
tobacco for the Border States and cotton for the deep South.
During the year 1943 there was little or no change in prices in Iowa and
Minnesota; whereas, there was a striking change in North Dakota. During August 1942 Iowa livestock prices were 41 per cent above North Dakota

grain; but by December 1943 Iowa prices were only 9 per cent above
North Dakota prices.

Comparison of World Wars I and II indicates that prices in the Corn

and Cotton Belts were lower during 1943 than they were in 1918, the comparable year of World War I. The greatest difference occurred in the Cotton
States, where 1943 prices were much less than those prevailing in 1018.
Prices for the dairy states of the Northeast and the northern part of the
Middle West were somewhat higher in 1943 than in 1918. The greatest
difference prevailed in the tobacco-producing Border States, where 1943
farm prices were as much as 20 per cent above 1018.

FOOD PRICES AND EARNINGS OF FACTORY WORKERS
Analyses of the trends of prices are hampered by the difficulty of measuring the level of prices that are actually being paid. Index numbers of the
cost of living. wholesale prices, and the like indicate where present ceiling
prices are relative to former market prices. They do not tell us the present
level of the cost of living or of wholesale prices because they do not take
into consideration black market prices, deterioration in quality. second
hand prices, and the like. It is reasonable to assume that the cost of living
and wholesale prices are above the level of the official indexes. This is not

the fault of the index-number makers. They will be the center of controversy whether they change the indexes or not. If they do not make a

change, labor leaders will contend that the index of the cost of living is not
an accurate barometer of the real cost of living. If they do change the index,
the regimenters and price fixers will be thrown into a bad light and the ghost
of inflation will appear more real. There is a much greater difference be-

tween the "official" and "real" barometers of the cost of living and of

wholesale prices than the public believes or the price controllers are willing
to admit
The best barometers of free prices have been wages and farm food prices.
During world conflicts both labor and food are in short supply and great
demand The forces are so dominant and difficult to control that wages and
food prices seek and ultimately find their proper levels
FOOD

There is some indication that the official indexes of farm food prices are
beginning to be affected by controls. During about half of 1943. official
prices of corn fluctuated from $1.00 to $1.10. Similarly butter has been
stable at 43 to 45 cents; and chickens, 24 to 25 cents. Prices of other pro-

ducts have been comparatively stable. This would indicate that black
market quotations have not been reported. During the year the United
(Continued on page 3570)

tucky

Ore-

Year

lina

Florida

Kan-

Wash-

100
105INDEX NUMBERS OP FARM PRICES FOR SOUTHERN AND WESTERN STATES: Pre World War

Ne-

Utah

Dakota Dakota brasks

souri

Iowa

Mon
101
nesota
Texas

101
consin
Okla

105
Loui-

Arkan-

103
sippi

Min-

Mis

Missis-

106
Wis-

vania
Ken-

Pennsyl.

Michi

Dela-

Indiana Illinois gan

New

Jersey

Ohio

New

Geor-

CaroINDEX NUMBERS OF FARM PRICES FOR ATLANTIC AND NORTH CENTRALSTATES:-Pre-World War

Year

Idaho

3571

3570

(Continued from page 3567)

States farm price of food rose only 6 per cent. As the controls expand, the
value of index numbers of farm food prices will diminish whenever shortages occur. since they will then be indexes of ceiling prices, not of actual

was small compared to that for the urban wage earner. This has been due
primarily to the rapid rise in the efficiency of factory labor and not to union
bargaining power as many erroneously conclude. Earnings would buy

about twice as much food during World War II as during World War I.
The respective parity rates were as follows:

prices.

Food prices in terms Factory earnings in terms of
of costs of farming
Cost of living Farm food prices

EARNINGS

approval, have not been obscured in the indexes of earnings. "Hidden" increases in food prices, which do not have official approval, have not been
included in the index of food prices.
There has been about as much discussion of efforts to control wages as
food prices, but much more effort has been devoted to the latter. It may be
more difficult to obscure the violations of wage policies than of price policies. Certainly the administration has frowned more on price advances than
on wage advances. Therefore, it is to be expected that only ceiling prices
will be reported; whereas, actual earnings paid are quite generally reported
As long as this condition prevails, it seems reasonable to assume that with
passing time the value of the index of farm food prices will decline faster
than the value of the index of earnings.
FOUR YEARS OF WORLD WARS I AND II

There are two methods of comparing New York farm food prices and
earnings of New York factory workers during the two World Wars: (a) compare the amount of change and (b) compare food prices and earnings with
costs of farming and costs of living.
Change. During the first four years of the two wars, food prices and
factory earnings rose about the same amount. The percentage advances

were:

New York food prices New York factory earnings
World War I
World War II

Under the free prices of World War I, the costs of farming and the costs

World War I

116

107

World War II
215
195
Change in Parity Rate: In view of differences in efficiency and other
94

factors, the most accurate approximation of the trend of prices and earnings
has been the percentage changes in their purchasing power or parity rates

for short periods of time in terms of flexible indexes. During four years of
World Wars I and II. the purchasing power of food prices rose 16 and 18
per cent respectively. In terms of urban cost of living, earnings rose much
more during this war. This increase in purchasing power is probably more
apparent than real. In terms of farm food there was no difference. After
four years of World Wars I and II the purchasing power of New York
factory earnings declined about 10 per cent in terms of New York farm food
prices. The percentage changes in the purchasing powers follow:
New York food
prices in terms of
costs of farming

New York factory earnings
in terms of
Cost of living Farm food prices

-11
+16
World War I
World War II
+18
+38
It would seem reasonable to conclude that the index of the cost of livin
may not be an adequate barometer of real living costs.
Despite the many attempts of the government to keep down farm prices
and to grant hidden increases to laborers, and despite the efforts of farm
and labor leaders to get their own prices up and keep the other groups
down, farm prices and factory earnings probably have not been far out of
line relative to one another Apparently the regimented economy of World
War II has reached about the same end as was reached by the free price
relationships of World War I.
8

During the year 1943. the earnings of factory workers rose 10 per cent.

almost twice as much as farm food prices. The rise was quite uniform
throughout the year. "Hidden" increases in wages, which have official

F. A. PEARSON AND W. I. MYERS

of living rose in about the same proportions, but under the controls of
World War II the indexes of costs of living rose much less than the costs
of farming. The percentage advances were:
Costs of farming

World War I
World War II

MILK SUPPLY AND DEMAND IN NEW YORK, 1943-1944
Costs of living

50
24

Parity rates. After four years of World War II, the purchasing power of
New York farm prices in terms of cost of farming was less than at a comparable date for World War I: whereas, the purchasing power of New York
laborers was greater. The difference in the purchasing power of the farmers
The Bureau of Agricultural Economics index of farm products is higher than our food index and

advanced more during the year 1943

The Bureau of Agricultural Economics farm index contains tobacco. cowpeas orances grapefruiti soybeans, and dry field peas that have been injected into the index on 10 season average 1919 28: s-season

average 1934-38; "derived base period price, 1010-20; and "derived base price.

During the fall months of 1943 there was a general shortage of milk
throughout the eastern states. All of the major markets along the Atiantic
seaboard except New York City had to bring in milk from sources beyond
their regular milk sheds to supplement the local supplies. Many carloads
of fluid milk were shipped to these eastern markets, at high cost. from
Michigan. Wisconsin, and other midwestern states. New York City escaped this necessity principally because it had kept enough farms under
inspection to supply its peak requirements not only for fluid milk, but also
for fluid cream, sour cream. and ice cream.
Reports of the Market Administrator for the New York metropolitan milk marketing area. and of the

Bureau of Statistics. New York State Department of Agriculture and Markets are the principal sources of
data used in this analysis

3572

3573

Probably a higher percentage of the New York milk supply was utilized
for fluid sales in 1943 than ever before, yet during the spring and early
summer production greatly exceeded the immediate requirements of the
market. During that period large quantities of milk produced on farms under
New York inspection were turned into manufactured products for military
and civilian use, or into frozen cream to be used by manufacturers of sour
cream and ice cream during the fall and winter (figure 1).
Most of the other large markets in the East depend on their local milk
sheds only for fluid milk, and in some cases fluid cream. These markets
have only small local reserves to draw upon in times of exceptional demand or decreased production. In this instance the shortages were due
mainly to increased demand, but there was also a decline in production
from the high levels of the last two or three years.
Except for the fact that other markets along the Atlantic seaboard took
increased quantities of milk from plants under New York City inspection,
the New York supply would have been more than ample even during
November 1943. the month of lowest production. As it was, the margin
between available supplies and market requirements was so small that an
allocation program was undertaken by the Federal-State Market Administrator to facilitate the transfer of excess supplies controlled by certain
handlers to others who were short. The period during which this program
was operative coincides with the period of near-shortage in the New York
milk supply. It extended from the last week in October to the third week

far south as Florida. Moreover,
*

these outside markets. The with-

drawal of these plants was the
main cause of the decrease of 1.3

million pounds, or more than 10
per cent, in the daily volume of

pooled milk for the month of
November.

Sales of fluid cream in the
New York City marketing area
took 1.68 million pounds less
milk a day in November 1943

In normal times, during the month of November a high percentage of
the New York milk supply is utilized as fluid milk. fluid cream, and ice
cream for sale in New York City. In November 1943, however, the margin
of surplus over these requirements was reduced to a smaller percentage than

previously had been considered practicable. Changes in utilization of the
November milk supply during the last four years are shown in figure 2.

Daily average
in millions
of pounds

PIGURE MONTHLY UTILIZATION OF
THE NEW YORK INSPECTED MILK

SUPPLY DURING 1943
As usual in the spring and summer. large quanti-

ties surplus milk were available for of
than in the same month of 1940.
storage cream and manufactured products But in
This striking reduction of 70 per
November
was and
barely
sufficient to meet
the
demandthe
forapply
fluid milk
cream.
cent was caused mainly by the
wartime ban on sales of cream containing more than IQ per cent fat. Before
this ban was imposed New York was predominantly a heavy-cream market,
and light cream has not proved to be an acceptable substitute. Some distributors reduced their cream sales still further in order to save milk for
bottling. A few dealers may have been affected by the government limitation order which restricts the cream sales of each distributor to 75 per cent
of his output in June 1943
As shown in the charts, relatively small quantities of milk are used for
storage cream, sour cream, and ice cream in the month of November, and

in December

The changes that occurred between November 1940 and November 1943
may be summarized as follows:

a number of plants that have
withdrawn from the New York
milk pool in the last year or two
shipped their entire output to

the quantity so used in November 1943 was 44 per cent less than in NovemII

ber 1940. Ordinarily during the fall months storage cream that was made
from inspected milk during the season of flush production is used to a large
extent in place of fresh cream in making sour cream and ice cream for New
York City. From August 10, 1943 to March 1, 1944. however, the New

Per cent

Milk sold as fluid milk, New York marketing
area

Milk sold as fluid milk, outside markets
Milk used for fluid cream, New York marketing
area

Milk used for sour cream and ice cream, New
York City
Milk for all other uses

+0.86
+0.90

+ 12.6

1.68

70.6

+ 100.0

0.11

44.0

1.31

58.0

1.34

10.7

Storage
?cream

In the four years, the daily sales of fluid milk in November increased
860,000 pounds, or 12.6 per cent. The increase in shipments of fluid milk
to outside markets was practically the same in amount but many times
greater in percentage. Among the outside markets supplied in part with
milk from the New York milk shed were Boston, Hartford, the New Jersey
cities, Philadelphia, Baltimore, Washington, and other cities and camps as

Fluid milk

Cream Outside milk All other

Total supply

MILLION POUNDS DAILY

FIGURE -UTILIZATION OF THE NEW YORK MILK SUPPLY IN NOVEMBER 1040 AND
NOVEMBER 1943

Last November the New York milk supply was the smallest for the month in several years but fluid

milk sales were the largest Shipments of milk to outside markets were much greater but sales of fluid cream
in New York were much smaller than in November 1040.

3574

3575

York City Board of Health allowed cream for these uses to come from
sources outside the milk shed. The imported cream took the place of
much storage cream, as well as fresh cream made from inspected milk.
The quantity of inspected milk used from current production last November for these products also was affected by the government orders which
restrict the use of milk products in ice cream to 65 per cent of the 1942
volume, and sales of sour cream to 75 per cent of the output in June 1943
After meeting the market requirements for fluid milk. fluid cream, sour
cream. and ice cream, which ordinarily have priority in the New York
milk shed. the quantity of milk left for manufactured products and cream
for outside markets was 58 per cent smaller in November 1943 than in
November 1940. In November 1943 the reserve supply of inspected milk,
designated in figure I as "manufactured,' was only 8.4 per cent of the total.
The fact that this margin was so small, together with the tendency toward

By next fall the number of men undergoing military training in American Army camps probably will be substantially less than it was in the fall
of 1943. Thus it is probable that less milk will be required for camps alon
the Atlantic seaboard On the other hand, the tendency to decrease the
production of milk throughout this region, which was evident in the latter
half of 1943. is likely to continue unless the returns to producers are
raised substantially and unless feed and labor turn out to be more plentiful
than is now expected.
Present indications are that there will be less advantage to cooperatives

and other handlers in shipping from the New York milk shed to outside
markets during 1944 than there was in 1943 The handler's cost of fluid
milk sold in the New York market is the Class I price fixed in the federalstate marketing order, while the cost of milk sold in outside markets is
based on the uniform price computed each month by the Market Administrator. An increase of 20 cents per hundredweight in the Class I price,
effective November 1. 1943, together with higher market quotations for
dried skim milk, raises the uniform price considerably and thus increases
the handler's cost of milk shipped to outside markets On the other hand,
thanks to a federal subsidy, the handler's cost of milk sold in the New York
market is not affected

increasing demands and decreasing production, raises serious questions as

to whether and by what means the market requirements can be met in
full during the fall of 1944
There are really three questions to be considered; namely
1. Will the New York market requirements increase or decrease during
1944 and to what extent?

2. Will more, or less, of the milk produced in the New York milk shed
be diverted to outside markets?

3 What are the prospects for production in the New York milk shed
during 1944, and how can they be improved?
Present indications are that the quantity of milk and cream required
for the New York market will be about the same or only slightly greater
in November 1944 than in November 1943. If the government limitation
order restricting milk sales to 100 per cent, and creamsales to 75 per cent, of
the June 1943 volume for each distributor remains in effect and is enforced.
only a slight expansion in the sales of these products will be possible.
Cream sales could expand considerably but, as shown in figure 2, are a
small part of the total. There is a possibility that the limits of sales might
be reduced temporarily in case a severe shortage should develop.
The demand for milk and cream in the New York market may slacken
a little during the coming year. Additional thousands of young men will
be transferred from the civilian population into the armed forces, and it
seems unlikely that the loss will be made up by migration to this area.

Purchasing power will remain high, but with full employment at good
wages already an accomplished fact before last November, the per capita
demand for milk and cream is not expected to increase much further.
The renewed ban by the New York City Board of Health on the use of
uninspected cream in the manufacture of sour cream and ice cream will
result in more locally produced milk being used for these purposes, but
these requirements will be met from stocks of storage cream made during
April, May, and June.

The quantity of milk that is diverted from the New York milk shed to
outside markets along the Atlantic seaboard will be influenced by several

factors. Among these are possible changes in the population of Army
camps and naval establishments in this region, the trend of production in
the several milk sheds, comparative prices and subsidy payments, and
government regulation of handling charges.

Government regulation of service charges on fluid milk also will tend
to make the outside markets less attractive to shippers in the New York
milk shed. During the past year distributors in outside markets offered
higher prices than were obtainable in New York. However, an order
recently issued by the New York Regional Office of Price Administration
establishes uniform limits on the handling charges or mark-ups on all
shipments of fluid milk by plants in the area, irrespective of destination
To overcome these less favorable conditions, some handlers in outside
markets, particularly Boston, are reported to be negotiating for control
of certain plants now under New York inspection by lease or purchase.
So far only one plant in northern New York is known to have been leased
to a Boston handler
As the end of the war draws nearer it is likely that cooperative groups
and owners of proprietary milk plants in the New York milk shed who have
been interested in outside markets will give more consideration to longtime market prospects and may value more highly the privilege of participation in the New York pool.
Altogether, it seems likely that the diversion of milk from the New York
milk shed to outside markets will not increase substantially during 1944
and may actually be less in November 1944 than in November 1943.
The main cause for concern about meeting the requirements of the New
York market during the fall of 1944 is the fact that in recent months production in the New York milk shed has fallen considerably below the
level that was reached in the last two or three years. In every month
since July 1943 the total receipts of milk from producers at dairy plants
in New York State, which include about three fourths of the milk pooled
under the federal-state order for the New York City market, have been
less than those for the corresponding month of 1942, and in several months
the lowest in three or four years. January 1944 receipts were the smallest
in five years. The percentage change in plant receipts each month since
January 1943 from the average for corresponding months in the three

3576

3577

HOW MUCH FOOD CAN WE STORE IN THE UNITED STATES?

years immediately preceding has been as follows:
1943

January

+1.0%
+3.4
+3.4
+0.6

July

May

-0.4

August
September
October
November

June

+3.4

December

February
March
April

The problem of food storage has been brought to the fore recently because of our attempts to help feed our allies and our promise to help feed
people in liberated countries during and after the war. Earlier in the war
the United States, a surplus-minded nation, promised vast assistance,
almost as though food grew abundantly on trees and was there for the
picking. As we began through Lend-Lease to deliver in a small way on our
promises, we rapidly came to realize that our contribution would put little
fat on the ribs of the world, with so little excess of current production over
current consumption in this country and with so many people to be fed.
We seem unwilling to make drastic sacrifices in consumption. Enjoying
excessive money prosperity, our own citizens vigorously demand more beef
steak and more butter.
As another approach, why can we not pick up our little excesses of different foods year by year, and accumulate them in storage? Then when the
big need comes, we might have an impressive stock pile from which to aid
liberated countries As with food production a few years ago, storage space
has been taken for granted, as though almost unlimited space was available
for any emergency such as the present one. Therefore, an inventory of our
storage space is in order. How far can our accumulation of food go, from
the standpoint of storage space available? What types of storage are available for various products, and how do they compare in capacity?
Briefly, the picture as revealed by the following evidence is discouraging
We could not feed for long any great number of people in other countries,
because of limited storage capacity in excess of our own seasonal needs.
The only space of any great importance is our grain storage, especially on

1944

1943

+3.7%
-2.1

January
February

-5.9%
-4.6

-0.2
-4.6
-7.6
-7-7

The shortage of feed, actual or anticipated, and the shortage of labor
are obvious reasons for this decrease in milk production. These conditions

are likely to be worse rather than better in the fall and winter of 1944
Another factor in the situation is the change that appears to be going
on in the seasonal pattern of milk production in the New York milk shed.
In the last several years the receipts of milk at New York State dairy
plants in the months of February, March, April, and May have shown a
rather steep upward trend, while the receipts in September, October, and
November showed only a small gain. An increasing proportion of the cows
have been bred to freshen in November, December, January, and February,
and a decreasing proportion for March, April, and May freshening.
Changes in the time of breeding and freshening are made gradually and
cannot be influenced enough by any changes in prices or subsidy payments
during 1944 to affect the milk supply next fall. However, an increase in
returns for milk during the latter half of 1944 would encourage the breeding
of more cows for early fall freshening in 1945 and after. The number of
cows on farms in the New York milk shed is near the all-time high, and
the number of heifers is sufficient for normal replacements. The problem is
to keep these cows in full production.
Government can help in three important ways to insure a high level of

milk production in New York and other Atlantic seaboard milk sheds
during the remainder of 1944. and especially in the critical fall months.
I. Further steps should be taken to assure the dairymen in this region
of feed supplies as abundant as circumstances will permit.
2. The necessities of dairymen with respect to farm help and labor-saving equipment should be fully recognized and provided for as adequately
as possible by the appropriate federal and state agencies.
3. Price returns for milk should be maintained at a level high enough
to encourage dairymen to maintain their herds and feed their milking cows
liberally even though labor and feed are high-priced, and even though it
means longer work days than ever before for the farmers and their families. The first logical step is to suspend that provision of the New York
milk order which calls for a reduction in the Class I price during April,
May, and June. In addition, the Class I price and the retail price probably
should be raised about July 1. If the rigid price control policy of the national government precludes this possibility, then the "feed" subsidy
payments probably should be increased The sooner these changes are
announced the more effective they will be for the purpose of insuring an
adequate milk supply next fall.
The prospects are that the price returns for milk will be favorable in
relation to costs during 1944 and 1945. and that dairymen will find it
profitable to maintain a high level of production.
LELAND SPENCER

farms, and the open-air storage; both have distinctly limited usefulne
for any program of national accumulation of food over long periods of time.
It appears, then, that any sizeable aid that we can give toward feeding
peoples in devastated areas would have to come largely from a change in
0

what we produce and its use, rather than from large accumulations of

stocks over a period of years.
Storage Capacity in the United States

People commonly believe that we have storage capacity for almost unlimited quantities of food, but this is not so. This mistaken impression has
come partially from years of miseducation about the size of our food surpluses as a cause of the agricultural depression. These "surpluses" were
mainly the result, not the cause, of the depression Food prices were low
for other reasons.

We have in the United States 13:353 million cubic feet of storage space
of all types, except open-air storage which is almost unlimited (table 1).
This is equivalent to about 100 cubic feet for each person in the country.
The author is thoroughly conscious of the probable inaccuracies of some of the figures included in this
article All factual evidence that could be found was first assembled and then the gaps were filled in with
guesses which were built up from various forms of indirect evidence. It is believed however, that the pie
ture presented here is essentially correct in its main outlines. even though details are subject to correction

as
available of classifications
these such summary storage question seems in

more difficulties. evidence becomes of the Also, some the warranted used had view to of be our arbitrary national Despite aspira-

tions

help

feed

the

world.

Harper. A. and Hyer. Edgar A... How Much of the World Can We Feed? Farm Economics No. 130.
page

3470.

June

1943

Pearson. P. A.. Myers. W. L. and Bennett. K. R.. Food Surpluses, Farm Economics No. 125. page
3125. May 1941.

3579

3578
TABLE -SUMMARY OF ESTIMATED STORAGE SPACE THAT COULD BE USED FOR

Livestock, as a form of storage for meat, overshadows our cold storage

FOOD UNITED STATES

Million Per cent
cubic feet of total

Kind

facilities for meat. If all the livestock were killed, dressed, and packed
Million

cubic feet

Kind

solid, only a little over half of it could be placed in our meat cold storages
at one time: if packed loosely, as when the carcasses are hung for aging and
curing. only a small part of our livestock could be put in storage. Thinking

Per cent

of total

STORAGE LESS COMMON Y THOUGHT OF

STORAGE COMMONLY THOUGHT OF

of our livestock another way, it represents a form of storage of the feed
used to grow it. As such, it is enough to empty about three fillings of our
entire grain-storage space not on farms. Either way we look at it, livestock
represents a tremendous storage either of meat or the feed necessary to
produce it. However, it is doubtful whether much livestock is really used
intentionally as a form of storage. To feed and care for a live animal purely
as a means of "storing the meat" is too costly to be justified. Most of it is
stock that is growing, or producing products like milk and eggs, or breeding

Mainly for perishables

Livestock

Cold storage other than meat
Above zero
Below zero

stores. etc.

Total

3.5

463

Cold storage for meat
Above arro
Below zero

Mainly for are perishables
Commercial for root crops. etc.
Mainly for non-perishaNes
Grain, not on farms

Farm cellars,

302

2.2

205

5-7

01*

0.7

1.0

685

5.1

7811

5.9

homes.

stores, etc.
Mainly for NOW perishables

Grain storage on farms

7.407#:

55.9

Stores homes, etc.
Open air storage

1,914

14.4

Total for on-perishables

0.381111

70.3

10.8ssttt

ML.

13.353111

100.0

stock.

Open-air storage cannot be ignored, though it is seldom thought of as
"storage" space. It seems impossible to estimate the amount used: it is
appreciable for products like wheat in exceedingly dry climates, and for
some vegetable crops when combined with straw and earth coverings.

10.0

1.338

General warehouses

1301

Total for perishables
ables

Total for perishables

4-1

Mainly for emi-perish-

287

Total

540***

Refrigerator space in

370

100**

2.3

Total (yees less commonly
thought of

Total for on-perishables

1,644

12.3

Total types commonly thought of

2.500

18.8

GRAND TOTAL ALL TYPES

Our Domestic Storage Requirements

In the use of our available storage space, priority naturally goes to our
own requirements. Our domestic needs arise from the fact that our food
products are not produced evenly throughout the year. or as they are
consumed Consequently, (1) we must store, between harvests, some food
that is to be consumed in about the same form as it is stored, (2) we must
store feed for our livestock, to be fed them during the season between
harvests, and (3) we must store a "minimum carryover" of some of
first two types of food and feed, so as to keep our marketing agencies
stocked for business until the new crops have become properly seasoned
and scattered through the distribution channels.

*Guess based on space in known areas proportioned to United States total relative to carlot shipment
of

products

such

**Based on actual square feet of floor space. and assumed average height. Non-refrigerated general

warehouses

***Based on numbers of livestock on farms (1943). reduced to the cubic volume of the total of edible
portions.

Guess. based on size of such crops plus unused space in homes having cellars (for amount of family

consumption).

less

outdoor

storage

number

establishments

estimated

storage

and

floor

space.

and

sales

and sales turnover figures; numbers of homes refrigerators, space
IIGuess based on maximum reported farm storage of cereal crops, and an assumed figure for space
still

unused

IIIExclusive of open-air storage

Sources of other figures: Grain Storage Capacity and Stocks. April 1/ 1943. Bureau of Agricultural
Economics United States Department of Agriculture W ashington. D. C. May 10, 19432 Refrigerated
Warehouse Space Survey as June 16. 1041 Agricultura Marketing Service United States Department

of Agriculture Washington D. C., September 20. 1941 (corrected).

The average person in the United States consumes about 1,500 pounds of

food a year which, if stored solidly, would require about 3,927 million
cubic feet for all the people (table 2). This is nearly 30 cubic feet per person

Our storage space can be divided roughly into two main parts. The first
includes those types of storage of which we commonly think when we speak
of "storage" It includes less than one-fifth of all our storage space, or 181/2
cubic feet for each person. Over half of this is grain storage off farms The
remainder includes cold storages, general warehouses without refrigeration
and a little commercial-storage space for semi-perishables. Our cold-storage
space for meats and for other products amounts to a little less than 6 cubic

feet for each person, of which-three-fifths is used for products other than
meats.

Of all our storage space except open air, 81 per cent is of types not
commonly thought of when we speak of "storage" But they are just as
clearly a means of storing food as are the commercial-storage warehouses.
and are highly important. They include farm and home storages, storage
space in marketing agencies such as stores, and livestock as a form of
storage. By far the most important in this group is grain storage space on
farms, which is 5 1/2 times as great as the grain storage space not on farms.
Also, a large space is available for storing semi-perishables and non-perishables in homes. stores, restaurants, etc.

TABLE 2. A COMPARISON OF STORAGE SPACE WITH CONSUMPTION AND
CARRYOVER VOLUME UNITED STATES
Millions of Cubic Feet of Space
Perishables

Semi-perishables

Non-perishables

Requirements for year's COMEUME and carr yourr*
Human consumption
Litestock consumption
Minimum carryover
Total

2,170

447

1,310

Total

1.027

5,337

1,337

1,108

7.755

10,372

Storage space

Forms commonly thought of
Forms not commonly thought of
Total

TOS

1,644

2.500

685

787

0.3812

10,853

878

11,331

13.3531

1.450

*Based on 1943 expected human consumption: 1942 livestock consumption: sixty days consumption
requirements of non-perishables Storage space figured as if packed solid
From table
1Exclusive of open-air storage

On the basis of 7 pounds of feed to pound of carcass meat

3581

3580

We have been rapidly increasing our livestock industry, which increases
the need for storage space required for their feed and thus rapidly reduces

Over half our consumption by volume is perishables, which require special
care and types of storage. The space required for feed concentrates for our
livestock for a year is about a third greater than that for humans, or 5.337
million cubic feet. The space for a minimum carryover of human food and
livestock feed is 1,108 million cubic feet. All together, these needs for a
year would require 10,372 million cubic feet of space, or 77 cubic feet for
each person in this country. Of course, we do not need that much space
because not all of our food and feed is produced in one day, to be stored for
use over a full year. Some of our consumption is "out of the field". and to
some extent we can make double use of storage space within a year.
Crops, in the main, are highly seasonal in production and we must store
much of our annual needs For instance, half of our production of vegetables
for canning is within a period of about one month, and four-fifths of it with-

our excess over domestic needs.

On the other side, this comparison ignores the points previously mentioned, to the effect that we need not store at one time all our domestic
requirements for human food and for livestock feed. Also, a given amount
of storage space would represent the annual needs for a larger or smaller
number of people, dependent on the types of food stored and their degree
of concentration; the contrast in feeding power per cubic foot of food is
tremendous between products like fats, grains, and dehydrated products
compared with products like fresh fruits and vegêtables.
Taking all these factors into account, it is difficult to find any great
amount of usable space unless we find some way to make greater use of
farm, home, and open-air storage, or unless we construct additional storage
space. Home storage is discouraged by rationing and the public condemnation of hoarding. Greater use of farm storage is difficult to accomplish,
except by vague and indirect methods. Open-air storage has limited usefulness. Construction of additional storage space would use critical materials, and would be expensive in view of the short time it would be needed.
For many foods, loss of quality makes long-time storage prohibitive in
spite of all other considerations

in a period of 2 1/2 months.

Meats and livestock products, which are about one-third of our diet by
volume, are far less seasonal in their production than the crops. But feed
crops must be stored seasonally for the livestock, thus making a large
seasonal storage requirement even for our livestock industries. In fact, the
livestock feed necessary to produce the meat and livestock products we
consume is many times the volume of the products themselves. The storage
space required in 1942-3 for the livestock feed concentrates alone, aside
from the roughage, was over four times as great as for our year's consumption of meats, dairy products, eggs, fish. and animal fats. Feed for livestock
is our big storage need, and will remain so as long as we maintain our heavy
production of livestock and livestock products.

F. A. HARPER

Amount of Excess Storage Space Available

In judging how much storage space we have for food to be supplied to
others than the people in the United States, we must deduct our domestic

needs from our total storage space available. On the surface, it would
appear that we had about 3,000 million cubic feet of excess space (13,353
minus 10,372). or about 20 per cent more storage space than required for
our own needs (table 2). This would seem to be enough to store up the
food needs for about 100 million people for one year, if we fed them the
same quantity as we eat. and if we did not include any storage of feed for
their livestock.

The figure thus arrived at is not a correct one. for practical purposes.
It needs several adjustments The most important is the amount of space
that is not usable Although commercial storages can be quite fully utilized
in case of need, large proportions of our storage space is on farms and in
homes where nothing like full use practicable. Farm and home storages
are highly important and useful for home use and for storage for feed for

the farmer's own livestock, but beyond instance, to store butter

for starving Europeans and Asiatics- might as well be forgotten. As far
as storing food for other countries is concerned, use of our excess storage
capacity is largely restricted to products like grains which could be held on

farms where produced for later sale.
The above comparison overstates the true figure also by the amount of
space needed for non-food items, that must be stored in the space we have
included in this listing Also, much of the cubic space of commercial storages
cannot be used, as products cannot be stored solidly and to the roof

RESULTS OF THE FARM MANAGEMENT SURVEY
ONEIDA COUNTY, 1942-43
A farm management survey of 102 Oneida County farms was
for the 12-month period ended April 30. 1943. The survey was made in
the west central part of the County in the vicinity of Vernon Center.
The general soil type of most of the area is Ontario Loam and the area
is typical of Land Class IV and the better parts of Land Class III.
The area included 202 farms and 18: other residences. Of the 202 farms,

141 were dairy farms selling milk at wholesale in 1942-43. Of the 39
dairy farms not enumerated II were not visited, 8 had had a change of
operator during 1042-43. 8 were run by operators who were primarily
not dairymen, and the remainder were not enumerated for various miscellaneous reasons. More than I farm out of 5 in the area was either parttime or had a very small business. A great many people lived in the area
but worked elsewhere. In fact, nearness to important industrial centers
like Utica and Rome had a pronounced effect on the farming.
The 12 months covered by this survey were part of a period of rapidly
rising prices of farm products and costs of farm operation. Because prices
were rising faster than costs and because of a good crop season, the year
was a favorable one compared with other years in farming, though not so
favorable compared with incomes of industrial workers.
For dairymen included in the survey the average price received for
milk of 3.7 per cent test was $2.89 per 100 pounds, or about 75 per cent
above the 1010-14 level. Purchased dairy rations cost on the average $47
per ton, or 43 per cent above the 1010-14 average Farm wages per month
with board on farms which had such labor averaged $63 per month, or
about 120 per cent above the 1010-14 level. In New York State as a whole
costs in dairy farming including feed, labor, machinery, buildings, fer-

3582

3583

tilizer, taxes, insurance, and the like were about 75 per cent higher than
the 1910-14 level. The average size of herd in the area was 21 cows. The
smallest dairy studied had only 6 COWS and the largest had 75. but nearly
two-thirds had herds of 15 to 40 cows.
The average size of the 102 farms was 129 acres operated per farming
unit. Many of the farms were small. Sixty-two acres of land were used for
crops, 50 for pasture, and 11 acres were in woods. Most of the crop land
was used in growing feed crops; go per cent was in hay, spring grain, and

corn for silage. Crop yields were good. This was partly a result of the
favorable growing season in 1942, and partly a result of the productive
soil. The average yield of hay was 2.2 tons per acre, and of corn silage
11 tons.

Of the 102 farmers, 73 owned all the land which they operated, 26
owned some land and rented additional land, and only 3 rented all of their
land. The 73 full owners had an average of 125 acres per farm. A number of

these included what was formerly 2 or more farm units. One-fourth of

the farm owners in the area enlarged their businesses by renting additional
land in 1942. On the average, these farmers owned 100 acres and rented 40
acres. Most of the additional land was cash rented, and was on small farms
where the house was used as a residence for a man who worked in town.
This enabled the 26 farmers to enlarge their businesses with a relatively
small capital outlay.
The average investment was about $15,000 per farm of which about
one-half was in real estate and one-third in livestock (table 1). Land and
buildings were valued at approximately $65 per acre.
TABLE -FINANCIAL SUMMARY
102 farms, Oneida County. 1942-43
Average of 102 farms
$15,390

All other

$4.183

that period.

In addition to labor income these farmers had a house in which to live
and farm products furnished by the farm. The average value of these
items was $536 at farm prices. This amount added to the labor income
made average labor earnings of $1,766.
L. C. CUNNINGHAM AND S. W. WARREN

THE MILK SUPPLY FOR THE SYRACUSE MARKET
About 1,000 dairymen supplied the Syracuse market in 1943 From
the center of the city to the outer borders of the milkshed, the maximum
distance was about 45 miles. A larger part of the production area was west
of Syracuse than to the east. Within and adjacent to the production area

were many country milk plants supplying the New York City market. a
few cheese factories. and numerous small local milk plants, all of which
compete with plants approved for the Syracuse market.
Distributors in Syracuse reported the pounds of milk delivered by eac
patron on January 5. 1943. and January 5. 1944. and the hauling methods
and rates. Changes in patrons between the two dates were ascertained,
including where new patrons had been obtained or where former ones

had gone. Milk from each farm was traced, regardless of changes in
operators.

1.060

Total

Numerous surveys during the twenties indicated that dairy farmers in

New York made labor incomes that averaged between $500 and $600 in

TABLE -SUPPLY OF MILK FOR THE SYRACUSE MARKET ON JANUARY s. 1943

6.140

AND 1944

Expenses

Purchased grain

Hired labor and board
Unpaid family labor

976
502

Livestock bought

610

Machinery and equipment

675

other

Total
FARM INCOME

Interest on average capital at 5 per cent
LABOR INCOME

Farm privileges
LABOR EARNINGS

Group of producers

404

January 1943

022

Stayed with same dealer throughout following year*
4.149
2,000
770

1,230
530

Number of

Pounds

producers

of milk

238,890

864

Stayed in Syracuse market but delivering to different dealer a
year

later*

Not producing milk for sale year later
Delivering to country plant year later
Delivering to local retail plant year later
Delivering to cheese factory year later

1,206

All groups

12,349
18,500

5.650

Total receipts averaged about $6.1 per arm-reflecting the high price

level of the period under study. Milk sales of $4,183 accounted for 68 per
cent of the total receipts. Crop sales were $3Gp, or 6 per cent and eggs and
poultry contributed 4 per cent of the total. Income from work off the farm,
including man labor, machine work, and trucking accounted for 2 per cent
of the total receipts. However, only farms whose operators were primarily
farmers were enumerated in the survey.

year

earlier

Not producing milk for sale year earlier
Delivering to country plant year earlier
Delivering to local retail plant year earlier

864

224.740

100

13.440

0.720
6.290
1.030

Delivering to cheese factory a year earlier
All groups

200

276,740

Stayed in Svracuse market but delivering to different dealer a

1,100

1,020

January 1042

Stayed with same dealer throughout preceding year*

Per cent Per cent
of produc- of supply
ers

Milk sold

the highest level of income in this area since at least World War I. A similar
survey of representative groups of dairy farms in five widely scattered
areas of the state showed an average labor income of about $430 in 1939-40

Total capital
Receipts

one-half of the expenses.
The average labor income amounted to $1,230. This probably represents

Items

The total expenses, including all the ordinary items of farm operation
but excluding any interest charges and any charges for the farmer's own
time, amounted to $4,149 per farm. Purchased grain and hired and family
labor each amounted to about $1,000 per farm and accounted for nearly

949

991

253,100

100

*The pasteurizing plant of Pendell Dairy was closed during the year following January 5. 1943. and
their operations cons olidated with Netherland Dairy. In this tabulation the two buyers were considered
single dealer.

L Less than one per cent.

3584

Eighty-five per cent of the dairymen delivering milk on January 5. 1943.
were delivering to the same city plant a year later (table 1). Another four

per cent of the producers had shifted to a different distributor in this

market. Producers changing from one dealer to another had the larger
dairies and during the year increased their deliveries by 9 per cent. Apparently dairymen with larger-than-average and expanding production
were inclined to look for a better market.
Eleven per cent of the dairymen supplying the Syracuse market on
January 5. 1943, were out of production or delivering milk to other markets
a year later. Of the 117 producers in this group, 95 were no longer producing milk for sale. This loss was partly offset by 88 new producers; one-half
had not been producing milk for sale a year earlier and one-half transferred

from other plants. The net decline in number of producers amounted to
3 per cent.

Deliveries of milk declined 9 per cent between January 5, 1943, and
January 5. 1944. The decrease was greater for small dairies than large
ones; 18 per cent for dairies with average deliveries of less than 200 pounds
and 4 per cent for dairies with average deliveries of 500 pounds or more.
Most of the difference was due to more small dairies going out of production.

Eighty-eight per cent of the dairymen supplying the Syracuse market
in January 1944 hired their milk hauled (table 2). The average hauling
rate increased about one per cent per 100 pounds during the year, from
19.1 cents to 20.0 cents. Syracuse rates are about five cents higher than

rates charged for hauling to plants approved for the New York City
market and five cents lower than rates charged in the Rochester market.
TABLE 2 -HAULING RATES FROM
FARMS TO CITY PLANTS IN THE SYRACUSE MARKET.
JANUARY 1943 AND JANUARY 1944
Number of producers Per cent of producers
1943

1944

1944
2

.
4
so

517

6
o

1,020

PNocharge--exchanged hauling

120

130

Total

111

66
25

Hired hauling rate not reported
No charge hauled own

506

221/2

1
17

173

125

225

1943

in centst

Rate per 100 pounds

100

001

100

*Less than one per cent.

Does not include 3 per cent federal tax, which was charged in addition.

STEWART JOHNSON

THE WHITE HOUSE

207-D

WASHINGTON

May 23, 1944.
MEMORANDUM FOR

THE SECRETARY OF THE TREASURY

Please read the enclosed

and return for my files.
Can you do anything to

get good old Bill Myers to help
us?

F. D. R.

OFFICE OF THE VICE PRESIDENT
WASHINGTON
THE WHITE HOUSE

May 19, 1944

Mar 20 9 OU AH
RECEIVED

The President
The White House

Dear Mr. President:

Our old friend Bill Myers doesn't seem to

be helping us on the subsidy fight. In this con-

nection the enclosed letter from a Farmers' Union

friend is very interesting. It is my observation

that some of the larger businessmen are using the
subsidy fight as a most effective method of keeping
agriculture and labor divided.
Respectfully yours,

Hawallace
H. A. Wallace

District to be factory

Ignor Earnett

Ann

RECEIVED

NATIONAL UNION FARMER

MAY

161944

OFFICIAL PAPER OF FARMERS' EDUCATIONAL AND
CO-OPERATIVE UNION OF AMERICA
OFFICE OF THE EDITOR

PRESIDE
ADDRESS

ALL

3501 E 46TH AVE
DENVER. COLO

May 12, 1944

The Honorable Henry A. Vallace
Vice-President
Washington, D. C.

Dear Mr. Vice-President:
Ringling Brothers has a clown whose most up

roarious trick is to kick himself in the face.

Inclosed please find one of 25 copies of a
pamphlet I have just received under the penalty
privilege from the Extension Service in New York
State.

Please note the marked passages on the front

and back pages.

Sincerely yours,

BENTON J. STONG Editor
NATIONAL UNION FARMER
BJS:dak

Inclosure: 1.

P. S. You will recall that this is the federally
supported agency which took over the job of anti-

inflation education at the beginning of the stabili-

zation program.

207- G

FARM ECONOMICS
Department of Agricultural Economics
NEW YORK STATE COLLEGE OF AGRICULTURE

CORNELL UNIVERSITY, ITHACA, N.Y.
Published and distributed in furtherance of the purposes provided for in the

Act of Congress of May 8. 1914. L. R. Simons, Director of Extension Service

FEBRUARY

No. 139

1944

United States food
Prices
Year

Farm prices

40 basic

1915

United
States

Farm
prices

com-

New

modities

York

106

114

118

120

Retail
prices*

107

Costs

distri-

bution
106

Prices

Costs

Cost

articles
farmers

dairy
farm-

buy*

ing?

107

living

Earnings
factory
workers'

104

102

104

II2

116

117

IOG

125

116

182

156

127

148

141

128

I32

202

201

180

158

173

161

163

104

213

214

194

I73

198

178

174

190

211

212

207

203

202

201

204

227

192

168

170

178

234

141

I20

105

I32

176

136

187

I39

196
204

1916

132

1917

197

169

175

1918

213

186

1919

218

206

1920

243

217

1926

150

I59

145

I54

1933

174
106

1934

101

122

158

129

114

1935

II2

102

108

100

143

175

120

1936

118

113

114

116

146

173

130
128

124

140

131

115

121

124

152

181

134

136

145

221

139

174

127

129

143

211

1937
1938

Aug.

100

101

103

132

168

123

124

140

222

110

101

135

171

127

141

220

128

142

228

1940

116

107

101

136

167

125
126

1941

136

123

122

124

148

167

133

144

149

267

1942

156

152

I57

171

179

151

172

165

323

192

188

186

1939

1943

Nov.

Dec.
Jan.
Feb.

376

163

157

164

169

167

173

180

160

162

178

169

174

188

156

191

I70

349

163

172

182

176

181

186

I57

194

171

354

164

174

178

180

185

186

I59

195

171

362

167

183

182

185

192

189

160

201

174

371

202

155

180

169

343

Mar.
Apr.
May

167

193

185

189

194

187

162

176

375

167

206

187

193

197

182

163

205

177

373

June

167

218

190

194

IQI

170

164

207

177

376

July

167

201

188

191

181

154

165

207

175

371

Aug.
Sept.
Oct.
Nov.
Dec.

168

185

193

188

179

151

165

206

175

379

169*

186

193

186

178

166

165

200

175

382

169*
168*

200

192

187

178

170

166

212

176

388

204

192

186

175*

167*

167

213

176

393

197

186

168

389

Index numbers on pre-World-War-I base. Footnotes on page 3529-30. *Preliminary.
Footnotes to standing tables

Warren. G. F., and Pearson, F. A., World Prices and the Building Industry, p. 21. 1937: and Farm

Economics, No. 108, p. 2621. June 1938, and later issues. Prices of hemp and silk have not been available

since February and April 1042. respectively.

3531

3530

LOOKING BACK AT 1943 AND AHEAD AT 1944 IN
NEW YORK AGRICULTURE
The year 1943 will long be remembered by New York farmers as one of
unparalleled difficulties in farm production. Continuous wet weather greatly
delayed the planting of spring crops and interfered with the spraying of
fruit and other farm work. The inevitable result was reduced acreage and
production of canning factory peas, oats, barley, corn, onions and cabbage.
In spite of unfavorable weather, shortages of machinery and supplies, with

less labor available and much of that inexperienced, New York farm
families turned in another magnificent performance in food production.

They increased the length of their already long working day to the physical
limit and produced the maximum of food permitted by weather and other
physical conditions. The production of New York crops was 15 per cent
below the all-time record of 1942. Since livestock production did not decline, the total food production of the State was only 6 per cent below the

all-time record of 1942.
For the United States as a whole weather conditions were more favorable.
Last year was the seventh consecutive year of unusually large crops. While
the total production of United States food crops was 9 per cent below the

all-time record of 1942, it was equal to the high level of 1941. Total food
production exceeded the previous record of 1942 because of the increased
output of meat which was produced in large part on 1942 crops.
During the past 30 years the number of New York farms has declined
from almost 220,000 to about 150,000, and the number of persons engaged

in agriculture from almost 380,000 to a little over 200,000. In spite of this
decrease in the labor force the total production of New York farms has
been maintained by the use of labor-saving machinery and has resulted in
an increase in labor efficiency of about 75 per cent.
During 1943, the labor situation on New York farms has become acute
because of the competition of nearby war industries and the demands of the
armed services. Labor will continue to be the number one headache of New

York farmers in 1944 The most critical problem will be that of obtaining
skilled men for year-round work on farms. More young men will be called
for the armed services not only from farms but also from small town industries on which farmers are dependent for feed, supplies, machinery repairs and other services. This will inevitably throw an even greater burden
on family labor and especially on farm women.
The harvesting of 1943 crops was accomplished with relatively small loss
because of the splendid teamwork of many agencies which cooperated in
the New York farm labor program. The patriotic response of the high

the
of
Noof
42.the
p.

Calculated from prices paid to producers as published by the United States Department.of Agriculture
Includes subsidies since October 1943. The indexes without subsidies are: October, 194: November, 198;
December,

year

191

1943

190.

Crops and Markets. 11. 375. September 1934 and later numbers.

*Prices paid to farmers for food materials and prices of the same food materials at retail. Farm prices as

reported Bureau by abor Statistics United States For Department methods calculation,see Agriculture and Farm retail prices as reported by 611 February United States 1927
omics,

No.

830

1038

*Index Numbers of Prices, Taxes, and Interest Payable by Parmers, 1910-14 100 mimeographed
May 1937.
report. United States Department of Agriculture, Bureau of Agricultural
Page 3321 Revised in 1943.

*Page

3090

*Based on data furnished by the Department Labor of New York

paid to producers for farm products in the United States and in New York are those reported by

the United States Department
Agriculture
prices
in New
NewYork
YorkFarm
which
are based on
Economics,
Milk
Prices
Series
Revised

revised

series

Spencer.

for

No.

111.

3707-3700 February 1939: and of butter in New York City which are based on creamery extra butter: and
eggs in New York City, which are based on revised series of the highest prices of the best large nearby
white eggs. Van Wagenen A., Prices for Nearby White Eggs at New York City, Farm Economics, No. 122,
p. jose, January 1941.

As a natural result the number of hogs being marketed exceeds the capacity

of the stockyards while the production of milk is declining relative to
last year.

Storage stocks of feed grains at Buffalo are about average for this season

of the year. Normally, these stocks only supplement the continuous flow
of corn by rail from the midwest throughout the winter and by themselves
would not provide more than half of the feed grain required to carry our
livestock until the pasture season. The flow of corn, however, has been
practically blocked by artificial price relationships. The relatively high
government-guaranteed floor price of hogs and the relatively low government ceiling price on corn have made it impractical for mid-western farmers
to sell their corn to eastern markets where it is required for milk and egg
production. An adequate and steady flow of corn must be reestablished if
the supply of fresh milk for consumers is to be protected. The critical feed
months: for New York dairymen will probably be March and April of this year.
Although the ceiling price has prevented New York farmers from getting

Cost of bling, rting, proc cessing. and distributing food. For methods of calculation see

school boys and girls, of thousands of men and women from towns and
cities to the call for help to harvest vegetable and fruit crops was an inspiring example of community cooperation in a time of great need. This
problem, too, will be more difficult next year and even greater efforts will
be required to save the food crops that farmers will produce.
The only substitute for unavailable labor is the greater use of laborsaving machinery. If present programs materialize into actual machines at
the time they are needed. the supply will be greater than in 1943. However,
even at best, there will be only about one-half of the number of the most
important labor-saving machines needed by New York farmers and the
present stock of machinery on farms will continue to deteriorate. Adequate
supplies of repair parts and the farm machinery repair program, supported
by the State War Council, will be of even greater importance in keeping
farm machinery rolling in 1944.
Feed will be a major problem of New York dairymen in 1944 Farmers
have good stocks of hay from last year's excellent crop which should carry
their livestock until the pasture season. However, there is a severe shortage of homegrown grains because of the near failure of the oats and barley
crops and many farmers are having difficulty in obtaining adequate supplies
of mixed feeds of proper quality for their cows and hens.
Under the stimulus of the government program, livestock production
has outrun feed supplies. The facts have been clearly evident for months
However, livestock numbers, especially hogs in the Corn Belt, are continuing to expand in spite of inadequate total feed supplies, because ceiling
prices on feeds have prevented feed prices from checking the expansion of
livestock at a point where all the animals could be fed.
Although the present demand for meat and other livestock products is
almost unlimited, the total production of these foods is determined by the
total available feed supplies. The amount of each will depend on existing
price relationships. The prices of hogs have been more favorable in relation to feed than those of milk and eggs throughout the present war period.

pp.

their usual supplies of corn, it has not held the line on the cost of dairy
and poultry feeds. Farmers have had to pay about $15 more per ton for
oats and barley than the ceiling price on non-available corn in order to
attempt to maintain essential milk and egg production.
(Continued on page 3536)

3532

3533

UNITED STATES

UNITED STATES
PRICES PAID TO PRODUCERS FOR FARM PRODUCTS

PRICES PAID TO PRODUCERS FOR FARM PRODUCTS

Apples Horses Chick Eggs Butter Milk Beef Veal Sheep Lambs Wool Hogs

Corn Oats Wheat Barley Rye Buck. Flax Beans Cot- Hay Pota-

head

dos.

August

60.2

INDEX NUMBERS (CORRESPONDING MONTHS, IQIO-14 100)

INDEX NUMBERS (CORRESPONDING MONTHS, 1010-14 100)
Corn

Oats Wheat Barley

Rye

Buck-

Flax

Beans

Cot-

Hay

Pota

Apples Horses Chick Eggs Butter Milk Sheep Lamba Wool Hogs

Sweet

August

3535

3534

NEW YORK

PRICES PAID TO PRODUCERS FOR FARM PRODUCTS

Butter

Eggs

Corn Oats Wheat Barley Buck-

Beans

Hay

Pota-

Apples

Horses

Butter.

Milk

Veal

Beef

Sheep Lambs Wool

cattle

Hogs

cwt.

bu.

INDEX NUMBERS (CORRESPONDING MONTHS, 1910-14 100)
INDEX NUMBERS (CORRESPONDING MONTHS, 1010-14 100)
Corn

Oats Wheat Barley Buck. Beans

Chick

Hay Pota. Apples Horses Hogs
toes

120

Includes subsidy

Eggs

Butter

Milk

Veal

Beef

Sheep

Lambs Wool

3536

(Continued from page 3531)

New York egg production in 1943 was the highest in history and 8 per
cent above 1942. Total milk production was about 7.7 billion pounds, a
little less than 4 per cent below the record production of 1942. Compared
with the corresponding month of 1942, New York milk production has
been declining for several months and in November was more than 8 per
cent below the same month in 1942. The outlook is for a decline in milk
and egg production in 1944 relative to last year.
The maintenance of the fresh milk supply is a vital problem in the health
and welfare of the thirteen million consumers who depend on New York

dairymen. There are two primary requisites for the protection of milk
supplies. The first is an adequate supply of feed of proper quality. The
second is a price for milk that will enable dairy farmers to retain necessary
labor against industrial competition and to encourage intensive feeding of
good cows.

Farm wages have increased rapidly in the present war in order to compete with industry for necessary labor and will probably rise further in
1944 Farm prices started at depression levels in 1939 but have kept pace
with farm costs thus far and will probably continue to do so this year.
One of the most unfortunate results of the present war situation has been

the public criticism of food prices due to lack of understanding of farm
problems. The principal cause of this misunderstanding is the failure to
realize that the pre-war period 1935-39 is an unfair base from which to
figure relative wartime increases in farm prices and in industrial wages.
In spite of considerable employment the hourly earnings of employed industrial workers in 1935-39 were the highest in history up to that time and
well above the levels of the boom year 1929. In striking contrast farm
prices were still at depression levels and about 25 per cent below 1929.
With average yields, the present levels of farm prices will result in farm
incomes which are below the earnings of industrial war workers but are
favorable in comparison with farm incomes during the past twenty years.
From the standpoint of long-time agricultural welfare, any further marked
increase in the general level of farm prices not necessary to meet higher
costs is undesirable because it would increase the danger of inflation of
land values. In wartime the vital problem is not the level of prices farmers
want; it is the level that should be established in the real interest of the
nation in order to permit farmers to retain labor against industrial competition, to meet rising costs and to maintain maximum production permitted by weather. While the general level of farm prices is satisfactory,
the prices of some essential foods are too low to insure the required production in the face of rising costs.

In spite of shortages and handicaps, New York farm families will do
their utmost in food production during 1944 as their vital part in the

nation's fight for freedom. The need will be greater while the total production of food is likely to be less than last year. I suggest a four-point program
for New York farmers in 1944
I. Produce the maximum of essential food by operating your farm intensively. These are the times when good farm practices and good farm
management pay.

2. Get your debts in shape by reducing excessive debts to a safe basis.
Money borrowed for working capital should be paid off when the crops are
sold.

3537

3. Avoid speculation in farm land. Don't go heavily into debt expecting
to pay it off on the basis of present prices.
4. Build your financial reserves and help finance the war by investing in
war bonds to the limit of your available net income.
Your financial welfare in the next two decades depends to a great extent
on the wise use of your higher farm incomes in the present war period.
The most effective way of avoiding the disastrous results of inflation and
deflation is through using your increased income to get your debts in
shape and to build a financial reserve in War Bonds.
W. I. MYERS

APPLE PRICES AND PRICING OF APPLES BY GOVERNMENT
The fruit growers in Western New York sell many varieties of apples.
Each variety is usually sorted into a number of grades. The grades are a
result of differences in color, maturity, soundness, shape, and size of the
apples.

The 1042 apple crop produced on forty-five farms in Niagara County
included fifty-six varieties. This crop was sorted into eleven different sizes
and sixteen different grades. The possible number of variety-grade-size
combinations is therefore large. To market that part of the 1942 crop sold
for fresh fruit consumption, the Newfane growers sold two hundred ninetyeight different variety-grade-size combinations
The average prices received for the more important combinations are
given in table I. These prices were net to the grower and did not include
the cost of package, storage, freight, or commission. The highest average
return for the eleven years was for No. I, 2 1/2 inch Delicious. This was true,
however, in only six of the eleven years. No. I, 2 1/2 inch Delicious has
usually sold from 20 to 50 cents higher than No. I, 3 inch R.I. Greening.
In 1934, however, they each returned an average of $1.08 per bushel.
No. I, 2 1/2 inch Northern Spy sold for more than No. I, 2 1/2 inch Delicious
in 1939 and 1941, but only half as much in 1934 Perhaps the greatest surprise was when the 1942 crop of No. I, 2 1/2 inch Baldwin returned $1.8: per
bushel or 8 cents more than No. I. 2 1/2 inch Delicious In 1937. No. I,
21/2 inch Baldwin averaged only 20 cents per bushel compared with 61
cents for No. I, 2 1/2 inch Delicious. For a majority of the combinations
given in table I, prices were the lowest in 1937 and the highest in 1942
The increase in prices for the various combinations in 1942 over 1937
was extremely variable, ranging from an increase of IO to 1,000 per cent.
Such variations indicate that prices for some of the variety-grade-size

combinations were determined quite independently of each other. In

wholesale markets, apples are not sold as apples, but as Baldwin, Greening,
or McIntosh of a given grade and size.
O.P.A. PRICE CEILINGS

Varieties and grades were not considered by the O.P.A. in establishing
price ceilings for apples. To put a ceiling on each variety-grade-size combination would be impractical if not impossible. The ceilings are on a perpound-of-fruit basis and vary only as to region, season, and type of sale.

If effective, such a ceiling lowers the price of high-quality apples. All

apples tend to sell at the same price under such ceilings. The growers of
high-quality apples are penalized; the growers of inferior fruit rewarded.
Effective ceiling prices tend to encourage the production of low-quality
fruit and to discourage the sorting of better apples into a high-quality pack.

3539
3538

TABLE PER CENT OF MARKET APPLES PURCHASED BY FEDERAL SURPLUS
COMMODITY CORPORATION. NEWFANE NIAGARA COUNTY NEW YORK

TABLE -NET RETURNS PER BUSHEL OF APPLES BY VARIETY. GRADE AND
SIZE. NEWFANE NIAGARA COUNTY. NEW YORK

Combinations* selling at

All

Season

High prices Average prices Low prices market apples

Combination: that sold at high prices
No. 1-21/2

N. Sev

No. 1-23

Baldwin
No. 1-21/2

R. I. Greening MeIntosh
No. 1-3"
$0.54

$0.76

$0.00

$0.77

$0.64

$0.44

1.10

0.03

0.00

0.81

0.92

0.80

1.08

1.07

0.57

0.91

1.08

0.02

0.86

0.07

0.50

0.71

0.00

1.58

1.13

1.20

1.27
0.20

1.05

1.00

0.39

0.48

0.61

0-24

1.12

0.84

0.80

0.76

0.55

0.71

1939-40
1940-41
1941-42
1942-43

0.00
0.82

0.57

1.12

0.54

0.63

0.81

0.65

0.63

1.25

1.08

1.30

1.24

1.10

0.35
0.49
0.00

1.74

1.31

1.43

1.82

1.14

1.17

Average

1.11

0.88

0.85

0.80

1932-33
1011-34
1934-35
1935-30
1936-37
1937-38
1935-39

1939-40
1940-41
1941-42
1942-43

Average

Cortland
No. 1-23/2

Jonathan

T. King

R.I. Greening

Wealthy

No. 1-236

No.1-23/6

No. 1-21/2

No 1-21/2

0.44

0.30

0.37

0.83

0.04
0.80

0.84

0.50
0.70

0.62

0.01

0.80

0.73

0.02

0.45

0.62

0.52

0.51

0.52

0.44

1.10

1.08

0.03

0.01

0.82

0.39

0.20

0.40

0.32

0.41

0.35

0.66

0.70

0.66

0.50

0.59

0.45

0.50
0.00

0.48

0.54

0.46

0.43

0.40

0.00

0.59

0.42
0.63

0.53

0.95

0.54

0.87

0.86

0.85

0.48

1.07

1.05

0.00

0.95

1.04

0.79

0.73

0.6g

0.68

0.65

0.00

0.57

16
14

However, the 1937 crop was large and sold for extremely low prices. The

Wealthy

0.50

0.01

government bought a few apples in the fall; more in the winter, but a
majority of their purchases were made in the spring. About all of the
Greenings and Wealthies and one-third of the Baldwins, that were in
storage March 1st, were later sold to the government. For these apples
the government paid a net of 22 cents per bushel. This was 7 cents more
per bushel than the growers received for apples of like variety, grade, and

No. 1-256

0.81

14
21

On the basis of the season's price the variety-grade-size combinations were classified as selling at high.

0.74

0.88

average, or low prices.

Combinations that sold at average prices
Season

Average

0.42

1038-30

0.74

1935-30
1937-38
1939-49
1949-41
1941-42

No. 1-216

McIntosh

No. 1-21/2

1033-33
1933-34
1934-35
1035-30
1930-37
1937-38

Red Delicious

Season

size sold during the spring to other buyers.
The 1938 crop sold at higher prices and the government made no purchases.

In the next season, 1939-40, the government bought the most apples, but
paid about one-fifth less than other buyers. Prices paid by the government
and other buyers were compared when apples of like variety, grade, and
size were purchased during the same season of the year. Even at these

lower prices, the government bought large quantities of apples. Their
Combinations that sold at low trices
Season

1032-33
1933-34
1934-35
1935-30
1036-30
1937-38
1038-30
1039-40

MeIntosh
Utility
0.44

Wealthy
No.

Baldwin

Duchess

Wealthy

R.I.

Utility

All grades

Utility

Greening

0.30

0.25

0.84

0.55

0.40

0.82

0.40

0.55

0.24

Utility

0.27

0.23

0.45

0.30

0.45

0.57

0.44

0.18

0.29

0.38

0.39

0.04

0.70

0.53

0.10

0.37

0.07

0.30

0.53
0.28

0.21

0.30

0.48

0.20

0.33

0.30
0.72

0.27

0.11

1940-41

0.24

0.30

0.34

0.35

0.24
0.20

0.47

0.49

0.44

0.33

0.18

0.36

0.53

0.85

0.74

0.43

0.52

0.50

Average

0.46

0.42

0.37

0.35

0.25

0.22

spring. The government purchased twenty-one different varieties and fifty-

two different variety-grade-size combinations For two-thirds of these

comparisons, the government prices were the lower.

0.51

1941-42
1042-43

0.11

purchases amounted to 16 per cent of the apples that these farmers sold in

the fall and more than 30 per cent of those sold during the winter and

GOVERNMENT PURCHASES

During the latter years of the recent depression, the government followed
a program of buying apples from farmers and giving them to their welfare
clients. The government's first purchases from the farmers in the Newfane
area in Niagara County were made in the spring of 1936. On March 1st of

that year, the Newfane growers still had a third of their McIntosh. Most
of their 2 inch and 2 1/4 inch packs were still in storage. If the government
had not come to the rescue, some of these apples would probably have remained unsold and would have been dumped. The government bought a
majority of these small apples. From the government purchases the grower
received, after paying for storage and container, 35 cents per bushel for
the No. I, 2 1/4 inch McIntosh and 26 cents for No. I, 2 inch.

The 1936 apple crop sold at unusually high prices and therefore the
government did not buy apples in the Newfane area.

TABLE NET RETURNS PER BUSHEL OF APPLES PURCHASED BY GOVERNMENT
AND OTHERS ACCORDING TO QUALITY, NEWPANE NIAGARA COUNTY NEW YORK
Increase in price

Combinations selling at
Season

High

Average

Low

High above

prices

average

Average
above low

Net prices paid by the government
1035-30
1037-38
1939-40
1940-41
1941-42

$0.47

$0.36

$0.97

$0.11

$0.00

0.28

0.31

0.10

-0.03

0.13

0.52

0.40

0.34

0.12

0.00

0.50

0.43

0.77

0.07

0.45

Average

0.07
0.10

0.04

0.08

0.33
0.24

0.22

0.17

0.13

0.15
0.22

0.03

A.37

Net prices paid by others
1935-30
1937-38

0.72

0.50

0.52

0.39

1939-40

0.66

0.23

0.21

1940-41

0.87

0.45
0.62

0.33

0.25

0.20

1941-42

1.00

0.80

0.40

0.20

0.40

Average

0.77

0.31

0.22

0.35

1036-37

1.21

0.94

0.64

0.37

0.30

1038-39
1942-43

0.8c

0.58

0.36

0.37

0.22

1.56

1.02

0.58

0.54

0.44

0.85

0.53

0.36

0.32

0.55

Net prices is other years

Average

1.21

3540

3541

The next year apple prices were higher and the government's purchases
in the Newfane area were decreased by about one-half of what they were
the year before. The government purchased 29 per cent of the Cortland
crop, 26 per cent of the Baldwins and Tompkins King, but only 9 per cent
of the McIntosh
In 1941 the government's purchases in the Newfane area were largely
apples salvaged after the terrific windstorm of September 25th. Ninetytwo per cent of their purchases were made in the fall. For these dropped
apples, the government paid much better prices than did other buyers.

QUALITY OF THE APPLE CROP

The premium paid for high-quality apples does not seem excessive in

view of the small proportion of high-quality fruit. Only about one-fifth
of the packable apples produced by the Newfane growers during the past
eleven years have been of such variety-grade-size combinations as to sell
at relatively high prices (table 5).
A majority of the packable Baldwin apples have been sold either as of a
grade lower than No. 1 or the minimum size has been smaller than 2 1/2
inches. For about one-half of the years, the No. I, 2 1/2 inch Baldwins have
sold relatively high. Not including ciders, about one-fourth of the Baldwin
crop was classified as selling at high prices.

TABLE COMPARISON OF RETURNS FROM APPLES PURCHASED BY GOVERNMENT
AND OTHER WHOLESALE BUYERS NEWFANE NIAGARA COUNTY. NEW YORK
Net returns per bushel
Government

Others

TABLE QUALITY OF APPLES SOLD FOR FRESH FRUIT CONSUMPTION AND FOR

Combinations selling of high prices
1935-36
1937-38

$0.47

$0.68

0.28

0.32

1939-40

0.52

0.73

0.77

1.02

0.51

0.09

PROCESSING, BY VARIETIES NIAGARA COUNTY, NEW YORK 1932-1942
Per cent of bushels sold

1940-41

1941-42

At wholesale. grade-size combinations

Variety

annual
prices

Combinations selling of aterage prices
1015-30
1937-38

1039-40

0.30

0.42

0.31

0.32

0.40
0.50

0.40

1940-41

1941-42

0.07

0.04

0.45

0.47

Total average

Red Delicious

0.51

1940-41

5
o

1941-42

Total average

0.27

Norman
Northern Spy

0.07

Baldwin

0.00

Wealthy

Low

prices

For

retail

processing

Total

100

100
59

100

100
18

100
32

24
35

Russet

100
#7

100

0.61

100

0.57

100

0.57

0.52

0.19

0.00

Wolf River

0.42

0.44

Duchess

0.37

0.43

0.40

0.03

0.37

0.31

apples

0.02

423,000

100
100

30
41

861,826

100

0.34

Total bushels
40

High

Average

0.01

l'ompkins King
Greening

0.26

$0.00
0.70
0.00

Jonathan

Combinations selling of low prices
1015-30
1937-38
1939-40

that sold at

Average of

Total average

613,823

100

Government

Others

higher prices paid by

Season

Number of comparisons showing

36,830

151,000

2,086,584

*A comparison was made for all the apples of like variety. grade. and size sold during the same season

of the year.

A review of the purchases in the Newfane area by the Federal Surplus
Commodity Corporation indicates that the government tended to narrow
the spread in price between apples of varying quality, raising the price of
those in relatively poor demand and lowering the price of those in high
demand. Since they were giving the apples away, there was not the incentive to differentiate between varieties and grades that there would have
been if they were buying them to eat themselves, or to resell at a profit
s.other buyers had to do. Besides, the government was in the market for
apples because of the appeals for help from farmers and their organizations.
The government was in the welfare business in buying as well as in distributing apples. The neediest growers were those who had made the most
serious mistakes: such as producing varieties for which there was little
demand, spraying too little or not at the right time, adding storage and
packing costs to apples too small to sell, or holding until spring varieties of
short storage life. Therefore, the government's goal in buying apples was to
distribute the government's money to the growers most in need. In the
long run, it must be so spent as to meet the approval of the voters. The
goal of the private buyer was to make a profit. To continue in business, he
has had to meet the competition of all others dealing in apples.

Only 4 per cent of the Greenings were thus classified These were of No.
I grade, minimum size, 3 inches. The No. I, 2 1/2 inch Greenings have sold
at average prices.
The price of No. I, 2 1/2 inch McIntosh represents about the usual price

obtained for apples of high quality. In some years, McIntosh of a lower
grade than No. I or of smaller size than 2 1/2 inch have brought high prices.
In all, 59 per cent of the packable McIntosh were classified as selling high.

The quality of New York apples has been greatly improved thru the increased production of McIntosh.
An apple that inherits poor quality is of second grade even if perfectly

grown. A majority of the varieties listed in table 5 were of such quality
that less than 10 per cent of the packable apples were sold at high prices.
Adjustments in production to price come slowly because of the length of
life and years required to grow the apple tree. In the long run, price,
whether set by the government or by the consumer, determines the production of the different variety-grade-size combinations.
G. P. SCOVILLE

3542

3543

COSTS AND RETURNS IN PRODUCING MILK IN
FOUR AREAS OF NEW YORK, 1942-43
In the 12-month period ended April 30, 1943, the average net cost of
producing milk in four areas of New York was $3.00 per hundredweight
(table 1). The net cost amounted to $3.15 in Orange County, $2.80 in
Chenango County, $3.00 in Oneida County, and $3.15 in St. Lawrence
County.

Depreciation on cows averaged 19 cents per 100 pounds of milk. This
item of cost was lowest in St. Lawrence County where unusually good cow
sales were made during the period under study. Hauling milk amounted
to II cents per hundredweight and other items of cost 4 to 6 cents.
The credits for calves and manure averaged 25 cents, which, subtracted
from the gross cost, left a net cost of $3.00 per 100 pounds of 3-7 per cent
milk. The average price received for milk of that test was $2.91.
PRICES AND QUANTITIES

TABLE . COSTS AND RETURNS IN PRODUCING MILK IN 4 AREAS OF NEW YORK
1942-43

Cost per 100 pounds
Items

St. Lawrence

Oneida

Chenango

Orange

Average*
4 areas

Costs

Grain
Hay

Pasture

$0.76

$0.88

$0.79

$0.66

$0.78

0.56

0.33

0.34

0.41

0.38

0.20

0.28

0.32

0.31

0.29

0.14

0.11

0.14

0.12

Total feed
Man labor**

1.64

1.55

0.85

0.80

1.03

1.08

0.08

Depreciation

0.22

0.21

0.10

0.15

0.24
0.16

0.14

0.16

0.15

lauling milk

0.11

0.00

0.12

0.11

Building use

0.00

0.05

0.00

0.05

0.04

0.05

0.04

0.05

0.00

0.07

0.00

0.02

0.05

0.04

0.00

0.04
0.00

0.00

0.07

3.35

3.10

3.21

3.40

3.25

0.10

0.15

0.11

0.15

0.13

0.15

0.10

0.12

0.20

0.30

0.21

0.25

3-15

2.80

3.00

3.15

3.00

3.25

2.01

2.80

2.82

2.91

1.78

ulpment use

bull service
Bedding

Miscellaneous
Total costs

Credits
Calves
Manure

Total credits

Price received for milk***

0.00

TABLE -FEED AND LABOR PRICES PER UNIT AND AMOUNTS PER cow AND
PER 100 POUNDS OF MILK PRODUCED

Average
Orange

Chenango

$43

$45
18

Oneida

$47

St. Lawrence

$47

$51

4-94

4-27

4-71

4.72

4.60

0.34

0.35

0.42

0.30

0.37

2,659

2,777
2.2
2.8

165

Grain lbs.

Pasture days

Man labor hours

2,020

2,164

2.5

2.1

4.7

4.9

158

182
Man labor, hours
A mount per 00 pounds of milk

Hay. lbs.
Silage, lbs

areas

A MONNA per cow

Grain, lbs
Hay. tons
Silage tons
Pasture days

Price

per unit

Cost per 100 pounds
of milk produced

lbs

Hay

125 lbs.

Silage

$65 ton

$1.07

perton

0.58

ton

0.38

2.2 days

Pasture

0.12

0.50 per hr.

hours

Labor

1.30

Other items minus credits

0.47
$3.92

*Approximate requirements as found in the 1042-43 study.

Feed costs averaged $1.55 and man labor nearly $1.00 per 100 pounds
of milk. Feed costs were highest in Orange County where grain feeding was
heaviest, and lowest in Oneida County where pastures and meadows were
the most productive.

Man labor hour

to produce 100

Net year-round cost

**Except milk hauling
**Converted to 3-7 per cent test.

Price per unit
Grain, ton
Hav. ton
Silage ton

Average amounts
Items

pounds of milk*

*Weighted according to total milk production in the regions of the state represented

Items

TABLE 3.-ESTIMATED COST OF PRODUCING MILK IN NEW YORK 1943-44

Grain

0.10

Net cost milk produced

interest cows

1.43

1.51

The average price of concentrates charged to the cows was $47 per ton,
hay $11 per ton, and silage $4.60 per ton (table 2). The average labor rate
was 37 cents per hour. The labor rate was highest in Oneida County, where
competition for farm workers by nearby industries in such cities as Utica
and Rome was particularly keen.
The average consumption per cow was 2,332 pounds of grain, 2.4 tons
of hay, and 4-7 tons of silage. The pasture season averaged 158 days.
Direct labor on cows amounted to 193 hours per cow
Per 100 pounds of milk produced, the average amount of grain required
was 33 pounds, hay 67 pounds, silage 127 pounds, and pasture 2.2 days.
The labor requirement was 2.6 hours.

155

180

2.332
2.5

184

2.4

4-7

An estimate based on probable economic conditions during the 1943-44
feeding season indicates an average year-round cost of producing milk in
New York of approximately $3.90 per hundredweight (table 3). This cost
is based on $65 per ton for a dairy ration, $18 per ton for hay, and $6 per
ton for corn silage. A labor rate of 50 cents per hour was used ($100 per
month for help not boarded plus $25 per month for farm privileges and
250 hours worked per month). The amount of the costs other than feed
and, labor minus the credits was assumed to be the same as found in the
1942-43 study.
A change of $10 in wages per month causes a change of 10.4 cents in the
cost per 100 pounds of milk, thus:
Rate
Cost per 100 pounds
Farm wages per month
of milk
per hour
with privileges
$125

$0.50

$3.92

135

0.54

4.02

145

0.58

4.13

155

0.62

4.23

165

0.66

4-35

158

210

193

ESTIMATED COST OF PRODUCING MILK IN 1943-44

59
80

130

136

130

2.3

2.2

2.5

2.4

2.5

127
2.2

2.2

3-0

2.6

L. C. CUNNINGHAM

3545

3544

FACTORS AFFECTING COSTS AND RETURNS IN

In Orange County, 2.4 cans of milk were sold per day per man, as com-

PRODUCING MILK-LABOR EFFICIENCY

pared with only 1.4 cans in Cayuga County. This measure, though not
sufficiently inclusive to be a good measure of labor efficiency for the entire
farm business in Cayuga and Chenango Counties where enterprises other

Each farmer was asked to estimate what his labor and management
would have cost if hired. The average of these estimates ranged from $54
a month in St. Lawrence and Chenango Counties to $74 in Orange County
(table 1). The wage of help hired by the month was highest in Orange and
Chenango Counties, averaging $45 a month. The average labor rate for
time spent caring for the cows was 24 cents an hour in Orange County,
and somewhat less than this in the other areas.

than the dairy were of relatively greater importance, is a practical indication of labor accomplishment in the dairy. The least amount of labor
per 100 pounds of milk was required in Chenango County, where the rate
of milk production was highest.
Cows PER MAN AND VARIOUS FACTORS

TABLE WAGES AND LABOR EFFICIENCY

Since wages were relatively high as compared with milk prices in this
period, the dairymen who used their labor most efficiently gained a considerable advantage over those who were less efficient in this respect.
As the number of cows cared for per man increased, the number of cows
per farm increased, showing again the close association between labor
efficiency, as measured by cows per man, and size of herd (table 2). The
proportion of farms that used milking machines increased in each area as
more cows were kept per man. Except in Cayuga County, a larger proportion of the farmers with the large herds hauled their own milk. There was a
striking decrease in the number of man hours per cow as the number of
cows per man increased. The rate of milk production was not consistently
associated with the number of cows cared for per man, but tended to be
somewhat below average for the groups with the most cows per man.

Five Areas in New York, 1039-40
Chepango
County

Cayuga
County

$74

$54

$18

$54

$55

$45

$43

$40

$0.24

$0.22

$0.23

$0.22

Cows per man

County

Acres crops per man

237

250

228

247

235

191

179

210

201

170
1.8

2.8

Work units per man
Hours of man labor per cow
Cans of milk sold per man per day

County

2.4

2.0

1.4

2.1

2.7

2.5

3-1

3.0

Hours of labor per 100 pounds of milk
produced

Measured in terms of work units per man, the average labor efficiency
was highest in Chenango and St. Lawrence Counties. Although the large
herds in Orange County were conducive to the efficient use of labor, the
lack of other important enterprises tended to limit the number of work
units accomplished per man. Relatively few cows were cared for per man
in Cayuga County, but this area and St. Lawrence County had the most

TABLE 3 -COWS PER MAN AND COSTS AND RETURNS
Five Areas in New York 1939-40
Cost per 100 Return per
Cows per man

crop acres per man.

Fewer than 10

Five Areas in New York, 1030-49
Per cent of farms
Cows per man
Range

Cows

of farms

per farm

Using

milking

Hauling
own milk

Man
hours

per cow

machines*

Average

Pounds

of milk
produced
per cow

labor

$2.80

$0.16

10 to 12

2.51

0.24

637

12 to 14

2.02

0.20

710

2.33

0.31

1,008

14or more
heneage County
Fewer than &
to 10
10 to 12

2.38

0.07

2.30

0.08

2.00

0.21

145

200
385

1,104

2.31

0.11

461

0.13

449

County

Orange County

Fewer than 10

8
11

268

6,887

Pewer than

2.40

183

6.535

6 to $

2.22

0.11

400

100

0.332

$ to 10

2.34

0.15

400

147

0.523

10 or more

2.17

0.18

601

2.40

0.07

224

2.30

0.10

200

1400 more

milk

Orange County

TABLE -cows PER MAN AND VARIOUS FACTORS

Number

Labor
income

pounds of

Value of operator's time per month
Wages of hired help by the month
Hourly labor rate

St. Lawrence Cattaraugus

County

Orange
Items

Chemongo County
6

10 to 12
more

188

6,424

167

6,850

141

5.020

14
24

6,371

Pewer than 8

228

St Lowrence County
Fewer than .
Sto II
11 to 14

2.03

0.17

502

1.02

0.10

770

Cayaga County
0

6 to

Pewer than 6

8 to

16
37

aSo

238

7.545
7,449

Callarangwa County
Pewer than

0.05

103

2.00

0.17

310

1.87

0.17

CAR

1.80

0.17

527

2.41

197

6,486

150

6,203

14 more

6,300
6.313
6,523

Cows PER MAN AND COSTS AND RETURNS

St Lawrence County
21

"
16

251

231
183

Fewer than 8
8 to

14or more

138

6,022

238

5.777

185

5,823

Callaraugus County
12

Fewer than a

1401 more

101

5,861

117

5.100

to months or more.

'This is the fifth in sea les on this general topic. This summary is based on study of about 110 dairy

farms in each of five areas in New York for the year ending April 30. 1940.

In Orange, St. Lawrence, and Cattaraugus Counties, costs tended to
decrease and returns to increase as more cows were kept per man (table 3).

In Chenango and Cayuga Counties, however, the relationship of labor
efficiency to costs and returns was not as consistent. Even in the specialized
dairy areas there were some irregularities in the relationships, especially
in the intermediate groups. These irregularities were usually the result of

3547

3546

UNITED STATES LEVEL OF LIVING RISES DURING WAR

the greater relative importance of the rate of milk production which, as
previously noted, was not consistently associated with the number of

The economic level of living in the United States, for both food and nonfood items, fails to show any wartime sacrifice (figure 1). In fact, the upward trend, that started from the low point of the depression during the
thirties, has continued. The upward trend for food has been continuous,
without any setback; for non-food, the rise has been irregular. Our participation in the war is not apparent in the trends for either food or non-food

COWS cared for per man. In Chenango and Cayuga Counties another factor
that was of importance in its effect on labor incomes was the greater rela-

tive importance of enterprises other than cows. Especially in Cayuga
County, this factor would appear to explain why the farms with the fewest
COWS per man still had a moderately favorable labor income.

items.

AMOUNT OF MILK SOLD PER MAN AND VARIOUS FACTORS

INDEX

In areas such as these, where dairying is the major enterprise on most
farms, the amount of milk sold per man is a useful and easily understood
measure of accomplishment On the most efficient farms in each area from
two to three times as much milk per man was sold daily as on the least
efficient farms (table 4).

All items

Non-food

Food
110

100

TABLE AMOUNT OF MILK SOLD PER MAN AND VARIOUS FACTORS
Five Areas in New York, 1939-40
Pounds of Cost per

Cans of milk sold per day per man Number

of farms

per

2.7

3-5

1.1

13
31

1.5 2.0

2.5

2.5 more
ayuga County
Less than 1.0

3.1

2.55

0.18

402

7,259

2.20

0.33

1,017

7,216

2.15

0.31

1,477

5.202
6.088

2.72

0.02

120

2.33

0.08

243

6,730

2.06

0.16

160

7.747

1.8g

0.27

1,094

0.10

6.432

2.61

6.446

2.30

0.12

452

7.183

2.20

0.13

350

7,867

1.93

0.30

081

2.75

0.00

1.1

2.0 to 2.5

2.2

2.50 more

3-3

0.0

1.8

1.5

1.8 2.4

2.0
2.8

28
25

4,073

The rise from the low point of the depression of the thirties has been 43 per cent for both food and

non-food items.

222

6,471

2.11

0.12

277

6,587

2.03

0.13

404

7,417

1.8g

0.25

1,010

5,004

2.00

0.02

217

5.514

1.00

0.14

175

5.930

1.83

0.18

$00

0.403

1.09

0.25

814

This added output of milk per man was obtained partly by having larger
herds, and partly by higher yields of milk per cow. As the output of milk
per man increased, costs on these dairy farms decreased rapidly In Cayuga
County the cost of milk production for the farms with the largest output
of milk per man was 70 cents a hundredweight lower. than for the farms
with the smallest output of milk per man. In each of the other areas it
was almost 90 cents lower.

Both measures of returns increased rapidly as more milk was handled
per worker. Returns per hour of labor averaged at least 20 cents an hour
more, and labor incomes from $000 to $1,400 a farm more for the most
efficient groups in each area than for the group with the smallest output
of milk per man. On some farms a relatively large output of milk was obtained per man with a small herd of high-producing cows, but large out-

puts were obtained more frequently with a large herd of moderately
high-producing cows.

FIGURE - CHANGES IN THE LEVEL OF ECONOMIC LIVING, UNITED STATES 1929 to 1943

104

2.3

1937

1929

1997

1929

1937

1929

1039 100

1.7

2.4 more

$0.11

$3.04

1.2

St. Lawrence County

Callaraugus County
Less than 1.2

Labor
income

0.8

1.4

Less than 1.5

of labor

5.660

1-4

Return

per hour

6.483

Chrasego County

Less than 1.5

of milk

80
1.5

2.2

3.0or more

duced

per cow

Average

Orange County
Less than

milk pro- 100 pounds

Range

Cows
farm

IVAN R. BIERLY

Changes in the level of living, as used here, represent changes in the
quantity and quality of goods and services purchased by the average person.
They do not represent changes in dollar expenditures which, in addition,
are affected by price changes.

Since the low points-1935 for food and 1932-4 for non-food itemsthere has been a rise of 43 per cent in the levels of living for both food and
non-food items. Since 1939 when the war broke out, our food living has
risen 20 per cent; our non-food living 14 per cent; and all goods and services 16 per cent.

The entire rise in our level of living, starting in the middle thirties and
continuing at about the same rate up to the present, is probably one of the
most rapid sustained increases we have ever enjoyed. The compound rate
of yearly increase has been 3.85 per cent, compared with a long-time aver'The level of living was calculated from expenditure and price series. or their equivalents. and
If thetheir
dollar

expenditure

for

all

goods

and

service

wholid

rise

per

cent

from

one

year

the

prices

should rise 19 per cent. the increase in the level living-quantity and quality of goods and serviceswould

per

cent

(1.25

1.19

1.05)

The figures used to get the food level of living were taken from The Marketing and Transportation
Situation. Bureau of Agricultural Economics United States Department of Agriculture. issues of April
on

May and September-October
These figures.
turn. the were United
based States data
compiled
Labor by of
the Statistics United
States
Bureau of 1943
Foreign
andin Domestic
Commerce
and
Bureau

The procedure was different from the above description. but the effect was the same. For instance, from
1039 to July 1943 the average person increased his expens fiture for food from $114 $212 (annual rates)

he bought 39 diet the costs would an

or 86 perincent.
Had
1935
$106
and +rose
$104.
increase
prices
of 55
perhave
cent. been
Therefo
his (1.86
level living
20 representing
per cent 1.55).The non-food
items were
based on exper
expen ditures oftheof the
average allwhol
sumer commodities
prices for ofgoods other and than services. farm and less
index
food) (total
for ditures
deflated
expenditures

his

difference in between the two be (1) in

price
the
(a) been an price index indexes of retail changes
food food Preferable Any holesale but and lacking. retail,
results would have
would
prices of of items all difference goods not and included services price and changes other those than be- inanddifferences
tween
in

cluded. Combining of food and non-food levels of living for "all items was based on the proportions of
dollar expenditures for each

3548

3549

age rate of increase of 1.71 per cent. Another difference from the usual
historical pattern is that the rise in food living has equalled that for nonfood. whereas we should expect it to be about half as much in the long-time

So far as food is concerned, our level of living could increase because
farmers' long hours have been combined with favorable weather. For instance, crop weather in 1942 was probably the best on record, and in 1943
was better than we had a right to expect. We have had favorable weather

The current rise in level of living has all been paid for from current
incomes, with much to spare. For the average family the picture is about

every year since 1936.

trend

like this: in 1939, for every $1.00 of income the expenditures for goods and
services were 87 cents; of the other 13 cents, 4 1/2 cents went for taxes and
8 1/2 cents for savings. In the middle of 1943, income was up to $1.99: expenditures for goods and services used $1.26; of the remaining 73 cents,

personal taxes took 21 cents, leaving 52 cents for the various forms of
savings. So, if we had the goods and services available, use of the present
increased savings would allow an increase in the level of living of 56 per
cent above that of 1939, instead of the actual increase of 16 per cent. This
limit of available goods and services makes the 52 cents of left-over money
a constant and serious threat of inflation; anything that increases its size-

subsidies, wage increases, or other-makes inflation that much more

One thing that makes it possible for us to have increased our entire
consumption of all items is that more people are working. In 1939, nine
million men were unemployed. Now unemployment is negligible, and in
addition we have drawn new workers into our labor force so that there are
about 20 million more employed persons than in 1939, an increase of 44
per cent. Also, people are working longer hours and efficiency has increased.
By using up inventories of some important products, we are able to con-

tinue to live well because of the production of earlier years. In part, we
have been living on depreciation by using, without replacement, many
items like houses, cars, highways, and railroads. This has allowed the
people who would have been producing these items for replacement to
shift to some other work.

certain.

The 16-per-cent better civilian living in 1943. as compared with 1939,
is equivalent to $12 billion. If this could have been used for the production
of war goods rather than for the production of better living, it would have

boosted our current war effort by about one-seventh or nearly two
months' war production in a year's time. The money that this better
living costs is about equal to our present personal tax contribution, and
is double the amount of war bonds we bought in 1942.
ARE PRICE INDEXES RELIABLE?

The accuracy of these conclusions naturally depends on the accuracy of
the price and expenditure figures on which they are based. Probably the
price indexes are open to question. Many items, especially those not under
the price controls, are not in the indexes. Quality of products has been cut.
which is the equivalent of a price rise, and not all of those are taken into
account; clothing is an illustration. Black markets and all forms of "shady
deals" are forms of price rise not in the index. Many services have been
reduced or eliminated without any corresponding reduction in price. In
normal times, these errors in the price indexes can, for all practical purposes, be ignored. But in wartime, with price controls and rationing and
with a "sellers' market" the errors become more important and are all in
the direction of understating the amount of rise in prices.
To the extent that prices have risen more than the indexes show, the
amount of rise in the level of living is overstated For example, if food
prices really rose 65 per cent instead of the 55 per cent shown in the index,
the true rise in level of food living would become 13 per cent instead of the
20 per cent.

How COULD OUR LIVING HAVE GONE Up IN WARTIME?

To many persons it seems unlikely that, as a nation, we could have
fought a war and at the same time increased our level of living. As mentioned above, the amount may be overstated because of failure of price
indexes to reflect the full increase in prices. But even after allowing for
that, it appears that there may have been an increase, although we have
no way of being certain
Trend for 1840 0.1933 For details see Warren, G. F., and Pearson, F. A., Gold and Prices, John Wiley
Chapter XVII. 1935.

FORMS OF INCREASED LIVING

Our living has increased in many ways not at first apparent. The illusion
of sacrifice while we are enjoying this grand living spree must be because
certain items of sacrifice unduly impress us.
Our food living has gone up, but not in the form of an increased quantity
of food consumed, if measured by pounds of digestible matter or calories.
The increase has been in the consumption of more of the highly prized
foods and in more of some marketing services. Our consumption of animal
proteins has increased every year since 1935 People are eating two and onehalf times as much in restaurants as they were in 1935-39. These and other
similar changes go to make up the better food living. This concept of better
living is founded entirely on how people have chosen to spend their money,

and is not based on any nutritional or ethical standards
For non-food items, we tend to think that the level of living has declined because we think of shortages of cars, gasoline, refrigerators, and
the like. But the consumption of other less conspicuous items has increased
these include department store sales, railroad and bus travel, hotel occupancy, and amusements of all sorts. Current advertising in magazines
reflects the extent to which high incomes of people have swelled the markets
for all sorts of luxury goods-watches, jewelry, liquor, fancy candies and
fruits, etc.
NOT ALL PEOPLE HAVE SHARED IN THE RISE

From their own experience, many will not believe that the United States
is living so much better. The rise in incomes and in the level of living has
been uneven. Because of increased prices, those who have had no increase
in incomes must have suffered a decline in their level of living by about onefourth. All who have had increases in income of less than 30 per cent
presumably have suffered some decline in their level of living. It has required an aggregate increase of income of about 50 per cent to pay the
higher prices and, in addition, to buy the better living represented by the
national average; many have had a far greater increase.
F. A. HARPER AND W. M. CURTISS

3550

3551

LABOR REQUIREMENTS OF CANNING CROPS

harvesting beans in Erie County and nearly three-fourths of the total in

The importance of canning crops as a source of food for the armed forces,
for our Allies, and for our civilian population was recognized early in this
war. Steps were taken to increase production of those crops. So that growers
and administrators of the food programs might have a better idea of the
relative costs of producing these crops, a survey was made early in the
summer of 1942, covering costs and returns.
For three of the crops, tomatoes, snap beans, and sweet corn, labor repre-

Wayne County.
TOMATOES

On a basis of acres, tomatoes required the second largest amount of labor
or an average of 188 hours per acre in Chautauqua County and 145 hours in

Orleans County More labor was used in Chautauqua County for both
growing and harvesting than was used in Orleans County. Some of the
difference in the amount of labor used for growing is explained by the meth-

sented the largest single item of cost. For the fourth crop, peas, labor
ranked second only to seed. Labor was by far the most important item of
cost in harvesting all four of the crops.

od of setting. Nearly all of the growers in Orleans County used a transplanter while nearly half of the tomatoes in Chautauqua County were set
by hand. It took an average of 24 hours per acre to set tomatoes by hand in
Chautauqua County as compared with an average of 13 hours to set them
with a transplanter.
Special labor represented about one-third of the total labor requirements

TABLE L-LABOR USED IN GROWING AND HARVESTING FOUR CANNING CROPS, 1941
Wayne

Erie

Sweet corn

Tomatoes

Snap beans
County

Orleans

Chau-

Livings-

tauqua

Number of farms
Acres per farm
Tons. per acre

5.2

35-5

2.35

1.50

Orleans

6.6

8.2

9.4

12.0

Livings-

for the tomato enterprise. Most of this labor was hired for picking. All
labor costs represented about one-half of the total costs.

ton

Peas

Ontario

17.1

9.0

5-9

2.34

SWEET CORN

0.61

0.8

2.5

Hours labor per are

243

Per cent special was

320

188

145

18
24

An average of 35 hours of labor was spent on an acre of sweet corn in
Livingston County and 39 hours in Ontario County. In Livingston County,
labor requirements for growing and harvesting an acre were about equal,
while in Ontario County more time was spent in harvesting.
In Livingston County where larger acreages of sweet corn were grown,
especially on the flat lands of the Genesee River bottom, special labor made
up about one-half of the requirements. In Ontario County the regular farm
labor force furnished more than three-fourths of the labor needed to grow
and harvest the crop. Most of the special labor for growing sweet corn in
Livingston County was used for hoeing. Labor, the largest single item of
cost in producing sweet corn, represented about one-third of the total cost
of growing and harvesting in both Livingston and Ontario Counties.

labor
40

the

Total

107

39
31

39
37

Harvesting

128

Total

Cost per hour of labor, cents
Growing

302

Growing
Harvesting

Total

105

Harvesting

Growing

Labor asper cent of cost
is
93

Total

Growing
Harvesting

Hours labor per low of product
Total

150

130

PEAS

SNAP BEANS

Snap beans required the largest amount of labor (table 1). An average
of 243 hours was required in Erie County and 326 hours in Wayne County
to grow and harvest an acre. Growers in Erie County spent twice as many
hours growing the beans as did those in Wayne County. Most of the difference was in the amount of time spent hoeing the beans. The Erie County
men usually have a large supply of labor available after berry-picking
which they feel is to their advantage to use, in order that the help may be
held for bean-picking. If it were not for this fact, probably beans would be
hoed less in Erie County. The difference between the counties in the amount
of labor required to harvest the beans is largely accounted for by the difference in yield. Although most of the beans in both counties were picked on a
piece-work basis, by the pound, growers estimated the number of hours of
labor required to pick their crops. In both counties an average of about 16
pounds of beans were picked and delivered per hour of labor.
Special labor, as distinguished from the regular farm labor force, represented more than four-fifths of the total labor required for beans. The
majority of this special labor was used for picking and most of the rest for
hoeing.

Labor represented nearly two-thirds of the total cost of growing and

Of the four canning crops peas required the least amount of labor per
acre. Practically all of the work was done by the regular farm labor force.
Of the total cost of producing peas in Orleans County, 15 per cent was
labor, compared with 13 per cent in Livingston County.
The rates paid for labor in 1941 varied from an average of 27 cents per
hour for Wayne County snap beans to 39 cents per hour for peas in Orleans
County. Labor rates have increased rapidly in the past two years. Other
costs, however, have not increased at such a rapid rate. This makes possible
profitable production of the canning crops, provided yields are normal, even
though prices have not increased at the same rate as labor costs:
FOOD VALUES AND LABOR

With a limited amount of labor available, more tons of food can be produced by growing tomatoes, peas, or sweet corn for canning than by growing snap beans. It took about six times as much labor to grow and harvest
a ton of snap beans as it did to grow and harvest a ton of peas, and nearly
ten times as much as to grow and harvest a ton of tomatoes or sweet corn.
The most efficient use of labor in terms of tons of product was made in
Orleans County where a ton of tomatoes was grown and harvested with
an average of 12 hours of labor.
It is difficult to evaluate one food in terms of another now that so many

3553

3552

GRADE QUALITY OF POTATOES SOLD AT WHOLESALE

of the different properties and values of different foods are recognized.
One food is valuable because it is high in calories, another because it is
high in protein, another because of its vitamin A or C, or because of its

During the 1940-41 season, 49 per cent of the muck and 28 per cent of
the upland potatoes were U. S. No. I grade quality (table 1). The following
year, 1941-42, 70 per cent of the mucks and 42 per cent of the uplands
were U. S. No. I. Both years muck potatoes were of better quality than
upland potatoes. A larger proportion of both muck and upland potatoes
were of better quality in 1041-42 than in 1940-41 (table 1).
A considerable number of the poor quality potatoes, particularly uplands
grown, could probably be eliminated by correcting some of the present
production practices. A shift to the growing of the newer varieties, such as

calcium, and so on. Nutritionists tell us we need certain amounts of each of
these different food elements. If our diets become short of one element, a
food that is rich in that element may become of considerable value to us
even though it is low in all the other food elements.
TABLE -FOOD VALUE. AFTER CANNING FROM ONE POUND OF EACH OF FOUR
CANNING CROPS

Vitaminat

Minerals in milligrams

Calories*

Crop

A. international units

Sweet corn

B. micro-

c. milli-

grama

grams

Calcium

440

Peas

Phosphorus

454

Iron

1.82

TABLE -GRADE QUALITY OF MUCK AND UPLAND GROWN POTATOES BUFFALO

10.80

610

250

Tomatoes
Snap beans

2,700

130

7.26

123

4-54

AND ROCHESTER 1940-41 AND 1941-42 SEASONS
Per cent of total inspections

*Chatfield C. and Adams G. Proximate Composition of American Food Materials, United States

Department

Circular

Agriculture,

Number

549.

June,

1940-41 season 1941-4 season

1940.

tHewston Elizabeth M., and Marsh Rosemary Vitamin Value of Foods in Terms of Common

Grade

Muck Upland Muck Upland

Measures United States D partment of Agriculture Miscellaneous Publication Number sos

IRose Mary Swartz Laborato ry Handbook for Dietetics, 1937. Table XVIII, and Pattee, Alida

Frances, Vitamins and Minerals for Everyone, 1943. page 215.

all

The food value of one pound of each of the four canning crops is shown
in table 2. The values shown are for the foods after they are canned. Some
of the vitamins are indicated to be lacking in each of the foods after they
are canned. Sweet corn is high in calories as compared with tomatoes and
snap beans. Of the four foods, tomatoes are the only ones to have vitamin
A after canning, while peas are the only ones with vitamin B1. Each of the
four foods carry vitamin C, but tomatoes have about twice as much as any
of the others.

Total

Peas ranked high in the production of vitamin C per hour of labor, and
were first in the production of calcium and iron per hour of labor.

100

Chippewas, Sebagos, and Katahdins, would also raise the average grade.
These are more attractive types and will grade a larger percentage to U.S.
No. I than will the older varieties.
In the 1040-41 season, all potatoes grading U. S. Commercial had 10.8

per cent damage out of 13.3 per cent total grade defects (table 2). The

After considering the amount of labor required to grow the different
canning crops and after adjustments are made for losses in canning, it appears that more calories can be produced with a given amount of labor by
growing sweet corn and peas than by growing tomatoes or snap beans.
More than 20 times as many calories were produced with an hour of labor
on sweet corn as were produced with an hour of labor on snap beans (table
3). Of the four crops, tomatoes provided the largest amount of vitamin C
per hour of labor, producing more than six times as much as snap beans.

SEASONS

BUFFALO AND ROCHESTER, 1940-41 and 1941-42

following year, U. S. Commercial potatoes had 9.5 per cent damage out of
11.8 per cent total grade defects. It seems reasonable to assume that this
damage, which in general is controllable, could be reduced. Such a reduc#

tion would enable many potatoes that now grade as U. S. Commercial
potatoes to meet U. S. No. I grade standards. Similarly, a reduction in the
amount of damage in U. S. No. 2 would permit many of these to meet the
higher grade standard, U.S. Commercial (table 2)
TABLE RELATION OF GRADE QUALITY TO TYPES OF INJURY AND TOTAL
GRADE DEFECTS OF ALL POTATORS PPALO AND ROCHESTER. 1940- AND
1941-42 SEASONS

TABLE FOOD VALUES PRODUCED PER HOUR OF LABOR ON EACH OF FOUR
CANNING CROPS*

Per cent grade defects

Vitamins
Crop

Minerals in grams

Grade

Calories

Rot
frost

international

units

B. mierograms

milligrams

Calcium

Phosphorus

Iron

2.1

20.1

0.12

5-3

Serious
damage

0.1

Sweet corn
Peas

28,400
27,200

Tomatoes

5,700

Snap beans

1,400

66,300
161,700

1,000
3.800

22.7

1.18

4.500

8.1

0.44

700

2.1

0.08

Values are adjusted for loss of weight in processing

Total

grade defects

2.9

3-5

10.8
1.6

0.5

*Based upon food values of the crops (table 2) and labor requirements of the crops in 1941 (table 1).

Other
damage

15.0

22.8

4.0

11.8

26.6

Considering the over-all nutritive value, snap beans ranked lowest
chiefly because of the large amount of labor required to pick them. Sweet
corn and peas made the most efficient use of labor in the production of
calories. Tomatoes produced the most vitamins per hour of labor.
D. B. FERGUSON

To reduce this damage would require efforts on the part of the growers
to improve their production and handling methods and of shippers and
other handlers to maintain a better quality potato enroute to the consumers.

3554

3555

DIFFERENCE IN GRADE QUALITY FROM FALL TO WINTER

During 1940-41, a larger proportion of the muck and upland potatoes
were U. S. No. I grade at the winter than at the fall inspection. About 42
per cent of the muck potatoes were U. S. No. I in the fall compared with
60 per cent in the winter. In the case of upland potatoes, there was less
difference between fall and winter inspections-27 and 32 per cent, respectively (table 3).
TABLE VARIATION IN GRADE QUALITY IN FALL AND WINTER INSPECTIONS
OF MUCK AND UPLAND POTATOES BUFFALO AND ROCHESTER 1940-41 AND
1941-42 SEASONS

Muck potato inspections Upland potato inspections,
per cent

Grade
Fall

per cent

Winter

Fall

MISSON

No.1

Commercial

No.

Total

100

1041-42 MIRSON
No.1

Commercial

No. 2

Total

even in land class II-are likely to remain on their farms. Present alternative opportunities for employment at relatively high wages are not likely
to entice a large proportion of them away from their farms, although some
will take on non-farm employment Thus many New York families are
and several will remain solely dependent upon earnings from relatively
unproductive farms for a living.
How then, can farmers in these areas organize and manage their businesses to increase incomes? To search out some of the answers to this question, the businesses of 28g farmers in the less productive parts of land class

III and of 124 farmers in land class II were studied for the calendar year
1940.1 Based on the experiences of these farmers, the following possibilities
are suggested as means of increasing incomes on the farms in the less productive parts of land class III.
I. Increase the size of several of the smaller farm businesses either (1)
by adding to the livestock enterprises or (2) by taking on non-farm employment. In general, there is little advantage to increasing the size of
business beyond that amount of work which the family can handle with
small amounts of hired labor.

2. Improve labor efficiency by adjusting the size of the labor force
the amount of productive work to be done. Where the labor force is
partly idle or unproductively employed and cannot be contracted, the

to
100

100

*No winter inspections made of muck potatoes during the 1941-42 season.

During the 1941-42 season there was no difference between the fall and

winter inspection in the proportion of U. S. No. I (42 per cent for each
season). However a slightly larger proportion were S. Commercials during the fall than during the winter (table 3)
It appears, therefore, that in a year like 1940-41, when the potato crop
was about average quality, the poorer potatoes were marketed early in the
season and the better quality potatoes sold later in the season. But in a
year like 1941-42, when the potato crop was of better than average quality,
there was little difference in the grade quality marketed at any given time

size of the business should be enlarged.

3. Keep as much livestock in relation to crop acreage as possible.

Some farm units as they now stand could carry more livestock. Yields will
have to be improved and corn silage will have to be grown on other farms
if the carrying capacity of the unit is to be increased.
4. Increase rates of milk production by improved feeding, breeding.
and management Higher rates of milk production mean a larger output of
milk per man and higher incomes.
5. Within reason, obtain the highest possible crop yields. In general

farmers making the larger applications of fertilizer and lime have the

during the marketing season. Some type of informational marketing

higher yields and the larger incomes.

service, aimed at determining the quality of the crop in a given area early
in the season, might be of benefit to growers, shippers, and others.

market opportunities are favorable.

WINSTON E. PULLEN

HOW FARMERS IN LESS PRODUCTIVE RURAL AREAS
CAN EARN A BETTER LIVING
Nature endowed the state of New York with some of the most productive
and some of the poorest soil that lies out doors. Because incomes of farmers
are usually directly associated with variations in soil productivity, families
in areas of poor natural soil productivity generally have low incomes. Land
classification maps, which have been completed for 20 New York counties,
delineate areas of varying degrees of natural soil productivity. Farmers in
land classes I and II are seldom able to earn an acceptable living from their

farms. Farm incomes in the less productive parts of land class III are
generally low.

Despite low incomes, farmers in considerable number continue to

6. Expand the poultry enterprise in those areas where climate and
The operator attempting to earn a living from farming in land class II
has a more difficult situation. Low crop yields limit the amount of livestock that can be carried. Milk production from purchased feed is often
too expensive for the low-priced milk market on which the farmer frequently sells his milk. A large proportion of the families in land class II
earn little in addition to their privileges for their year's work.
Study of 124 farm businesses in land class II indicated that the surest
way to increase incomes was to obtain employment away from the farmeither on a full-time or part-time basis. This alternative is not always
available, and when available farmers do not always take advantage of it.
For those who continue to operate farms in land class II, more comfortable
livings may be obtained by following some of these suggestions.
These farms were located in Steuben. St. Lawrence and Otsego Counties This study is reported in

detail in thesis Hardin L S., An Economic Study of Low Income Rural Areas in New York. 1940.

operate businesses in these lower land classes. Because they own their

Cornel University Library.
It is recognized that of these suggestions are inconsistent with the most efficient use of manpower

farms and are attached to the community, many of these operators-

view dividuals remaining on farms in poor land areas Hardin. L S., More Agricultural Production

machines livestock and fertilizer the war effort. These dations are made from the point of

Where? Farm Economics No. 134. p. 3408, February, 1943

3556

3557

I. Obtain outside employment whenever possible even if farm businesses
must be curtailed
2. Produce as much food and fuel for home consumption as possible.
3. Keep expenditures on the farm business at a minimum. If capital is
available for enlarging the farm enterprises, invest in a more productive
farm in a higher land class.

4. Operate a business just large enough to fully utilize the fixed labor

farmers and the charges of all
marketing agencies for the last
thirty years and for a fixed quantity of food.

An estimate of marketing costs
based on the assumption that they

supply.

will change proportionate to changes

5. Keep the fixed labor supply fully occupied at productive work. If the
business must be enlarged to achieve this end, expand through addition of

in the prices paid farmers for food
is far from our actual experience.

outside work whenever possible.

The error of such an assumption has
been increasing in general over the

6. Use excess labor to take better care of the livestock on hand in an
attempt to improve rates of production.
7. Use government fertilizer and lime allotments. Increases in yields
resulting from fertilizer application are generally not large enough, however, to justify expenditures for this purpose much in excess of conservation allotments.

L. S. HARDIN

HOW MARKETING AGENCIES ARRIVE AT THEIR MARGINS,

PER CENT

These figures show the returns to

thirty-year period, and for the last
ten years one would be about 83
per cent wrong in that assumption

1934-43

1924-33

1914-23

FIGURE 1-TREND IN THE PROPORTION
MARKETING CHARGES MADE ON A
"PER CENT MARK-UP BASIS, UNITED

(figure 1). Expressed another way,
83 per cent of marketing costs for
the last ten years have apparently
been based on a fixed dollar rate,

STATES

Most marketing services are now performed at
fixed rates, and are unrelated to changes in prices

and only 17 per cent based on a
fixed percentage mark-up such as

paid to producers.

AS RELATED TO THE SUBSIDY QUESTION
There are several explanations for the claim that subsidies would "save
us many dollars for each dollar of cost". One is based on the manner in

would increase or decrease with changes in prices paid to farmers for food.
The reason why marketing margins and charges are mostly based on a
fixed dollar rate, rather than to be related to the buying price of the food,

which marketing agencies establish their margins for operations, and is as

is that marketing costs are mostly wages which change slowly. In fact,

follows.

It is assumed that marketing agencies set their charges on a percentageof-cost basis, rather than at fixed rates per unit of product. Consequently,
it is assumed that a rise in prices to farmers would bring a proportionate
rise in the margins of all the successive chain of marketing agencies. For
instance, assume that before the price rise, farmers were receiving $1 and
marketing agencies $1 of a $2 retail price. Then, if we wished to increase
the price to farmers by 10 per cent so as to stimulate production, it would
result in a rise in the retail price to $2.20 ($1.1 to farmers and $1.10 to
marketing agencies); that is, the rise would be double the increase going
to farmers. By using subsidies, the farmers would be paid $1.0 in the open
market and 10 cents in subsidies. The subsidy money would be handed to
them "behind our backs" or "under the counter" so that the marketing
agencies would have no basis for raising their margins. The subsidy plan,
then, would cost consumers $2.00 of retail market price plus IO cents of
subsidy money, or a total of $2.10. The subsidy device, in this illustration,
would save 10 cents or half the amount of total rise in retail price that
would occur if subsidies were not used.
The first question is, do marketing agencies arrive at their margins that
way? Some do, but others fix their margins or charges as specified amounts
per unit of product. Transportation charges, for instance, are almost entirely on a package, volume, or weight basis, and only in an extremely remote sense do they bear any relationship whatsoever to changes in the
price of the product. What part of all our marketing charges are priced
one way, and what part the other?
Had the originators of this claim investigated some excellent data available in another agency of the Government, the Bureau of Agricultural
Economics, they would have found some useful but discouraging evidence.

since 1921 marketing margins show only slight recognition of the increases
and decreases in prices paid to farmers. Most marketing agencies perform
a service on what amounts to a fee basis, and the size of the fee depends
on wage rates more than anything else.
The evidence for the last ten years can be applied to present farm prices
and marketing costs, to compare the effect of a subsidy plan with allowing

rise in farm prices to occur in the marketplace. The retail cost of a
family's food basket in mid-1943 was at the rate of $451 yearly, of which
$255 went to producers and $106 went to the marketing agencies (table 1).
Now assume that it is considered necessary to give producers a IO per cent
increase, in order to stimulate food production. The argument for the subsidy scheme, as outlined above, would lead us to expect the retail cost to
rise to $496. Actually this is a sizeable exaggeration and we should instead expect a retail cost of $480, based on the action of marketing agencies
during the last ten years.
The cost under a subsidy plan, whereby producers would be given the
same 10 per cent increase in returns, would be $476. This is only $4 less
TABLE -RISING FOOD PRICES AS COMPARED WITH A SUBSIDY PAYMENT. AS
AFFECTING TOTAL FOOD COSTS*
Actual figures
for

10 per cent riset allowed in the marketplace

As assumed by sub- Probable. based on
proponents

Paid to producers

Paid marketers

$255

past experience

10 per cent riset

paid subsidy
to producers

$250

Salto

$280

210

200

100

Administrative expenses

None

Total cost to public

$451

$400

Sallo

*In terms of annual cost of food for typical workingman's family
The 10 per cent is an increase to producers, based on the original producer-return of $255.

$476+7

3559

3558

than the $480, and we would be ignoring the administrative costs. The un-

founded expectation was a saving of $20 -$476) Under the subsidy
plan, marketing margins might soon increase to the $200 figure, leaving no
saving.

The administrative costs of the subsidy plan are not to be ignored, either.
The present analysis affords no basis for estimate. It seems conservative to

expect that the total cost, including administration, under the subsidy
plan would be as much or more than the cost if we allowed the price to
rise in the marketplace

small number of copper mines, but it is quite another problem to find the
high- and low-cost operators among the millions of food producers, food
processors, and food distributors. Agriculture has a wide range of costs and
it would be difficult to determine costs for these millions of producers.
Presumably, then, the subsidies must be scattered about among the highcost and low-cost producers on the basis of production. Most of the benefactions fall into the hands of low-cost producers who produce the bulk
of the food and are already operating near capacity. Insofar as this is true,
the subsidies are a benefaction and ineffective for the purpose intended.

F. A. HARPER

SUBSIDIZING PRICE ADVANCES
Food subsidies are economic, social, and political problems; they are
highly controversial and produce plenty of heat in our frozen economy.
Food subsidies affect the purchasing power of everyone, but in different
ways and by widely divergent amounts.
Subsidies are not new. During the early thirties the nation used subsidies, in the form of payments for restricting production, to raise prices at
a time when practically every other force, national and world wide, was
driving prices down. Now the nation contemplates using subsidies to keep
prices down at a time when the major forces in the United States and in
the world are forcing prices upward Subsidies did not overcome deflation
during the early thirties and will prove unsuccessful in preventing inflation
during the early forties. The power of the government's price-raising
activities of the thirties and the power of its present ceiling food prices and
controls are greatly overrated. The power of the market on prices for food
then was and now is greatly underrated. It is almost as difficult for the
uninformed to become conscious of that power as it is to explain it or to
control it. The nation had better weigh carefully the end it hopes to attain
and the methods of attaining the objective before it attempts to check the
rising trend of prices.
There are several important arguments for food subsidies: To stimulate
production, to protect the consumer, to eliminate inequities, and to prevent
general inflation.
PRODUCERS

There is little question but that subsidies would stimulate production of
this or that food, but whether the total supply would be materially augmented is a question. The only important justifications of subsidies to food
producers are to shift production or to get food that otherwise would not be
produced. At present prices most farmers are operating near capacity
and the problem is to subsidize those who could expand production still
further. To locate these particular producers and determine the exact
amount of subsidies required would be expensive and time-consuming.
It has been stated that subsidizing high-cost copper producers has saved
$28 for every dollar the government has spent. In the absence of convincing evidence the magnitude of this saving may be questioned But
even if true for copper, it does not follow that such subsidies could be used
in agriculture. It is one problem to find the high-cost producers among the
Under program of rigid ceiling prices, guaranteed minimum prices may be necessary to insure ample
production certain crops. In the event large crop these min mum prices may involve some cost to the
government but in wartime this may be better than risking a reduced acreage which would follow low

prices.

New York Times. page 20. November 3. 1943.

CONSUMERS

Although many persons favor subsidies because they think they will increase production, the vast majority favor them because they help hold
down consumer food prices. Leaders of labor and other consumer groups
sponsor subsidies on the assumption that they will keep down food prices
and thereby maintain or increase the purchasing power of the incomes of the
groups they represent. Since the cost of living and weekly earnings have
risen about 25 and 75 per cent, respectively, from August 1939 to October
1943, the organized laborer's case has lost some of its force. The interest
in subsidies, however, has not waned. The white-collar workers have not
had commensurate increases and have become the forgotten men that
should be brought under the protective wing of the government. How to
get them there and protect them is of course a conundrum. By the use of
subsidies the government could temporarily depress the food prices for the
white-collar consumers and thereby could increase temporarily their purchasing power. While the government was subsidizing white-collar worker's
food, it would also be subsidizing many organized laborers who do not
need assistance Therefore, the government would be pouring additional
purchasing power on the "just and unjust. It would pass into the hands of
a few that need it and many who do not. Subsidized purchasing power in
the hands of those who do not need it is a price-raising force and affords
little protection to that part of the so-called white-collared group who really
need it. If equality were to be attained, it would also be necessary to distinguish between those who need it, and those who want it. Since everyone
wants more income, many persons erroneously conclude that they need it.
There is a much greater difference between those that need it and those
that want it than is generally realized.
INEQUITIES

Wartime subsidies are one of the defensive weapons used in the retreat of

a regimented price economy. The first step was to attack with general
price-fixing orders. Since these proved ineffective, because they created
many inequities, the strategy was shifted from attack to defense. The first
defense weapon was rationing, which in turn was only partially effective
because it did not eliminate previous inequities and in fact produced still
more. To hold the retreating line subsidies were called for. The demand for
subsidies was an admission that low ceiling prices impeded the production

of this or that commodity and had not protected the consumer or eliminated inequities as it was assumed they would.
Where subsidies fail to hold the weakening line, there is no new surprise
'The government's fixed price for copper is 12 cents per pound, and the government pays 17 cents per
pound for that produced in excess of fixed quotas. This type of subsidy is not much different from the costplus government contracts

3560

weapon of defense. Therefore, it is necessary to use more and more subsidies. This was well-illustrated by government legislation and WLB ad
ministration which subsidized union labor. It now appears to some that it in
necessary to subsidize the white-collar classes to give them equality with
other more favored groups.

There is another excellent illustration of the cumulative inequities and
the necessity for more subsidies once the first step is taken. The government subsidized hog production with high prices for pork and low prices
for corn. To correct one of the errors, milk production was subsidized with
cheap wheat and later with direct dollar payments. If continued, it will be
necessary to subsidize the civilian consumers of wheat and corn to protect
them against the subsidized cow which was subsidized to protect it against

the subsidized hog. When the nation starts to use subsidies, inequities
follow and there is no end except more and more subsidies to correct the
mounting inequities.
It has been pointed out that subsidies cannot hold the line unless accom-

panied by rigid price controls, inflexible wage controls, firm savings programs, and vigorous tax measures. If that Utopia were attained, there
would be no inequities and the necessity for subsidies would be nil. Since
imperfect legislators and imperfect administrators have not given us rigid
price and wage controls and have not syphoned off excess purchasing power

by vigorous fiscal and savings programs, it follows that huge amounts of
imperfect subsidies would be required in the attempt to eliminate the subsidized inequities for the 125 million imperfect civilians.
INFLATION

Subsidies are no protection against inflation. In fact subsidies are inflationary. They increase the purchasing power of consumers which is antisocial in times of war. If the increased purchasing power is spent, it causes
immediate inflation through rising prices and, if not spent, it will probably
cause postponed inflation through the so-called inflationary gap. In addi-

tion subsidies add to the government's fiscal expenditures which is also
anti-social in times of war. The problem is to keep down the government

non-war expenditures and to reduce civilian purchasing power to the bone,
Food subsidies, therefore, are not a war measure as some contend. They
are just as much a political measure now as they were in the early thirties.
Subsidies and taxes are as opposite as the poles in their effect on inflation. Taxes reduce the purchasing power of consumers and transfer that
purchasing power to the government. Subsidies increase the purchasing
power of the consumer and decrease the purchasing power of the government. Shifting purchasing power to civilians from the government results
in immediate or delayed inflation which is ultimately a tax on consumers.

The bigger the wartime subsidies, the greater the inflationary force.
Ultimately, despite rigid controls, inflation will operate as a tax to partially offset maladjustments created by mounting subsidies. Wartime inflation is a flat tax and is no respecter of persons.
Food subsidies do not increase materially total food production; they
do not syphon off excess consumer income; they do not eliminate the socalled inflationary gap; they do not decrease the government debt; they
do not eliminate inequities; and they do not prevent inflation. Subsidies
are just as attractive and just as elusive as the pot of gold at the end of the

rainbow.

F.A. PEARSON AND W. I. MYERS

208

June 7, 1944
12:10 p.m.

ARMY DATA FOR WAR BOND SPEECHES

Present:

Mr. D.W. Bell
Mr. Fred Smith
Mr. Haas

General Clay

Mrs. Klotz

H.M.JR: On the other hand, there are certain

things that have to increase. He is having a hell of a
time with Jimmy Byrnes who doesn't want him to start

any new plans. Anything to do with artillery and
ammunition and big guns has been increased.

Now, so far they wouldn't tell me. Bell has to
get it from - he has to call up Patterson and say,
Now, Morgenthau wants to know where the hell these

plants are. Why not tell Morgenthau and he will go
and make an address for you at some big gun and am-

munition factory. How much have you increased this?"

So that we know. big guns, big artillery, and big
ammunition - they are terribly short, see?
MR. BELL: Yes.
loan.

H.M.JR: They increased the five billion dollar
MR. BELL: They have increased this just recently?
H.M.JR: Yes, he called up Somervell while I was

there. But the impression I got from him is this: The
war - as he calls it, a flaming war - has just started;
we only have infinitesimal people there.

209

-2-

As he says, for instance - to gi ve you a little
example - now, get this, Fred - the reason for the
success - I couldn't get it out of Stimson the other
day - success of the drive in Italy has been that
they have maintained the regiments to full strength
and constantly renewed their equipment.

For example, if a group of men come out, they put

them in a shower - take all their clothes off them, give
them a shower, completely equip them, and put them back
in again. Their equipment is completely changed - new

equipment goes in. And you can imagine the cost of it.
He says this is an entirely new policy and is what put
these troops through. And they have been up against
a Herman Goering Division, which is the apple of Hitler's
eye, and they licked that.
You will have to get somebody to give us more de-

tails, so we are sure they are right. But the idea is,
why has this thing cost seven billion dollars - because,
as I say, they completely re-equip a whole regiment,
clothes for the men, artillery, and so forth, and that

is the expense. That has to be repeated between here and
Berlin, and the expense is going to be enormous. There
are no substantial reserves; there is no place to put
them, see?

Now, I want you fellows to go in a huddle and find
out where you can get these things.

MR. BELL: May I tell Fitz to hold General Clay
in my office? He is there and getting ready to leave.
(The Secretary sends for General Clay)

H.M.JR: Then they said in the last calendar year
they actually took delivery of twenty-three billion
dollars - the Army did; this calendar year they are

calling for twenty-four billion dollars. I have never

seen that figure before. Any idea that they need less
is ridiculous, they need more of everything, do you see?

210

-3Now, that has not been put over. I showed him
this Wall Street Journal; he was shocked. He said he
can't even convince Byrnes of his needs. Naturally,
he is tickled to death to have me go out and do this
talking. But the Army - Clay will be swell, he would
get it because Somervell has all these things. Everything is yet to be done.
(General Clay enters the conference)

MR. HAAS: That checks with all the figures I

have here.

M.JR: I just spent half an hour with General
Marshall, see? I always do this before I go out, to
get the perspective. I mean, I won't go into the military part because I don't make any notes on that, but
let me just run over it.
To make these speeches I need facts, and Somervell
gave me some, but I need more, you see. I showed these

headlines to General Marshall - those two extremes.what I want to do for the Army and for my country. He
told me you people in Italy - how you completely reequipped a regiment, how you gave all new clothes and

all the rest of that stuff; and by. doing that, and keeping the regiment up to full strength, that is the way
they have gone ahead.

Now, I would like that in more detail. What does
it mean? I mean, I don't want to make a statement

that isn't accurate. It might just as well be correct.

But just what do you do in Italy to these regiments
when you pull them out, that I can tell the people?
We have an over-all picture that it cost seven billion
dollars to go from Naples to Rome. We got that from

you people, but why?

Then I am going to say, "Well, the public can use
their own imagination, how much it is going to cost to go
from the beaches of France to Berlin."

211

-4Now, the thing that I want to put over, in sincerity,
not on account of the bonds, because I will sell my

bonds, but I want to help the Army and help win the war.
I want to put over this thing, contrary to Baruch, Hancock,
and Byrnes, and Mr. Nelson, that the war has just started,
do you see - I got this from General Marshall - and the
expenditures are just going to start.

I want more detail - what you did with these regiments there. Then, for heaven's sake, loosen up
on the stuff that General Marshall told me about you
putting in these additional orders for heavier artillery
and ammunition, and where the hell are the plants? Why
not let me go to one?
But he gave me these figures which he got from

General Somerveil. He placed a billion dollars of additional orders. Then he gave me these figures that there
was twenty-three billion dollars' worth of delivery in
the last calendar year, and twenty-four in this.
GENERAL CLAY: That is right.

H.M.JR: But if you could take somebody - if I could
pin this on you - I am leaving the very first thing
Friday morning. I want to be able to go out and tell
the American public that as far as the expenditures are
concerned, the thing has just started, and this idea
that we landed and the war is over, is the bunk. But
I have to have facts.
Now, General Marshall gave me the indication - he

didn't have the time - he shouldn't have it - as to
illustrations that people want. Someone said, "Do you
mean you started new plants or old," and so forth. All
you have to do is to read that paper. The people are
resigning because they can't settle how they are going to
close up the plants, and damn it, here you people are
opening new ones. Now, I have had the audience.

GENERAL CLAY: Going to build more tanks next year

than this year.

212

-5H.M.JR: Now, unless you people are dumb, and I
never thought you were dumb - I am begging you to use me;
I want to be used, because I don't want the American

public to sit back and say, "O.K., we will use the gasoline, we will do this and that, and get a safe job. The
war is over; why work for a gun factory if you can work
for a vacuum cleaner plant," and so forth and so on.
Now do you know what I want?
GENERAL CLAY: Yes, sir.

H.M.JR: Can I get it?
GENERAL CLAY: Yes, sir. I will have some figures

in your hands tomorrow.

H.M.JR: But make it colorful, so it isn't just cold.

I would like to say - we asked here a couple of weeks
ago, what about this program for heavy guns, and so forth.
Well, they wouldn't say - they wouldn't even tell me,

which I thought was childish. But if I read that paper
I would say the only thing for me to worry about is how
can we close up all the plants. Here you people want
to open new ones.

GENERAL CLAY: You can take a figure, for example,
of where we had two hundred thousand men in North Africa

and we used so much artillery ammunition; here in Italy

we had so many more men and we used about eight times

that much artillery and ammunition. That shows a picture
that we face as we go into the Continent with still more

men.

H.M.JR: Yes, and if it is true, relatively higher
stuff. We are going to begin to burn this stuff up and

destroy it. General Marshall says there are no large
stockpiles anywhere. This stuff is going to be destroyed,

and we have to go full speed ahead on production, and

nobody in America believes it. With the President and

OWI - I mean, they just don't believe it. I believe it

because General Marshall told me so. I am willing to

tell it, but you have to give me facts.

213

-6GENERAL CLAY: I will have some in your hands
tomorrow, sir.

H.M.JR: Supposing, in case they come late, I think

the best way is to put it right into Mr. Bell's hands.

Do you know what I want?

GENERAL CLAY: Yes, sir.

H.M.JR: Am I really going to get it?
GENERAL CLAY: Yes, sir.

MR. BELL: If you need me, I will sit down with
you and look them over before you go into the final
stage.

GENERAL CLAY: For example, I know the number of

tanks knocked out in Italy; we can convert that into

numbers of tanks and money, tanks that have to be replaced
because they were destroyed.

H.M.JR: while you. are on it, General Marshall told
me I could have the figures of the exact detail of equipment destroyed in Sicily. he gave it to me - a telegram
from General Eisenhower. I put it in a speech - everybody hit the ceiling. General Marshall gave it to.me,
this is what is destroyed, it went thro gh. Then we
piped it into the plants that actually made the equipment and said, "You made these tanks; so many have been

destroyed" - fifty to sixty percent. It went over big,
didn't it?
MR. SMITH: It did.

H.M.JR: Now, if you can do something like that for
me again, the number of tanks, and so forth, and the
increasing tempo of the destruction of these things
because I take it you agreed with me that the American
public thinks they can sit down--

GENERAL CLAY: Yes, sir.

214

-7H.M.JR: I am willing to be your mouthpiece if you
give me the facts.
GENERAL CLAY: I will have them for you tomorrow.

H.M.JR: A little colorful detail. Now, I listened
to Mr. Stimson. I take it it is my fault, but I couldn't
understand what he was trying to get over about what you
did with the regiments. I listened. It meant nothing.
I know you did something different in Italy handling
the troops at the front than you have ever done before,
with the result that you were able to crack through. I
don't know - I don't think anybody has explained it to
the American public. You did it and it cost money; it
is going to cost money again.
GENERAL CLAY: I am sure I know the story you want,

sir. I will have some facts in Mr. bell's hands tomorrow.
H.M.JR: As I say, so-many Chrysler tanks destroyed "Hell, get back there and do this and that and the other

thing. Do you understand that of the tanks you built,
fifty or sixty percent was destroyed?" Nobody tells

them that.

Am I crazy?
GENERAL CLAY: I don't think so.

H.M.JR: I think that newspaper is crazy, after
listening to General Marshall.
GENERAL CLAY: Well, in spite of all of that, our

program is going up every day, Mr. Secretary.

H.M.JR: All right, you have to pay for it, and I

have to raise the money. And I want to convince the
people that own the money that they should lend it to me.

That is where I come in the picture. It is their money;
they own it. They have to lend it to me. And I don't
want sixteen billion dollars, I want twenty.

215

-8GENERAL CLAY: I will get onto it as soon as I get
back to the office and have something over here tomorrow.

MR. BELL: I think the people will be very pleased
to hear about re-equiping the troops in Italy - giving
them equipment to protect themselves.

H.M.JR: As General Marshall says, you take a man
who comes out, he has been up to the front, he is buggy,
and so forth - he takes a shower, has a complete new

uniform, and so forth.

Oh yes, now here is a figure, for instance: These
two particular regiments have advanced eighty-four miles;
that is due to this new method - a world record. It is

that kind of stuff. It isn't that I want to make a

speech; I do want to make a speech, but 1 want to carry
a message that will be useful.

GENERAL CLAY: It will be very helpful to us. I
am sure I know what you mean, sir. I will have some
facts over here tomorrow.

H.M.JR: You see, in between I don't speak very

much. It will be fresh. I have the radio hookup; I
am talking from Texarkana and Los Angeles.

Do you know the story, Fred, of the new technique
that they have used to make these regiments go forward?
MR. SMITH: No, I just assumed they had more men
there, or something.

H.M.JR: No, that isn't the story, is it?
GENERAL CLAY: That is right, sir; it is the old

substitute system.

H.M.JR: I couldn't get a better man to help us.
GENERAL CLAY: Thank you, sir.

June 7, 1944
1:10 p.m.

Grace

Tully:

Well, I got in touch with the Secretary of
Commerce and the Secretary of Commerce is
holding it up until you and Mr. Stettinius
have had a chance to talk it out.

HMJr:

Good.

So that's that. Apparently it hadn't been
done so that was good.

HMJr:

Well, that's good because it's a silly piece

Uh huh.

HMJr:

And what else can you do for me?

of business.

(Laughs) I don't know. What else do you want

me to do for you?
HMJr:

Nothing -- well, I gathered a very gentle hint
from you that -- now that -- that you only make
the bedroom appointments and there are no more

bedroom appointments.
T:

Well, there haven't been any morning -- early
morning appointments.

HMJr:
T:

HMJr:

So I go out the other way.

(Laughs) I'm afraid if it's in the office, you

have to.

I see. In other words, if I see the President
in bed, it's you.

(Laughs) Or after hours.

HMJr:

All right.

(Laughs)

HMJr:

Thank you.

Good bye, Mr. Secretary. Bye.

216

217

June 7, 1944
2:45 p.m.
SELECTION OF DELEGATES, MONETARY CONFERENCE

Present: Mr. Smith

Mr. O'Connell
Mr. White
Mrs. Klotz

H.M.JR: You can try it first on the phone, see?
If you have no luck, then, I think, you and Joe cught
to go up on the Hill.
MR. O'CONNELL: What are we waiting on?

H.M.JR: Waiting to hear from Barkley, and I just
cannot--I mean, I am so pressed for time that I just

can't do it. I thought if you fellows could clean it

up, I could get word still this afternoon from Miss
Tully and say I could do this thing and get a clearance
on it. Otherwise, it won't get done.
MR. WHITE: Yes, we will have to move along.

H.M.JR: Then the other thing I have thought of. If

you people will work together, see?
MR. WHITE: Yes.

H.M.JR: The other thing I was thinking about, I like
this suggestion pretty much of asking Fred Vinson to be a
delegate. He sent word to us he would like to be a delegate.
MR. WHITE: I am not sure that he sent word. I got
word. I mean-H.M.JR: Well, Ben Cohen called up.

218

-2-

MR. WHITE: That's right. I am glad you like it,
because the more I think of it, the more I like it, too.
H.M.JR: In the first place, the man is a Roosevelt

Democrat, and with the exception of Harry and me, there
ain't any on the committee.

MR. WHITE: That's right.
H.M.JR: And don't forget that Dean Acheson asked
the question, who was going to be my deputy, acting, do
you see?

MR. WHITE: Did he ask that in my presence? I dian't

hear him ask that.

H.M.JR: Yes, sometime ago. Now I can't take each
of you in the corner and ask you,. - I don't know. I don't
know whether White thinks he should be deputy when I am
not there, whether Acheson thinks he should be there--

MR. WHITE: No, there is no such thing. There are
vice presidents of foreign countries who act. There is
somebody who acts in your place in one committee and

others on others. We are protecting our interest. There
is no such thing as a deputy as a whole. But we would like
to go into that with you. No, I shouldn't be your deputy.

I am taking care of those committees which I have to be on
and are important.

H.M.JR: You are not thinking of yourself in terms of
my deputy?

MR. WHITE: No, I am not. I would like to be chairman
of what they cali the "Commission", which deals with the
international fund. You won't be that, anyway. You are
Chairman of the Conference, you are chairman of the steering
committee. The vice presidents are to take your place. They
will probably be foreign vice presidents, if you are chairman
of the committee and are not there, but you will be there

when it is important. When it isn't, then they can take

219

-3-

your place on the steering committee. That is an important
post, and when you leave, we are trying to decide how we
can protect our interests while you are gone. We haven't
decided yet, but in any case, it won't be a deputy.

H.M.JR: I was thinking, to protect our interest, I

have real confidence in Vinson. The fellow is very loyal
to Roosevelt and I was thinking whether he wouldn't be a
better fellow.

MR. WHITE: He would be better than anybody else on

there.

H.M.JR:

Than Acheson?

MR. WHITE:

Yes.

H.M.JR: The Roosevelt Democrat. He is a fighter,
and I was thinking, now the other side of it is, he may
be doing it but that is unimportant, because the Chairman
of the Banking and Currency is from Kentucky-(Secretary holds a telephone conversation with Colonel
Edward Heller, as follows:)

220
June 7, 1944
2:51 p.m.
HMJr:

Colonel

Hello.

Heller:

Hello, Henry. This is Ed Heller.

HMJr:

Hello, Ed.

Say, I'm terribly sorry to have to report to
you that I haven't -- that I can't make much
of a suggestion to you.

HMJr:
H:

You can't.

The only man that I can really think of there
at all has probably already occurred to you.

HMJr:

Yes.

And that is Henry Grady.

HMJr:

Henry Grady?

HMJr:
H:

Yes, Henry Grady was formerly Assistant Secretary
of State.
Oh, yes.

And he is now Chairman of the Federal Reserve
Bank of San Francisco and President of the
American President's Line.

HMJr:

President of what?

Of the American President's Line.

HMJr:

Oh, yes.

That's the successor to the Dollar Steamship
Company.

HMJr:
H:

Oh, yes.

And he was formerly head of the College of
Commerce at the University of California.

HMJr:

Yeah.

Now, I don't know whether he would be interested

in it or not but he's a -- he's a very good man.

-2HMJr:

Yeah. He is president of the President's Line

The American President's Line.

and also of the Federal Reserve Bank.

HMJr:
H:

Chairman of the Federal Reserve Bank.

HMJr:

I see. Well, that's not a bad suggestion.

Well, he's a very high-grade man.

HMJr:

Yeah.

And has been sympathetic with the Administration

HMJr:

for a long time.
Yeah. Now, let me ask you this, Ed. That -that's a very interesting suggestion. Now, let
me ask you, one that was made to me -- Elliott
McAllister of the Bank of California.

Yes.

HMJr:

Do you know him?

I do. I don't know him well. He's a -- he's a
very decent, fine individual. I don't know what

his views are.
HMJr:
H:

Yeah.

He' S respected. I don't think he's very well

known.
HMJr:

Uh huh. I see. But as between these two of them
I would gather that Grady would be a much better
man.

HMJr:

I think he would be.

Right. Well, thanks for the thought. We'll talk
it over here.

All right, sir.

HMJr:

Ever so much obliged.

How's your family?

221

-3HMJr:

Mine's very well. And yours?

Splendid.

HMJr:

Well, give them my best.

I certainly shall. Glad to hear from you.

HMJr:

Thank you, Ed.

Okay.

222

223

-4-

H.M.JR: That isn't a bad suggestion.
MR. WHITE: No, it's a good suggestion. We know

him well. He will cooperate fully. He is former

Assistant Secretary of State. He is a moderately good
economist and can make a good presentation and he has

apparently the title on the West Coast.

H.M.JH: And he is the head of this other thing.

MR. WHITE: That's right. He will be interested
in both these things. I think that is & good suggestion.
H.M.JR: I was talking to a distant cousin of mine,
Ed Heller, who is related to the banking business. Here
is a young fellow in the banking business. He is a partner
of Kaiser in several kinds of enterprises, Kaiser Cement,

Kaiser Gravel, so they make him an Army officer and attach
him to the Federal Reserve of Boston on V Loan. His

territory is the Pacific Coast. So that he surely does
not know anything about the territory--they sent him to

Boston. He happens to be a Roosevelt Democrat. His
mother was, I think. They are very good Roosevelt
Democrats.

MR. WHITE: Vinson and Gradywould strengthen the

delegation. I mention this only if you are looking for

a banker. You know they had a bank meeting on the Board.

All the Federal Reserve Banks on this matter, all day

yesterday. I got three different reports. The Board
approved, with the exception of McKee, they approved
to go along, and Williams was there and from reports,

it was the first time anybody had seen him very emotional.

He didn't do a good job. John Williams, that is. He is
against it. According to Brown who told Bernstein, so

I have it third-hand, they were moderately favorable.
According to Goldenweiser the Board was very favorable
and it was a very good meeting. According to Hansen,
it was an excellent meeting and they just slew the
opposition. Take your choice. But they had the twelve
banks and this man made a very strong statement

224

-5-

and presentation in favor of going along and in favor
of the project. I know nothing else about him.
H.M.JR: The way I feel now, I am afraid of getting
this thing so weighted-MR. WHITE: Not it you get the other two.
H.M.JR: I think if you add Henry Grady and Vinson--

MR. WHITE: It would be excellent, and call it a .
day. I think that is getting large enough.
H.M.JR: Isn't that good?
MR. WHITE: I think they both will strengthen the

delegation.

H.M.JR: You might type up for me the address and

title. I will send this letter tomorrow in care of
the steamship company.
MRS. KLOTZ: You are speaking of Grady?

H.M.JR: Yes. Now if you fellows will get on your
way, maybe you can do it on the phone. I am tired, but
I wanted, if possible, to get a clearance, so I can say
to Miss Tully, "Look, I want to call this meeting at

three o'clock tomorrow. If it's all right, I want to

ask Grady and Fred Vinson.

MR. WHITE: Do you want to speak to Dean Acheson about

Grady and Vinson?

H.M.JR: Yes, you will have to. I can't do another
thing except talk to Miss Tully on this, this afternoon,

including Fred Smith.

(Everybody leaves the conference but Fred Smith)

225

-6-

MR. SMITH: well, can I ask you one little question?
H.M.JR: If you want to cheer up, send for Joe Gaydica.

MR. SMITH: I just saw him out there. Bernstein has
eleven items about the Treasury policy on international
monetary cooperation. Do you want him to send those right
to Gaston?

H.M.JR: Oh, Gaston can't do anything. We will have
to do that.
MR. SMITH: I am just asking, because you mentioned

Gaston.

H.M.JR: he isn't well enough.

MR. SMITH: All right. We will go on from here.
H.M.JR: You have heard about it?

MR. SMITH: Yes, indeed! I am very happy about it.

Everything is clearing up. Pieces are all falling in
place.

H.M.JR: Come here, young fellow. Come here and see
Papa. (Shakes hands with Fred Smith) Okay.
MR. SMITH: well, you know you always worry and at

the last minute those pieces of the jig-saw puzzles that
Mike took and put under the table, come back.

226
STANDARD FORM No. 14 A

TREASURY DEPARTMENT

APPROVED BY THE PRESIDENT

WASHINGTON

MARCH 10,1926

TELEGRAM
OFFICIAL BUSINESS-GOVERNMENT RATES

NIGHT LETTER

CHARGE TREASURY DEPARTMENT. APPROPRIATION FOR

Official
(The appropriation from which payable must be stated on above line)

- OFFICE
JUNE 7, 1944

2-14117

MR HENRY GRADY

FEDERAL RESERVE BANK

SAN FRANCISCO, CALIFORNIA
ON BEHALF OF THE PRESIDENT OF THE UNITED STATES AM EXTENDING TO YOU
AN INVITATION TO BE A MEMBER OF THE AMERICAN DELEGATION TO THE
MONETARY CONFERENCE STARTING JULY FIRST. WILL TELEPHONE YOU
THURSDAY AFTERNOON, JUNE EIGHTH.
HENRY MORGENTHAU JR

June 7, 1944
3:27 p.m.

Roberta
Barrows:

Hello, Mr. Secretary.

HMJr:

Hello, Roberta. How are you?

Fine, thank you, sir. The General has you
down tomorrow with Mr. Pehle and we think

it will go through all right.

HMJr:

I hope so because you know I'm leaving town
tomorrow night.

Yes, he knows that.

HMJr:

And

He has you down at twelve fifteen. That may
change.

HMJr:

Well

And we'll let you know in the morning.

HMJr:

You stick by him now.

We surely will.

HMJr:

Thank you.

All right, sir. You're welcome.

HMJr:

Bye.

227

228
June 7, 1944
3:35 p.m.

HMJr:
Grace

Tully:

I don't know what time of day you see the President
now, but I want to get a message to him through you
today. Are you going to see him again?
Yes, I expect to see him later this afternoon. Yes,
sir.

HMJr:

How much later?

Oh, could be half an hour or more.

HMJr:

Well, I'd better tell you what I have on my mind.
Do you remember -- oh, I don't know whether it was
a week ago I -- well, I guess I did it through Pa
The President was going to talk to the Leaders
about who should be the delegates to the Monetary
Conference, and I got a message that I should go
up and see the Leaders myself, which I have, and
they're terribly slow. See?

Yes.

HMJr:

But we ought to hear from both Barkley and Rayburn
some time today.

Yes.

HMJr:

Now, here's my problem. I'm going away tomorrow
night

Yes.

HMJr:
see?

to go -- start to speak on the War Bonds, you

Yes.

HMJr:

And I'd like to call a meeting here at three
o'clock at my office tomorrow to get these
delegates organized.

HMJr:

Yes.

And I wonder if the President will be satisfied
if either late tonight or tomorrow morning I get
word from Barkley and Rayburn who he wants, if I
go ahead and call them to this first informal
meeting

Yes.

229

-2HMJr:

and he can, maybe, if I get word -- I may
not hear from Barkley until tomorrow, then I
can't reach the President tomorrow, you see?

Do you think I can -- all I want to know is, is
he satisfied if Barkley says it's going to be,

let's say, Senator Wagner and somebody else
T:

Yes.

HMJr:

and Rayburn says it's going to be so-and-so?
Yes. Those are just your Congressional ones, huh?

HMJr:

Yeah. Can I go ahead and -- without checking with
him again

Yes.

HMJr:
see?

and call this meeting for three tomorrow, you

Yes.

HMJr:

And then I want to add two names which I hadn't
suggested to him before.

HMJr:

Yes.

He's left this all entirely to State Department

and me and State is with me on this.

Yes.

HMJr:

And the State Department went up on the Hill with
me in the person of Dean Acheson, you see?

Uh huh.

HMJr:

I want to add Henry Grady of San Francisco

Uh huh.

HMJr:

who is now President of the Federal Reserve

Bank of San Francisco.

Yes.

HMJr:

And Fred Vinson. I'd like to add those two.

-3T:

HMJr:

Yes, sir. All right. I'll see what I can

find out on that and call you back a little
bit later, Mr. Secretary.
And if -- how late do you stay -- because I'm
going to the dentist at five.
Well, I'll be here, probably, until around six

or a little after.

Well, if I don't get word from you before I go
to the dentist, I'11 call you from the dentist's.
How's that?

All right. Fine. All right, Mr. Secretary.

HMJr:

Thank you.

All right, sir. Bye.

230

231

June 7, 1944
3:40 p.m.
WAR REFUGEE BOARD

Present: Mr. Luxford
Mr. Pehle
Mr. DuBois

Mrs. Klotz

Mr. White

MR. PEHLE: This is the aide memoire we got from

the British. (Refers to memoire of June 5 from the British)
H.M. JR: You're not talking to Dr. Wise, so talk

up.

MR. PEHLE: All right.
H.M.JR: Get off your orthodox manner.
MR. PEHLE: The problem is, how we can take advantage

of this and keep the thing alive. The British have sent

it to us in such a way that it is very difficult to go

back directly to Steinhardt and say, do this or do that
about this proposal.
(Mr. White enters conference)

H.M.JR: Harry, I insisted that you should not come
and
they insisted you should. I said it was cruelty to
all
animals.
out.

MR. WHITE: I think it is a good spot for me to get
MR. LUXFORD: Thanks.

H.M.JR: That's what they said. Mr. Pehle said he
wanted to bring in the boys and you are one of "the
boys". What is the meeting you all want to get out of?

232

-2-

MR. LUXFORD: Mr. Kelchner.

MR. WHITE: We have to go back there.

H.M.JR: All right.
MR. PEHLE: It has been suggested that we send a

cable.

H.M.JR: Excuse me. John Sullivan said some newspaper man came in to complain, so he, John Sullivan, was

getting a list of all the hotels in New Hampshire.

MR. WHITE: He told me--he is doing this for New

Hampshire.

H.M.JR: Yes, but if you know about it, it's all

right with me.

MR. WHITE: He just told me.
H.M.JR: The Chinese Embassy wanted some place for

their wives, too.

MR. PEHLE: The suggestion has been made that we send

a cable back to Steinhardt, from whom we had previously

received some of this story, to point out to them in the
cable we want to keep the thing alive and say that coincident
with Hirschmann's going back which he is going to do on
Sunday--that we are sending a special representative of the

War Refugee Board to Ankara, that has the views of this
Government in reference to this matter.
H.M.JR: Who's that?
MR. PEHLE: Hirschmann.

H.M.JR: You're not naming him?

MR. PEHLE: Yes, he will be named, but to tell the
Germans that we are sending a special representative.
Now, most of the people, I take it, here feel that that

233

-3-

is what we ought to do. I just want to throw in a note
of doubt and see how you feel about it. If you feel it
is all right, then I don't much worry. The thing that
worries me about it is this: (a) It comes through the
British in such a way that they have practically told
us, "Don't do anything without coordinating your policy
with us". That is the first point. The second point
is that we haven't told the Russians anything about it.
Now, I don't know how important it is at this stage of
the war, not to take an action which involves dealing
with the German Government, the Gestapo, and sending a
special representative, because that is what we are
going to tell the Germans, to Ankara to deal with them,
without first coordinating with our Allies.
H.M.JR: While you are waiting to coordinate with
the Allies, it means the Combined Chiefs of Staff, and
these poor people will all be dead.
MR. LUXFORD: Exactly. We will tell them about it,

Mr. Secretary.

H.M.JR: There is only one person I would like to
have satisfied. I would like to have McCloy satisfied.
Do you think you can satisfy him?
MR. PEHLE: I. .think so.

H.M.JR: I don't even make that a "must", but I
would feel lots happier if McCloy was satisfied. As far
as I am concerned, it doesn't bother me a bit.
MR. WHITE: Do it informally.
MR. DuBOIS: We can inform them immediately what we

have done.

H.M.JR: I didn't even say that, but I won't fuss
around with it, but I would like McCloy to know the cable

has to clear.

234

-4-

MR. DuBOIS: This will go direct to Stettinius.
H.M.JR: And then that keeps my original bargain with
Stimson on these things that Stettinius would know and if
Stettinius is willing to send it and McCloy says "Okay", I

am perfectly satisfied, and I wouldn't wait. My God, I
wouldn't wait for anybody! I am perfectly willing to stand

up and say--and use the example of the experience I have had

with the Combined Chiefs of Staff--God, you wait for the
Combined Chiefs of Staff to act, maybe that's why it has
been so long about having a second front.

MR. WHITE: I think this thing has potential possibilities.
I am not sure in what direction. I think Joe DuBois ought to
go along. I feel very strongly about that, because this
fellow Hirschmann is a very good man, but I got a letter from

Irving Friedman--

MR. PEHLE: That's right, there are disturbing elements

about Hirschmann.

MR. WHITE: That's why I would like Joe DuBois to go
along. This might be a very important thing.

H.M.JR: Listen, if we argue much more about it, I
will change my mind. I have done a little checking of my
own on Hirschmann. Hirschmann is all right. There are
people who don't like him. He is very direct and very
brusque, and so on and so forth, but I have yet to find
anybody--the only criticism of Hirschmann, he doesn't
see things through. He gets bored with them.
MR. DuBOIS: I think this, Harry, he is very much
interested.
MR. WHITE: Never mind about Hirschmann.

H.M.JR: Luxford, have you been working on Harry White
to get out of Washington?

235

-5-

MR. LUXFORD: It is a touchy subject, Mr. Secretary.

H.M.JR: So would I; so would Mrs. Klotz; so would

Mrs. Dickinson.

MRS. KLOTZ: I think Harry has a point.
out.

MR. PEHLE: I am not going to lightly send Joe DuBois

H.M.JR: That is not going to be my decision until

Pehle recommends it. You have what you wanted out of me?

MR. PEHLE: Yes, sir. I would like to mention one

more sentence.

(Everybody leaves conference but Mr. Pehle)

MR. PEHLE: It is tied in with what you just said.

Luxford is going up to the Conference in Bretton Woods--

H.M.JR: I didn't even know that.
MR. PEHLE: Yes, he is going up there and I have been
asked whether I would consent to DuBois handling his work

while
he is gone. I am willing to do that for obvious
reasons.
H.M.JR: Who asked that?

MR. PEHLE: Joe O'Connell and Luxford, but I didn't

want to do it without your okay. They are doing that

because they are thinking of sending Aarons to London.

H.M.JR: Well--Harry started me last night on Aarons
and before I give up any more lawyers to anybody, they
are going to have a hell of a time. I wrote a memorandum
to Charlie--

MR. PEHLE: They will have to raise it with you but
they
need DuBois while Luxford is gone, I want to give
itif to
him.

236

-6-

H.M.JR: That is something else, but before they
take any more of these bright lawyers and send them all
over the world, you are going to have trouble with me.

237

June 7, 1944

3:52 p.m.

HMJr:

Ernest

Olrich:
HMJr:

Hello.

Hello, Mr. Secretary. Olrich speaking.
How are you? I'm just in the process of
signing Order Number 53 which makes Ernest
L. Olrich an Assistant to the Secretary in
charge of the Procurement Division.

All right, sir.

HMJr:

Now, Charlie Bell will go back and he'll talk

to you, and he and you and Sullivan get together
and the combination of you can break the news to

HMJr:

Cliff Mack. I'd do it but I'm leaving town
tomorrow night and I ain't just got time.
No. Ah -- we'll be glad to do it.

So when Charlie goes back, he and Sullivan and
you get together and you do it, and tell Cliff
when I come back from the West Coast, I'll see

him.
O:

Yes, sir, I will.

HMJr:

Is everybody happy?

HMJr:

Yes, they are. We're -- we'll make more progress.
We' re beginning to get men and we're moving merchandise and information is coming. I think
you've had several reports which I think are a
little more enlightening than some you have received.
I hear you're forcing a lot of Jeeps on me for War
Bond sales.

(Laughs) I think it's in reverse.

HMJr:

Did you get me one?

I'm going to get you one. I don't know how I'11

get it -- I'll get -- I've got one but it's not a
it, you'll get it.
All right. Well, I -- I think it's a wonderful way

good one, but I'11 have it. If I have to gold-plate

HMJr:

to dispose of them. Sell them to the Junior Chamber

of Commerce and they '11 sell War Bonds.

-2O:

Right. We'll have it there. You can count on it.

HMJr:

Wonderful.

Righto.

HMJr:

Thank you.

All right. And I hope you have a good trip.

HMJr:

Thank you.

Thank you, sir.

HMJr:

All right.

Good bye.

238

238-A
THE SECRETARY OF THE TREASURY
WASHINGTON

June 7, 1044

TREASURY DEPARTMENT ORDER NO. 53.

Effective from and after this date, the Procurement
Division is assigned to the supervision of Mr. Ernest L.

Olrich, Assistant to the Secretary.
Treasury Department Order No. 49, dated May 27,

1943, is revoked and superseded by this Order.

Munuthan
Secretary of the Treasury.

PORVICTORY

BUY
WAR
ONDE
STAMPS

239

June 7, 1944
4:00 p.m.

ADVERTISING COPY, FIFTH WAR LOAN

Present: Mr. Gamble
Mr. Fred Smith
Mr. Robert Smith
Mrs. Aikman

Mr. Sinclair
Mr. Cobb

Mr. Rainbolt
Mr. Peabody

Mr. Stone
Mr. Alexander

Mr. Delehanty
Mrs. Klotz
MR. GAMBLE: We have one new person, Mrs. Aikman.

She came down on the radio copy (introduces Mrs.Aikman).

H.M.JR: Oh. Fifty-fifty on women interest - one
horse, one rabbit-MR. GAMBLE: One woman.end nine.men.

H.M.JR: Don't they have any women write copy in

America?

MR. PEABODY: They have a lot of them, Mr. Secretary,

but they can't take this Washington job, they are not
strong enough.

MRS. KLOTZ: "Sez you"!

H.M.JR: Well, Mr. Chairman, where are you?
MR. PEABODY: Well, we are just about cleaned up

as far as we can be now, Mr. Secretary. we have here
three ads, two for newspapers and one for magazines, on
the theme you suggested yesterday.

240

-2Would you like to read these yourself, or

would you like to have them read to you?

H.MLJR: I like your voice!
Incidentally, the President had a press conference
at the same time I saw you people yesterday, and he
stressed exactly the same thing.
MR. GAMBLE: Over-confidence.

H.M.JR: I don't know whether Ted told you people
about my talking with General Marshall this morning.
He says all the bunkers and all the hurdles are ahead of

us. He isn't scared, as they say, but there are a lot
of very difficult things to overcome, especially on

production.

We have been getting the figures and I hope to use
them in Texarkana. They are opening new plants instead
of shutting them down, and everything is for more spending of money and increased production, and everything

else. He is going to spend a lot of money. In other
words, the war is just beginning.
(Mr. Fred Smith enters the conference)

MR. PEABODY: It is a good War Bond argument, re-

gardless of its effect on public morale.
H.M.JR: This is a speech of statistics given by
General Marshall. That is what I hope to lay before the
public in Texarkana. As 1 say, I have had this half hour
with General Marshall, as I always do before I start out.
There is no question that the spending of money is

going - I think the figures that he gave me, which I
hope to use, show that they actually took delivery of
twenty-three billion dollars' worth of goods in the
calendar year '43, and they are looking for at least
twenty-four billion dollars this year.

241

-3They are opening new factories for artillery and
heavy ammunition, and so forth. He says - in the room
here - he says he is having his battles with Jimmy Byrnes
and Nelson. They don't want to give him any more factories.
He has to have additional factories. So it is just contrary to what everybody thinks.
I used this thing - these two headlines from the
Wall Street Journal - everything as though the war was
over. Well, the war is over; what are we going to do?"
If this man doesn't know, nobody knows.

MR. PEABODY: It is just exactly the opposite.

H.M.JR: I hope to have some figures. I will have
some figures. Just to give it to you - we have the
breakdown - it cost so many billion dollars to go from
Naples to Rome; how much will it cost to go from the

French Coast to Derlin. This stuff I am saving for
myself! (Laughter)
MR. GAMBLE: Can't rewrite the ads.

H.M.JR: I feel now I am on the beam. I haven't

felt right on this whole thing until today. They are

going to tell us the story of how these regiments in
Italy have been able to go ahead the last two weeks,
and why they couldn't go ahead before, and the technique
they used - refitting, rearming, and so forth - and
what it cost in dollars, which has never been explained.
MR. PEABODY: That will be wonderful. There is
some awfully good war bond copy in that.
H.M. JR: But I feel now what my message should be

and how I can be of use. It hasn't been clear in my
head, but it is now. And believe me, the war hasn't
started yet; it hasn't begun. There are some awfully
anxious days ahead, and we have all got to be on our
toes.

Now, Mr. Peabody?

242

-4MR. PEABODY: This layout we had over yesterday;
we had General Bradley on it.

Title: "Your Invasion." (Reading) "From General
Bradley through every rank in our armed forces, American
men now face a brutal, desperate, able enemy, for this
invasion has only begun. Before our fighters lies ahead
a bloody task, one that demands all their courage, backed

by all your faith in their ultimate victory. That faith

will be tested many times in this invasion and grim
struggles, set-backs, possibly even temporary defeats.
It will be up to you. Early victories usually only mean

more savage opposition from a foe made more bitter, more

ruthless as the shadow of his doom grows larger. It is
up to you to keep that faith in days and nights of gloom
as well as in hours of triumph. There is little you can
do to show you realize what they must face, perhaps for

many months, but one thing you can do; buy your invasion

bonds today. Let the bonds you buy in this greatest of
drives be the measure of your belief in their ultimate
victory. Back the attack. Buy more than before."
H.M.JR: Is that Bradley speaking?
MR. PEABODY: No, the picture is a war scene, but

thas Bradley in one corner of it, with soldiers.

H.M.JR: Did you know that Dradley is Commanding
General of American troops in France, now?
MR. PEABODY: We assumed he was.

MR. COBB: It was in the papers this morning.
MR. PEABODY: That is correct, isn't it? His name
hadn't appeared on any of the earlier dispatches.
H.M.JR: It came over the ticker sometime today.
MR. PEABODY: That will be very apt, then.

243

-5H.M.JR: Very, and you can get his correct title.

He is in command of the Americal troops.
MR. COBB:

He is the commander of all ground
forces in the invasion.

H.M.JR: Couldn't we indicate that he is in charge

of the forces which have landed?
MR. COBB:

Yes.

H.M.JR: Because General Montgomery is in charge of
them all, but that doesn't mean he is in France.
MR. COBB: True.

H.M.JR: He is in charge of the troops which have

landed.

We can simply take his title and his
position from the ticker, then we won't need to get permission to use it because it would be public information.
MR. COBB:

check.

H.M.JR: That is right. It doesn't do any harm to

MR. PEABODY: No, we will do that.
H.M.JR: We have to use OWI in here!

MR. STONE: Here we go again. (Laughter)

MR. PEABODY: I was waiting for that one. It was

a little late this afternoon, Mr. Secretary.

Here is another one. This we are tentatively think-

ing of. We have a situation for September magazines,
because there you have an area that, again, we don't know

much about. We know it will still be on. he don't know
anything specific we can tie into. We felt the theme
you suggested yesterday might be admirable for that time,
so here is another ad for that.

244

-6Title: "Let these guys start." (Reading) "There
is a day coming when the enemy will be licked, beaten,

whipped to a fair-ye-well, every last vestige of fight
knocked out of them. There is a day coming when every
mother's son will have the right to stand up and urge,"
and so forth and so on.

"But Let's not start the cheering yet. In fact,

let's not start it at all over here. Let's leave it

to the fellows who are doing the job - the only fellows
who will know when it is done - to start the cheering.
Our leaders have told us over and over again that the
smashing of the Axis will be a slow job, a dangerous job,
a bloody job; and they have told us what our own common
sense confirms, that if we at home start to let up before
the job is completely done, it will be slower, more
dangerous, bloodier. Right now it is up to us to buy
War Bonds, to buy double, triple the bonds we have ever

bought before. Let's do that. Let's keep bearing right
down until we get the news of victory from the only place
it can come, the battle line. Let's buy more War Bonds
and more, and more. If we do that, we will feel even
more like cheering when the right time comes.

H.M.JR: Now, may I put my suggestion in there "Have you bought. your invasion bonds today?" - if these
men like that.
MR. PEABODY: Yes, we can make a display line out

of that.

H.M.JR: I picked that up on the radio last night;

I liked it.

MR. GAMBLE: You will find it all the way through.

H.M.JR: will IY It is missing in this one.
MR. GAMBLE: Read it back in the other one, Stewart.

H.M.JR: But in there you could use it with the
rest of them, like that?

245

-7-

MR. GAMBLE: Oh, very much.

H.M.JR: I was listening last night and somebody

used it. I thought that hit the bull's-eye.

MR. GAMBLE: We have it on one poster, now.

MR. PEABODY: we have it on the poster. We are

putting it in the drop-in for the box and also we have
it for some of the radios.
MRS.AIKMAN: Yes.

MR. PEABODY: Yes, it was in the first piece of copy.
Now, that was one thing. The other thing was the

one we referred to yesterday - it isn't quite exact that is the prayer thing. We had an ad already written
called "Bow your Heads, which we all agreed was an
excellent ad. I think you saw it, Mr. Secretary. We

did one more on that same theme, but I might read it
to you.

We have a layout for this, it is titled "As we
pray for their safety, let us send out dollars to fight
with them in the Fifth War Loan Drive." (Reading)
"Pray for them, America; pray for their safety in this
fateful hour. Pray for victory in their bitter, bloody
fight for freedom. Pray for their return to us as soon
as may be. A long hard road lies ahead. There will be
many a desperate heart-breaking day before they will
reach the end of that road, and many a white cross will

mark its course through the tortured battlefields of

Europe. Would that we could do something to help our

gallant fighting men in their hour of need, and something to express the gratitude in our hearts for the
sacrifices they are making for us. Do something? We
can do something. Each and every one of us right now
can join the fight by purchasing extra war Bonds during
the Fifth War Loan. Let us support this Drive as we have
never done before. Let us show our loved ones over there
we are with them heart and soul. Let them know that we

246

-8are backing them to the limit, to our last dollar. Yes,
to our last dollar. No matter what sacrifices we have
to make, let us all invest in War Bonds now, more and
more War Bonds, until we have poured out the might of
America in overwhelming measure. Let no American fight-

ing man feel we have failed him in this crisis. Let

his hands never be without the weapons which only your

dollars can provide. There is no turning back now.
There can be no hesitation. We are on the march. Today, before you go to bed tonight, make your pledge
to invest in extra war bonds during this Drive. Invest in double or triple the amount you have ever subscribed before. Invest one hundred dollars, two hundred dollars, three hundred dollars extra. Invest in
thousands of dollars' worth, if you can. everyone,
man, woman, and child, must do his or her part. You,
yes, you, must do yours. Back the attack. Buy more
than before. 11

H.M.JR: My criticism is that it is too long. I

don't think anybody will read it.

MR. PEABODY: I think that was probably written for

the layout. It can be cut.

H.M.JR: I think there are too many words.
MR. GAMBLE: I don't know that you have ever heard

the copy on the ad we like the best. I think maybe,
Stewart, you ought to read it.
MR. PE/BODY: what one is that?
MR. GAMBLE: "Bow your Heads.

MR. PEABODY: You didn't hear that?

H.M.JR: You don't want to use the President's
prayer of last night?
MR. PEABODY: We read it very carefully, and listened
to it, Mr. Secretary, and we could not put a War Bond

247

message onto that. I think it would be completely out

of taste. It is really a deeply religious prayer, and
the opportunity just isn't there. It stands by itself.
MR GAMBLE: They all sat and listened to it together
last night.

H.M.JR: All right. I just wanted to make sure

they weren't political, that is all.

MR. PEABODY: This is entitled "Bow your Heads."

(Reading) "Pray with millions of mothers the country
over as their hearts reach out over the seas, each one
seeking out her boy to protect him with the shield of

her love. Believe that in this world there is definite
strength and decency and honor. Believe that in our
devotion there is moral force. Believe that our will
to victory will aid that victory. Seek and ye shall find.

Let us seek added strength and fortitude for our men in
our own sacrifice and devotion. Let us focus every
thought, every action, and every prayer on the boys
fighting for us, and while each one bends to his task
with ever growing fervor and energy, let us adopt a common
symbol as our faith in victory. Let that symbol be War
Bonds. Let us pour our money in a gigantic flood of
gold toward our sons and brothers as a spiritual shield

for them. This is the invasion. The lives of our boys
are at stake. Let them see that the soul of America
is with them. Let it not be too late - not next month,

next week, or tomorrow, but today.'

JR: Well, I will be perfectly frank. If you

were selling me so copy and I was president of the company,

I wouldn't buy any of this stuff. But you fellows are

supposed to be the tops in your profession and I bow to

you. I can get it through pictures; I never read the

written word of an ad. I either get it the first flash,
or I don't. But I am willing to take the word of the

men who are making a living out of this.
last.

MR. GAMBLE: This is a powerful piece of copy, this

248

- 10 -

H.M.JR: But if I had to put my own money in it,
I wouldn't buy it. I would most likely be wrong.
MR. PEABODY: Mr. Secretary, I think this business

of long copy is something like people getting on a bus.
The bus is full when it starts and then down at 15th
Street, five people get off, and down at 13th Street
two more get off, by the time you get to the end of the
line there are only two or three. Therefore, we write
copy which may be long for some people, but you always

hold some of them right through to the end, and therefore the longer you can keep at them, and the harder
you can pound them, the more chance you have of getting
action out of them. You drop off at the next corner
when you read that - you don't even get on the bus!
(Laughter)

H.M.JR: If there is an ad on the bus, I will read
it. But I wouldn't get on!
But as I say, when we have invited the best of the
profession to come down here, I am not going to argue
with you. I am just telling you why I don't spark more
to these things - because I wouldn't buy them. but I
will go along. There is nothing offensive that I can
object to. But I want to explain why I don't stand up.
and give three cheers.

MR. PEABODY: All right, sir. Here are a few things.
I will read one or two. These are suggestions we will
make to the newspapers to drop into the box in the ads
they already have. The first one (reading): "What comes
after prayer? All of us have prayed with deep heart-felt
sincerity for our men's success, but after prayer comes
action. Buying ar bonds is one thing you can do and do

right now that will really and actually help. Buy that

invasion bond today.' "

Another one: "Can we take it? The men running this
war have told us again and again that victory is likely
to come slowly at bitter cost, and attended by heartbreaks
all the way. we must take bad news with good. We must

249

- 11 -

never let up. We must keep doing our job and buying
more and more bonds until the day the enemy lays down
his gun. Buy that invasion bond today.

Another suggestion I don't need to read - I think
we mentioned it yesterday - is the number of boys out of
a given town, locally, that are in the service - the
number who have made the supreme sacrifice.

There is another one which provides for plugging
any local special event such as the New York Army Show,
or the washington Army Show. There will be a fine

place in that ad for them to advertise that this is
coming and to be sure to go.

Another one relates to the local quota, which we

have always found is effective. Put that in there (indicating) - and how close we are to it. Those are going
out, Jack?

MR. DELEHANTY: Today.

MR. PEABODY: To fit into the other ads.

H.M.JR: I like those.
MR. PEABODY: The other point is "Buy the invasion

bond today. We have covered that pretty well on the
copy.

Jack says we are going to have it on the poster as
the main display line, and we are going to send out five
new ads to the newspapers, Mr. Secretary, and in those
we can get that in display.
MR. GAMBLE: As a punch-line, like a slogan, and not
in the body of the copy.
MR. PEABODY: How would you feel about an ad in which

we dropped out "Back the Attack," and put that in instead?

H.M.JR: what is that?

250

- 12 -

MR. PEABODY: "Buy your Invasion Bond Today."

H.M.JR: All right.
MR. PEABODY: That will give it much more attention

and much more display.

H.M.JR: That is all right.
MR. PEABODY: I have three radio announcements which

I can't read - I can't read a radio announcement. Ruth,

you read them.

MRS. AIKMAN: That is unfair, but-H.M.JR: Have you written these?

MRS. AIKMAN: Yes. It is not quite fair to make

me read them.

MR. PEABODY: She has done twenty since ten o'clock

last night.

MRS. AIKMAN: These are one-minute spot announce-

ments: "Friends, right now, on some far-off bloody beach-

head an American boy is offering his life for YOU.
For that's what invasion means! Invasion is not the end
of this war it's only the beginning of the end. Our
enemies will fight to the last ditch for defeat is a

bitter thing and they'll make our victory come high!
Our leaders tell us that the grimmest, toughest battles
in history are still ahead, for our boys. Here at home
we're not asked to give our lives ... nor
leg, nor
a

an arm, nor an eye! But we are asked to lend our money
and no living American can refuse his country now. No
matter what you bought before, your government asks you

to double the amount this time. Sure, it'11 be tough!

War is tough! But remember - when we go to bed at night
we know we'l 11 get up next morning! So make the 5th War
Loan Drive the smashing success it's got to be! Show
those men who are fighting for us that we're behind them
with our last dollar! BACK THE ATTACK - buy MORE than

251

- 13 -

before! And buy those Invasion Bonds - TOMORROW! The
message you just heard was from our United States Treasury
and was brought to you by
(sponsor)
H.M.JR: That is one announcement?
11

MRS. AIKMAN: That is one minute. These are all one
minute.

H.M.JR: Can they do that in a minute?

MRS. AIKMAN: Yes, it really is. I timed them all

with a stop watch.

(Reading) "The flags were put out! The bands
played! excited people cheered the world-shaking news

when D-Day came. But friends invasion is not the end
of this war! It's only the beginning of the end! Our
military leaders tell us that the toughest, bloodiest

battles in the history of the whole world are still

ahead. Lives will be lost! Casualties will be heavy!
There are grim days ahead for all of us, before final
victory is here. And that does mean - all of us! For
we here at home can't let our fighting men do it alone!
Our fighting dollars have to get into the struggle
and more dollars than we dreamed of for though invasion means ultimate triumph invasion comes high.

Every hour of the war costs thousands and thousands of

dollars and it's up to us safe here at home

to back up those boys on the bloody beachheads of the world!
The largest sum of money ever raised must be raised during
the 5th War Loan Drive! Your country asks you to buy
double the bonds you bought last time! So make the sacrifice

and BACK THE ATTACK! Buy MORE than before!
TOMORROW.
Buy YOUR Invasion Bonds

H.M.JR: Fifty-five seconds!

MRS. AIKMAN: I was hurrying a little that time.

252

- 14 -

MR. PEABODY: You ought to give her the hand
signals, Mr. Secretary.

H.M.JR: I am a very suspicious guy. I am from

Missouri.

All fight.
MRS. AIKMAN: (Reading) "Friends, that hour when

word flashed around the world, invasion, that hour was
the most important in the history of mankind. Yes, the

crucial time is here at last and the fate of nations is

in the making, and every one of us has somebody near and

dear to us who is out there making it. You are anxious
you
to do your part you are more than anxious
are determined. You want to feel that you, too, are
doing everything you can to back up those men, and the

one thing you can do, right now, is to get behind the
5th War Loan Drive with every nickel you can dig up.

Buy War Bonds and buy more bonds. Remember, this isn't

over yet. The bloodiest battles in history are still
ahead, and every day and night of this war is costing
millions of dillars. So tighten your belt and scrape

your pocketbook, and send your fighting dollars to back
up your fighting men. If you have to make a sacrifice
to buy more bonds, just stop and think of what those
boys have sacrificed. On bloody beachheads, the sea, and

in the air, they are fighting grimly on to win this war

for us. So BACK THE ATTACK buy MORE than before
in the 5th war Loan!"

H.M.JR: May I make a suggestion for all of you, if
you don't mind? You get the impression that this thing

is the only thing. After all, we do have a Pacific. If
it can be introduced - the fate of Europe hangs on this just introduce that - not " the fate of the whole world.
11

MR. PEABODY: In other words, narrow it down to what
we have got before us now.

H.M.JR: If you don't mind - instead of saying, the

fate of the world," 11 just say "the fate of Europe, " because
we have a Pacific show which will maybe become focal the

way this is.

253

- 15 -

Do you think that is all right? It is the truth,

the fate of Europe hangs on it rather than the fate of
the world.

MR. PEABODY: We still have another.

H.M.JR: That won't in any way spoil your thing?
MRS. AIKMAN: No, indeed.

H.M.JR: Another one?

MRS. AIKMAN: No, we brought just three.

H.M.JR: Very good. Thank you.
MRS. AIKMAN: Thank you.

H.M.JR: One other suggestion - this is awfully
small, but there is only one thing - "scrape your pocketbook," I don't know just how you do that.
MRS. AIKMAN: You kind of scrabble around.

MR. GAMBLE: The inference meant there is really

to turn it inside out this time. I.think it is good.
H.M.JR: It is only a little thing. But on the
over-all, they are excellent.

MRS. AIKMAN: Thank you very much.

MR. PEABODY: That is the collection, Mr. Secretary;
that gives us all the material we talked about yesterday.

H.M.JR: I think it is wonderful. I think that is

fine. The only thing - as I say, I played my hunch last
night and after talking with General Marshall I feel we
are all on the beam. we just have to be prepared for

weeks of very, very trying news. There will be some days

that it will look very black.

254

- 16 -

MR. GAMBLE: I think we are well ready for it in

this campaign now.

MR. PEABODY: Yes, it is good that we got that

reflection yesterday, because it has been built into all
of this.
H.M.JR: I haven't talked this through, myself, but
I will throw it out to you people. I don't know how
many weeks we took a terrific licking day after day at
Anzio - we took it on the chin, day after day. Hundreds
of people died. Now, I can't believe it true, it looks
as if we have made a forty-mile gain in one day. It
hasn't been confirmed yet. You might draw a parallel "Well, after all, we did take it in Anzio for so many

weeks, but we got the combination and now look where we

are. So don't be too down-hearted if we get bogged
down somewhere in France, and maybe bogged down for

number of weeks. I am just throwing it out to you.
don't know whether it is good or not.

MR. PEABODY: I think the other way for our purpose;
I had rather have them down-hearted. I don't mean I
want them to be that way, but we have a better chance
of selling bonds when they are in that mood than we

have if they get over-optimistic.

H.M.JR: I was thinking - in other words, if we got

too pessimistic - anyway, what you gave me today is what
I wanted. I think it is fine, and you have done it on
such short notice.

MR. PEABODY: That is fine, sir. we appreciate

your comments.

MR. GAMBLE: We have even gone SO far as to help a

couple of them get out of town! I think we have done

our part.

H.M.JR: That was the carrot before their nose.
(Laughter)

255

- 17 -

MR. PEABODY: We have to go back and do the other

part of the job now. The stuff has to be translated
into pictures and titles.

H.M.JR: well, are you going to be around awhile?
MR. PEABODY: I am going back tonight.

H.M.JR: Well, I am very much obliged.

cc-Harry White

HMJr:

June 7, 1944
4:40 p.m.

256

Hello.

Ronald
Ransom:

Hello, Henry.

HMJr:

Hello, Ronald.

I want, at first, to congratulate you people of
the Treasury on what I regard as extraordinarily
satisfactory progress on this stabilization
thing.

HMJr:

Good.

I think that is a very, extraordinarily successful
job you've done.

HMJr:

Good.

And we have tried to be as helpful as we know
how.

HMJr:

That's right.

Now, in the meantime, Harry White has been hunting

around for a few people on the staff of the Federal
Reserve Bank

HMJr:
R:

Yeah.

who might be on the technical staff.
Yeah.

And we are more than willing, as far as we are
concerned to have you people get all the help
from that quarter that you can.

HMJr:

Right.

Our dilemma is that among the group are people

like Malcolm Bryan of Atlanta, who is Acting
First Vice President of that bank, charged with

a lot of duties
HMJr:
R:

Yeah.

and if people in your Department would take

the trouble to clear them with us first

257

-2HMJr:
R:

HMJr:

Yeah.

....we might handle it much more satisfactorily.
Well, I will tell White. Now, who should he
clear it with over there?

Szymczak.

HMJr:

Szymczak?

Yes.

HMJr:

I'll tell that to White.

And if they'11 pick that up and do it that way,
I think we can handle it more expeditiously
and more satisfactorily.

HMJr:

You want it all cleared through Szymczak?

Through Szymczak if you will.

HMJr:

Be delighted to.

Thank you, Henry.

HMJr:

Thank you.

All right.

258
June 7, 1944
4:43 p.m.

HMJr:

Hello.

Operator:

Go ahead.

HMJr:

Hello.

Senator

Barkley:

Hello.

HMJr:

Yes.

Henry.

HMJr:

Talking.

HMJr:
B:

I talked to Danaher again and he's decided he
can't go on that thing.
Oh.

He says that in addition to his duties on the
Resolutions Committee of the Republican Convention, that his boys are both in the Army and
that he is trying to get his daughters-in-law
and his wife together to spend a little time
with them this summer and he just don't feel
like undertaking it.

HMJr:

Well, now

So, that leaves us in bad shape

HMJr:

Yeah.

as far as the Finance Committee -- I mean
the Banking Committee is concerned.

HMJr:

Yeah.

Bob Wagner told me today that Tobey had been to

him personally and practically solicited that
he be appointed on this -- this Committee.

HMJr:

Yeah.

But, hell, I just think that's

HMJr:

Well, we can't do that.

-2-

that's just a joke.

HMJr:

No.

When you get beyond -- the next man below
Danaher is Taft.

HMJr:

Yeah.

259

And while he's got plenty of ability, he
usually uses it in the wrong way.

HMJr:

Yeah.

And you get down below him, you haven't got
anything.

HMJr:

Yeah.

Now, the only -- there might be a possibility

of -- who'd the House recommend?

HMJr:

Let me see -- it was -- just a minute -- I think

Yeah.

HMJr:

I think that's what they said.

That's the Vice Chairman and ranking Republican.

HMJr:

I'm almost sure. I just sent for Harry White.

Yeah.

HMJr:

He may be here any minute. I think it's Spence

it was Spence and Wolcott.

and Wolcott.

Now, there might be a possibility -- I don't know
whether he -- how it would work -- I don't want to

do anything that will -- that will offend the
Banking Committee

HMJr:

Yeah.

because we might have to -- we've got to keep

them in a good humor.
HMJr:

Yeah.

-3B:

But if we went away from that Committee, we
might pick a man from Foreign Relations, which

of course, is interested.

HMJr:

Yeah.

And Vandenberg is both on Foreign Relations and
Finance.

HMJr:
B:

Yeah.

From that standpoint, if we had to go off of
the Banking Committee, that might be a solution.
of course, I don't know whether he'd serve or

not. I haven't inquired.

HMJr:
B:

Well, he's interested.

I haven't had -- felt at liberty to talk to him
about it because I was waiting on Danaher and
then I got to figuring -- I don't want to talk
to him unless -- unless we're going to appoint

him
HMJr:

Yeah.

if he wants it.

HMJr:

Well, he's been -- he told me he is for this.

Yeah. Well, I'll have to -- I'll have to report
to you tomorrow. I can't give you the answer

now,
HMJr:

(Aside: In the House.) Well, let me just --

White came in. He says Spence and Wolcott is
correct.

Yeah.

HMJr:

Now, here's the thing -- here's my dilemma and
I wonder if -- I'm leaving town tomorrow night to
go out campaigning on War Bonds.

Yeah.

HMJr:

And we wanted to call a meeting at three o'clock
tomorrow, preliminary, of these delegates.

Yes.

260

261
4

HMJr:

You don't suppose that we can -- could we start
without the Republican Senator?

Well

HMJr:

That wouldn't be so good, would it?
That wouldn't be so good unless you could have it
an executive and confidential session.

HMJr:

Yeah. Do you think you'd know by noon tomorrow?

I might.

HMJr:

What?

I might. I'll do my best.

HMJr:

Will you do your best?

I'll do my best. But I've got a hard thing to

work out
HMJr:

Yeah.

uh -- the way to get away from the Banking

Committee
HMJr:

Yeah.

without giving offense to them.

HMJr:
B:

Yeah.

Because the House -- the House has selected both
of their members from the Banking Committee.

HMJr:

Yeah.

Well, I'll study it over and see what I can

give you tomorrow on it.

If you could do it by -- before lunch tomorrow,
you'd be doing me a real favor.
Well, I'll see what I can do.

HMJr:

I thank you.

And let you know.

HMJr:

262
-

HMJr:

Thank you.

All right.

263

June 7, 1944

Dear Commender Stassen:

Thank you for your letter of May 22, relative
to the articles made by service men in the South
Pacific Area which have been sent to the Treasury
for display purposes. We have also received
Miss Lucy H. Crockett's letter enclosing a description of the individual items end an indication as.
to their disposition when the exhibition has been
completed.

We appreciate the opportunity to use these
items, particularly during the Fifth War Loan
Campsign. It is the War Finance Division's plan
to exhibit this display in many large cities during
the impending drive and I am sure that we will find
it to be a highly valuable contribution to this
effort.
Please be assured that as soon as these exhibits
have ended, we will have all of these items returned
to the individual consignees indicated. Thank you
for your interest and help in connection with this
project.
Sincerely yours,
(Signed) H. Morgenthan, Jr.

Lt. Commander H. E. Stassen,

Flag Secretary,
South Pacific Force,

Fleet Post Office,
Sen Francisco, Celifornia.
TRO:ecb

264

TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION

DATE June 6, 1944
TO

Miss Chauncey

FROM

Mr. Gamble

See

Receipt is acknowledged of three boxes addressed to Secretary of the
Treasury from Lt. Commander H. E. Stassen, South Pacific, ETIC-33,
shipped on Government Bill of Lading "recreational gear" delivered
on May 25th. This material was received from the Storekeeper of the
Treasury and is being handled by the War Finance Division.

265

Memo for Mrs. Klotz:

The Storekeeper of the Treasury has received three

boxes, weighing 150 lbs. , addressed to the Secretary of
the Treasury from "Comdr. South Pacific ETIC-33", shipped

on Government Bill of lading, contents marked "Recreational
Gear". One box was opened and found to contain "souvenirs

such as knives, etc. "
This may have been sent by Admiral Halsey in view of

his recent letter sending photos of an ingenuity contest
sponsored by the A.R.C. for possible use in War Bond drives.
Mr. Gamble recommends that the boxes be sent to him

for examination and if they are the articles which the
soldiers made from captured material, etc., the War Finance

will arrange it for exhibition purposes.
nmc

Sparker

you

U.S. NAVAL AIR STATION

Anacostia, D.C.

Supply Department

Number 5212

Date 5/20/44

Received from: Comdr. South Pacific, Epia 33
Shipment Order

Contract

Bill of Leding Memo N-GC 12588 46

Reqn. No.

Invoice
Number

Packages

No. Kind
3 Boxes

CONTENTS

Weight

Recreational Gear

150/

Via: NASS

For delivery to Henry Morgenthau, 13.. Bee, of Treas., Wash., D.C.
Received by:

Date

For Transchipment to:
B/L

Delivered to am Gamble
Room 716

Sshood

str5

COMBOPAC FILE

SOUTH PACIFIC FORCE
OF THE UNITED STATES PACIFIC FLEET
HEADQUARTERS

THE

COMMANDER

22 May 1944

The Secretary of the Treasury
Washington, D.C.

Dear Mr. Secretary:

With further reference to Admiral Halsey's letter of

March 13 and your reply of March 27, I am pleased to advise

you that the exhibit of unusual items fabricated by servicemen in the South Pacific, and sponsored by the American Red

Cross, has been forwarded to your department. They are contained in three boxes, total weight of the three being 150
lbs., and are covered by Bill of Lading #17588-44.

Enclosed with the shipment, and in a letter from
Miss Crockett of the Red Cross, is descriptive information
of the enemy material and other sources of metals used in

the fabrication. It is respectfully requested that after

the department has completed its use of the exhibit for
War Bond drives, the respective items be packed and forwarded to the individual consignees indicated. This can
be done either by your department or by a nonveniently
located Naval Supply Officer.
Respectfully,

H. E. STASSEN,

Flag Secretary.

+
AMERICAN RED CROSS
Service Club

APO 502

c/o Postmaster

San Francisco, California
The Secretary of the Treasury

Washington, D.C.

Desir Mr. Secretary:
3

We are shipping herewith the crates coraining the Red

Cross South Pacific "INGRNUITY CONEST" entries, which Admirel

Halsey suggested sanding o you for whatever use you care to
put it towards promoting the sales. of Wer Bonds.
These eutries were all made by servicement on their own

spare time, of materials icked up by them, with tools often
made by themselves. The display created great interest among
the enlisted men in this area. It provided apdendid examples
of O what good USU man with & little ingenuity can put their

spare moments. The therepeltic value of such work must be
Clair to-aryone
milies. WCO has seall men separated from their homes

I 16 suggested that if these items are sent on tour as
display, the Civicers of each.tom. be invited to cost a
popular
1107 to
vote
10 Dattrect
thefor their favorite object - this as &
Enclosed Ara records of each item, with the address to
which the object IS eventually to shipped, also & suggested
legend to TO on each display card. For the sake of the men

WAO were willing to trust their handiwork to us, it is requested that every possible preoution be taken in handling
he objects, and heat 111 time they be duly shipped to the

people for woom the owners intended them.

We 570 grantful for Admiral Helsey's interest, and we
S. orely hope
some
be nxide of this show towards
the sale
of 490
War my
Polds.
Yours very sincerely,

due " Cochit
LUCY CROCKETT

American Red Cross

)

AMERICAN RED CROSS
POOPY

SOUTH PACIFIC FORCE

of the United States Pacific Fleet
Headquarters of the Commander

13 March 1944

Dear vr. Secretary:
The enclosed copy of a letter from the American Red Cross
Service Club, with accompanying photographs and descriptions
presents a remarkable exhibit which I have viewed personally.

It occurred to me that it might be a very interesting and
appealing collection to display in conjuntion with the War

Bond drives, and I have requested Miss Colletta Ryan, the
Director of the American Red Cross Servie Clubs in the South
Pacific Area, who has returned to the mainland for a speak-

ing tour, to present to your department the availability of
this exhibit.
Sincerely yours,
/s/ V. F. HALSEY

The Secretary of the Treasury

Washington, D.C.

"To furnish volunteer aid to the sick and wounded of armies and "To act in mattérs of voluntary relief
and in accord with the military and naval authorities - . medium of communication between the people of the

United States of America and their Army and Nevy ..." The Charter of the American National Red Cross
By Act of Congre m January 5, 1905.

AMERICAN RED CROSS
COPY

THE SECRETARY OF THE TREASURY
WASHINGON

27 March 1944

My dear Admirel Halsey:

I have received your letter of March 13 with its enclosures
elling about the Ingenuity Contest spoisored by the Red Cross
Service Club among the servicemen in the South Pacific area.
We shall be very glad to discuss wi h Miss Colletta Ryan methods
of making use of the exhibit in War Bond Sales.
Knowing what resposibilities you have on your shoulders
and the incessant demands on your time and energy that must

result, I appreciate more than I can say your kindness in
so useful that N our men who have participated in it will be

writing to me about this project. We shall try to make it
rewarded when the word gets back to them.

We continue here at home to watch the achi evements of

he Sou h Pacific Force with the most intense interest and

with the highest admiration for the great qualities of leadershi D its Commander has displayed and is displaying.
Sincerely,

/s/ HENRY MORGANTHAUQHJR.

Secretary of the Treasury
Admiral William F. Halsey USN
Commander, So th Pacific Force,
Flee* Pos office
San Francisco, California.

volunteer
accord

with

the

aid

military

the

and

navel

"To
of

voluntary

the people of the

United States of America and their Anny and Nevy ... The Charter of the American National Red Cross
By Act of Congress January 5, 1905.

AMERICAN RED CROSS

Not

PICTURE FRAME

MORRELL, Frank P., Aviation Radio Mate 1st Class

plexiglars with stand

Official address: Seaplane Base
Home address::

Albuquerque, New Mexico

Send to:

Mrs. Frank Morrell

1417 South Walter St.

Albuquerque, New Mexico

CARD LEGEND:

From scraps of plexiglass hut came his NEW this blue-eyed

blond-heired seilor, who used o be 5 urquoise outter before be
war, has made a picture frame that is bo h modern and classic in
design. He usad a saw and file, sandparper and 611 and lots of

albow grease to S-ve it the smooth finish. It was mide for his

mother.

AMERICAN RED CROSS
WAKEFIELD, John B. 832/0

PICTURE FRAME

Plexiglass, photops..
Official address: 6th Construction Battalkon, USNR
o/o Fleet P.O., San Francisco, Calif
Home address:

Send to:

Plano, Iowa
F3.

Leroy Coohran
Plano, Iowa

CARD LEGEND:

This mohor-shaped from was obviously made by a ssilor.
I' is out from cowling glass salvaged on Guadaloanal, and wet
12 .2 outsere's ploked up along the beach.

AMERICAN RED CROSS
No:

PICTURE FRAME

CRESSFY, W.A. AMM5/C

Official address:

Propellor tip

A.E.O.B.
Navy 131

c/o F.P.O., S.F.

Home Address:

Send to:

418 Main Street

Suwdersville, Mass.

Mr. W. Ag Cressey

418 Main Street
Saundersville, Mass.

CARD LEGEND:

This picture frame was made out of the tip of E propellor
E Liece of en old boiler, Aickel plated. The twenty-one year
old owner, who before the Wer was employed by the Springfield
Armory in Spri igfield, Mass., spent as much of his after-hours
time
buffing the frame to get the high polish as he did to make
is.
of on S.F.D., baoked and h strinless steel, on a base made from

"To furnish volunteer eid to the sick and wounded of armies and "To act in matters of voluntary

and in accord with the military and navel authorities MA of ication between the people of the
United States of America and their NEW and Nevy The Charter of the American National Red Cross.
By Act of Congress January 5, 1905.

relief

AMERICAN RED CROSS

SCHUMACHER, Lloyd, AMS 1/o

No:

CRIBBAGE BOARD

official Address: Unknown
Home address:

Send to:

Unknown

Barbara Selmer

417 Hudson st

Eau claire - Wisconsin

CARD LEGENT:

Cribbage is 8" pogular game with enlisted men 101 he South

Pacific. This board is made of plexiglass, metal, and linoleum;
the brass pins are cut from enlvaged cartridge shells.

FORM 28

AMERICAN RED CROSS

LENNON, John, Seaman First Class

No:

TWO PENDANTS

sea beans, catseyes,
Official address:

U.S. Eaton

Home address:

Springfield, Ohio

c/o s.P.O., SanFrancisco

Sand to:

Mrs. J. V. Lennon
109 Lingoln Ave.

Sprinfield, Mass.

CARD LEGEND:

Sea - beens are the seed of a tree found on Guadalganal; they

are very dark and completely lack polish. This anilor put from
thirty to forty hours on each pendant.tr get the polish they now

have. The ooin on one WHB Acquired 10 New Zowland, the outseye
on a beach at Guadaleanal. Here is & neis who always has some-

thing he's working on in his spare time.

AMERICAN RED CROSS

No R

CRUCLEIX & CHAIN

GUGGER, Pfo Robert

Plexiglass

Official Address: Hq Co 3 Bn.

148 Infantry

APo 37

Home address:

Toledo, Dhio

Send to:

Mrs. R.W. Gugger3362 Detroit Ave.
Toledo, Ohio

)

CARD LEGEND:

Tear-drop pure in design, this beautiful cruoifix and chain
ingenuity own produce work of the finest quality, where living

midd from plexig lass from E wreoked plane, proves that taste an
COUNT ic.3 are rugged and tools often none-existentg This Item

was made on Guadaleanal.

AMERICAN RED CROSS
JOHNSON, Cpl. Earl A.

SET OF 4 RINGS

Set with mother-of-

pearl

Official address

3465 Ordnance Co.

APO 502, c/o P.M. S.F.

Home address:

Bloomingdon, Indiana

Send to:

Mrs_ Frank J. Johnson
406 East 17 Street
Bloomington, Indiana

CARD LEGEND:

F /is Alexa away on Ling or two made from
pieces of 1L 989 ate from 802 wrs of planes He uses

file do 9 piper, and effer, to18
not interested in
do.

08 filed down, set with bits of mother
hese rings. Hoosier Johnson 1888 B small three
file, and R half-round file.

plastic

AMERICAN RED CROSS

MYERS, s/sgt. Henry F.

No:

SET OF 6 RINGS

Official address:

Home address: Belleville, Kansas

Send to:

Miss Marie Copley
5210 Fairway Road

KansasCity, Kans.

CARD LEGEND:

This
70 in his pocket on which he is
corking. Ho usesia file, sindstone, sendpaper, and buffer -an

01 aces of S inless steel from scrap parts of planes. Prefers
home Q selling hem.
o send

AMERICAN RED CROSS
SCHLONGA, Coxswain Glover R.

NOR

PAIR OF BRACELANDS

Aluminum & oatseye stone

Official address: Co. B 2nd Special USNCB
c/o F.P.O.
San Francisco, Calif.
Home Address:
Send to:

2731 N. Kedzie Ave.

Chicago, Ill.

Mrs Ida Schlonga

2731 N. Kedzie Ave.

Chicago, Ill.

CARD LEGEND:

This sailor out approxima aly sixteen hours on each of heee
bracelets, which are made of scrap aluminum Bet with gatseye's
He used E. file, knife, and emory paper.

AMERICAN RED CROSS No.:

SHILL NECKLACK

BALLARD, H.C., I Inarmatist's Mate First Class

Official Adgress: Unknown
Home Address:

Nebraska

Send to:

Alfred Cavileer, Jr., MM 2/o
24 Chathem Street
Cambridge, Mass.

CARD LEGIND:

This delicure necklace W -S made by a sailor who picked
up the shedls 011 the beach at Guadalganal, carefully selected
nem for size and coloring, then went to work with plaster of
peris and dental wire.

"To

furnish

volunteer

"To

old

act

of the

and in accord with the

United States of America and The American National Red Cross
By Act of Congress 5, 1905.

AMERICAN RED CROSS
DRETS, Cpl. Kenneth

No:

CARVING SEN

Official address: 6936236 A.S.N.
70th Fighter Sq. (E)
APO 717 - c/o P.M.

San Francisco, Calif.

Home address:

3930 - 14th Ave.
Oakland, Calif.

Send to:

Mrs Janet E. Deets
3930 - 14th Ave_

Oakland, Calif.

CARD LEGEND:

This perfectly matched set, which would look well in E George
Jensen window, is composed of & strange Assortment of materials,
all gathered and assembled on Guadaleanal by Corporal Deets and
G New Zealand buddy. The knife blade is Art of E Jap gaber four
embedded in the ground; the prongs of the fork are xxxxxxxxxxxxxx
from BL Zero propellor; the
metal on the handles is cluminum from the tracks of an amphibiots

tank st.lvaged from a jur.k pilej. Aeroplane glass, t in ed with
India ink, and oker chips complete the handles. Deets, who before the war did trick riding in rodeos, used a backsew half &
dozen different files and emoxy paper. It took him one month about & hundred hourse work - to get the stuff and put it together

AMERICAN RED CROSS
BARNETT, Robert O., BM 1/0

KNOW Soobbaid

Official Address: CBMU 537
c/o F.P.O.," S.F.
Home Address:

Send toi

Oklahoma City, Okla.

317 West Chickasse

Oklahoma City, Okla.

CARD IBEND:

A knife such as this is an essential part of a fighting man's

equipment in combst. This wicked looking number was made on
Guade lossel. The blado is from a twelve-inch ateal band saw.

Layers of plastic glass made he handle. The copper strips here,
and 'he luminium end guard, were salvaged from a ship. It took
WO months to wake.

483

+
AMERICAN RED CROSS
HIPWELL, Sgt. N.A.

NGH

AIR PISTOL

Officia 1 Address

Home address: Auckland, New Zealand

Send to: Mrs. A. C. Hipwell
114 Reihana Street

Orake

Auckland S.E.2
New Zealand

CARD LEGEND:

What dd you have in your junk heap? Turn Sgt. Hipwell mn it,
and there is no telling what might emerge.
The mechanism of this air pistol WEB made from bits df vehicle
spring; the air oy linder from a primus plunger; the spring cy link
er from a bike pump; the mechanism housing is of petrol-drum
metal; the trigger and guard was once a spoon handle. The butt
is hardwood and deerhorn, the barrel wasmade from part of & steel
tube. The pistol is completed by "other bits and pieces, all
salvaged from rubbish" - according to Hipwell. The loading ramrod is & 'BIX inch nail and the end of B .303 cartridge.

The most amizing thing about this pistol is that it works
Action is cooked by the ramrod, the pellet is inserted at the butt
end after removal of EL little breech. The bore is approximately
two inches. It took the sergeant three weeks to make in his spare
time.

284 FORM ABA

AMERICAN RED CROSS

VERNON, T.R. SF 2/c

No: 14

PAIR CANDLESTICKS
ONE TOOTH CK TRAY

Official address: Base Construction Depot Det.
US Navy 131 -ABCD
o/o F.P.O., S.F.
Home address:

nd to:

Pittsburg, Pa.

Mrs Vema Vernon

681 Baddwin Road
Hays, Penna..

CARD LEBND:

When this sailor worked in the Farmers Bank in Pittsburgh he
probably never thought that one day he would be salvaging discardal
shells to make useful ornaments in his home. This set of candlesticks and toothpick container was made from 20, 37, and 40
milimeter shells.

palish before displaying

AMERICAN RED CROSS

No.:

PAIR OF BRASS EMBOSSED VASBS

RICHTARICK, Joseph J., Mochanist's Mate First Class

Official address: 3rd Naval Construction Battalion
c/o F.P.O., S.F.

2636 Arvia St.

Home address:

Los Angeles, Calif.
1) one me.rked "Marien":

Send to:

Miss Marian Spatz
401 South Grand

Los Angeles, Calif.

2) one marked "Evelyn":

Richtarick

2636 ania st.
has Angeles, Calif.
CARD LEGEND:

When JoseXph Riohtarick wants to make something to send

home to a girl, he hunte around for a discarded 37 milimeter

shell in some junk pile, fills it with lead, then goes to

work hammering out B. design, using tools that he made himself
out. of bunt out valve stems.
Here is a man who spends all his spare timmorking on one
thing or another. Richtarick WELB born and raised on a farm in
Nebraska, where from the first he turned to the mehanical end
of the work. Now he spends all his spare time working on something; each of these shell vases took him a week.

polish before displaying
furnide volundose old to the and of armice and "To act in matters of voluntary
relief
the people of the
America

navel

the

Scanne

Arsay and Nevy The Charter of the American National Red Crom
By Act of Congress January 5, 1905.

286

FORM

AMERICAN RED CROSS

PAIR OF ASHTRAYS

MILTON, Pvt. H.R.

Made of brass shells

Official Address: 151st CO., 358 Port Battation, APO 502
Home address:

Burlington, Iowa

Send to:

Mrs Alice Milton
1315 Barrett St
Burlington, Iowa

CARD LEGEND:

Here are H couple of ashtrays that won't get knocked over;

they're pretty solid. The trays are mile of three inch .50 calibe
new shells, with decorations of .45 and 30 caliber shells. The
center is E .50 calibar shedl; also from these shells were cut X
+he cigarette holders. Pvt. Milton used & hacksaw and file and

80 ldering iron.

polish be fore displaying

POME

AMERICAN RED CROSS

No: 17

PAIR MOTEL P-38ta

TONER, Sapper J., 066748

Made from brass shells.

Official address: work Service Construction,
2 NZEFIP, NZ APO 150

Home address:

Christ Church, New Zealand.

Send Obiect to:

Mrs B. Toner,

202 Lincoln Road,

Addington, Christ Church, N.Z.

CARD LEGEND:

This pair of model P-38's was a prizewinning ent ry in the Sout
Pacific Red Cross Ingenuity Contest. Something about their delixe
cate balance and smooth finish, right down to the plexiglass
prope llors-in-movement, won the hearts of the hundreds of men who

viewed the show.

The wings and tail pieces are made from .25 pound shells, the

plane bodies from .30 caliber shelis. .45 caliber shells provided
the copper "noses". The cockpits are from armor-piercing shells,
tipped with the lead points of .35's. The base is made from a
37 milimeter shell, the stem from a 303 caliber English she11.

polish before desplaying

+
AMERICAN RED CROSS

MCHENRY, William, Gunner's Mate Third Class

FORM 884

No:

LAMP

shells single YOU
Official Address: Base Construction Depot Detachment
A.B.D.D. US Navy 131

o/o F.P.O., S.F.

Home Address:

West Orange, New Jersey

Send to:

Mrs. William McHenry
575 Valley Road
West Orange, New Jersey

CARD LEGEND:

This handsome lamp shows what can be made from useless

shells salvaged from an ammunition dump. The stem is from a 40

milimeter shell and projective the decorations are 30 caliber
shells end projectiles. The base is from a 5 inch shell mounted on
mahogeny. Mcyenry used a file, hacksaw, grinder, and screw drive.

FORM A

AMERICAN RED CROSS

O'HALLORAN, Thomas J., Seaman First Cdass

No::

LAMP & SHADE

Shells, double la
official Address. BCDD - Navy 131
c/o F.PO., S.F.
Home address:

Send to:

Lanham, Md.

Mrs - Patrioia O'Halloran

Lanham, Md.

CARD LEGEND:

It took this Irish sai lor about f air weeks in his spare time
shade, a present for his Irish wife. The stem is a 40 milimeter
shell,
the:35
base
5 inch shell.
The decorations are .50 caliber,
45, and
alsoa carbine,
shells.
to collect salvaged shells and fashion from them this lamp and

AMERICAN RED CROSS

HALEY, J.E., Carpenter's Mate First Class

No:

LAMP & shale
Different woods be
plexeglass

Official address: 575 32 07
Base Construction Depot Detachment
Mayl 131 - o/o A.B.C.D.
c/o F.P.O., San Francisco, Calif.
Home address: Houston, Texas
Send to:

Mrs. J.E. Haley
5525 jairbanks Street

Houston, Texas

CARD LEGEND:

J.E. Haley says he doesn't know the name of the dark wood
used to make this handsome lamp, although the other wood used is
mahogany. Layers of plastic glass and aluminum add to the design

and finish of this outstanding Ingenuity Contest entry.

Already shipped home: to be collected, then returned again.

DAY

AMERICAN RED CROSS

FORM

No:

LAMP

JOHNSON, R G., Aviation Mehanic's Mate First Class

Jake

Avia ion Repair Unit

B6faojal address:

Havy 145

c/o F.P.O., S.F.

Home address:

Lagrande, Oregon

Send to:

M. Martin J. Johnson
1101 O Avenue

Lagrande, Oregon.

CARD LEGEND:

One of the outstanding entries in the South Pacific Ingenuity
Contest
this handles.
lamp made
a 40 WELS
milimeter
shell,
caliber sap
shells
for- pull
Theofatem
filled
withwith
lead25
then
enbossed with punches made by the artist. The big shell is

partially nickel plated, also the small Japx shells.

Letter Attached

AMERICAN RED CROSS

Service Club
APO 502

o/o Postmater
San Francisco, Calif.
24 April 1944

Red G Johnson, AMM1/o

Aviation Repair Unit
Navy 145

o/o F.P.O, San Francisco.

Dear Mr. Johnson:

Although I am writing this to you, I shall mail it to your

father, to whom I believe you sent the very fine lamp which was
one of the outstanding and prizewinning entries in our Ingenuity

Conbet.

Admiral Halsey has arranged through the Secretary of the

Treasury for the entire show to be sent to the States, possibly
for a nationwide tour to help promo te the sales of Far Bonds.
The exhibit would not be complete without your lamp. I am
forwarding with the other records one for this lamp, hoping that
your father will ship it at once to Washington, marked:
SUERICAN RED CROSS SOUTH PACIFIC NGENUITY CONTEST

(To be used in War Bond campaign)
e/o The Secretary of the Treasury

Washington, D.C.

By permitting us to include your lamp in the display you
will be making a contribution that will be greatly appreciated.
with best wishes to you wherever you may bel
Sincerely,

LUCY H. CROCKETT

American Red Gross

"To furnish volunteer aid to the sick and wounded of armies and "To act in matters of voluntary relief

and
accord
with
military
andThe
navel
the Red
people
United in
States
of America
and the
their Army
and Nevy..."
CharterMA
of thebetween
American National
Cross the
By Act of Congress January 5, 1905.

FORM AN

AMERICAN RED CROSS

SOHLONGA, Coxewain Glover

No:

MODEL LIBERTY SHIP

Official address: Co "B", Second Special
U.S.Nevy Construction Battalion
o/o F.P.O., S.F.

Home. addressi

2731 N. Kedzie Ave.

Chicago, Ill.

Mrs Ida Schlonga

Send to

2731 N. Kedzie Ave.

Chicago, Ill.

CARD LEGEND:

Wood, paper, wire, celluloid, and paint went into this perfeb
of a Liberty ship. It took Coxswain Sohlonga about three

hundred model hours of his s pa re time to make it. He used a knife,

pair of pliers, and a paint brush.

AMERICAN RED CROSS

CARR? Pvt. George

No:

MODEL JEEP

Official Address: 1943 Quartermaster
Tonhouta Air Base
A.P.O. 502

c/o P.M., S.F.

Home. address:

Desmoines ,IOWA

Saud_to:

Mrs. Odessa Carr

601 Southeast 5th St.

Desmoines, Iowa

CARD LEGEND:

The body of this model jeep is made of tin, the whe da of
wood. It is complete down to E hood that latches with real
springs, renomition, front and rear diferentials, a windshield
the goes
realthe
springs
wheel
thatup,
turns
front beneath
wheele. the chassis, and & steering
Carr, who was a truck driver before the war, spent all his
spare time in TWO weeks to work on this, his first, model. He

used
Li soldering
and
paint.

iros, pair of plyers, pair of tin snips, file,

"To furnish volunteer old of ..." is of
in

United

accord

with

the

Scates of AmericaByand
Nevy The Charter the National Cream
Aa of Congress January x 1905.

AMERICAN RED CROSS

cct

COOPER, Set. Clifford B.

MODEL P-47

Official address 90th Ordnance

Heavy Maintenance

HM - TR

c/o APO 302, S.F.
Home Address:

Salt Lake City, UtaH

Send_to:

Mrs. H.F. Cooper
2621 Lake Street

Salt Lake City, Utah
CARD LEGEND:

Perfectly balanced is this little model P-47, for which the
owner has been O ffered large sums of money. It is made of 2n by
4" pine wood, the pring propellor of nails. It is complete right

down to the Jap flags painted beneath the cockpit. Sergeant
Cooper used T pocket knife, sandpaper, and paint to make the
model, which took about three weeks in his spare time.

FORM M

AMERICAN RED CROSS

MCDONALD, Pvt. F.

No:

GUITAR

Official address: Co "B" 353 Engineers

APO 502, c/o P.M.S.F.

Home address:

Campbellsville, Ky.

Send to:

Mrs. Helen McDonald

725 W Street Catherine,

Louisville, Ky.

CARD LEGEND:

Here is a perfectly good guitar made entirely by hand. Ply
wood and glue, scrap iron for the feets, a toothbrush handle for
the top bridge, a piece of wood for the neck - and Private
McDonald
has an
instrument on which he can twang out the live liest
of
hilbblly
music.

AMERICAN RED CROSS

GORELL, F.R., M2/c HISH

No: 26

CRUCIFIX Gooden

Official address: Corps Replacement Transit Center
Ist M.A.C. F.M.F.
c/o F.P.O., San Francisco.
Home address:

Norwood, Mass.

Send to:

Mrs. Barbara M. Gorell
14 Hawtherne St.

Norwood, Mass.

CARD LEGEND:

Here is an ex-sheet metal worker who has turned to working on
vood. one week in his 8 pare time spent whittling away with his
Jack knife produced this crucifix for his mother.

AMERICAN RED CROSS
BLATTER, Fred v.

No::

WAR CLUB

official address: 6th Naval Construction Battalion
o/o F.P.O., San Francisco Calif.

Home address:

Ripley, Ohio

Send for

Mrs_Fred Biabber
115 North 4th St.
Ripley, Ohio

CARD LEGEND:

Mrs. Blatter now has a weapon in this war club, made by
her
husband
in NOW Caledonia from native Maouli wood injaid with
deer horn.

+
AMERICAN RED CROSS

BLATTER, Fred V.

No:

₫8

JEWEL BOX

official Address: 6th Naval Construction Battalion
c/o F.P.O.

San Francisco, Calif.
Home address:

Ripley, OHio

Send to:

Mrs. Fred Blatter
115 North 4th St.
Ripley, Ohio

CARD LEGEND:

This beautifully finished box, lined with felt, is

made
of mahogany, carved, and inlaid with pieces of
deer horn.

AMERICAN RED CROSS

BROOKS, John, Steward Second Class, USN

No.:

29
CIGARETTE BOX

Official address: COMSOPAC
Home address:

Philadelphia, Pa.

Send to Miss Hefen caskins
3815 N.17H Street

Philadelphia (40) PA

CARD LEGEND:

Coats of red and black watercolor and ramish give this
bamboo cigarette box its mellow appearance. The pattern of
cats'eyes and ground glass set in with putty add to the hoary,
antique effect.

"To furnish volunteer aid to the sick and wounded of armies - and "To act in matters of voluntary relief

and in accord with the military navel authorities - a medium of of the
II Annual and Nevy ..." The Charter of the Croas

United States of America =
-

By Act of Congress January 5, 1905.

+
AMERICAN RED CROSS

KEENEY, J.F., Carpenter's Mate Second Class

official address:

No.1

COFFEE TRX

ABOIX

Base Construction Depot Det.

Naxy 131 - ABCD
Home address:

Send to:

c/o F.P.O., S.F.
Phoenix, Arizona
Mrs. S.F. Keaney
2214 N. 24th Place
Phoenix, Arizona

CARD LEGEND:

Mrs Keeney will have a handsome tray on which to serve
coffee. Her husband used 60-40 metal, two ty pes of rahogany,

white cedar, naoufli wood; his tools were a plane, chisel,
plus sandpaper and glue.

AMERICAN RED CROSS
POLOMSKI, Cpl. John A.

No:

2 CARVED WOODEN FIGURES

official Address: Headquarters Co.

6th Replacement Depot,

APO 502

Home address:

Send to:

Hurley, New Maxico
Mrs_ Samuel Stearman

Hurley, New Mexico

CARD LEGFND:

Here is a man who keepe an eye on the watch for suitable
pieces of native wood, or even driftwood which he picks up a long
the beach. A sharp penknife, some sandpaper, a half hour here and
there in his spare time, and he has something worth sending home.

AMERICAN RED CROSS
SWEATE, T/Sgt. Steve

No:

STATUS OF DANCINGGIRL

Official Address: 3564 QM Truck Co.
APO 502

Home Address:-

2915 Dawson Ave_

Chicago, Ill.
Send to:

Mrs - Anna Geisler

537 Circle Ave.

Forest Park, Ill.

CARD LEGEND:

How many men have seen this figure of a dancing girl and

offered to buy it from Sergeant Swiatk? Flenty. She is carved
from a bit of oak; her skirt is manila hemp. Shells, brass, and
tiny stones form her jewelry. It took him three days in his
spare time, using e pocket knife, to produce the figure.

FORM A

AMERICAN RED CROSS
SWIATK, T/Sgt. Steve

No:

Statue of TONKINESE MOTHER & R
CHILD

official address: 3564 OM Truck Co.
APO 502

Home Address:

2915 Dawson Ave.

Chicago, Ill.

Mrs. Allen M. Fontaine
414 Stuart Cirole

Send to:

Richmond ( 20 ), Va.

CARD IBER:

This figure of a Tonkinese mother and child is carved
from a pece of native wood . Real rice grains fill
the basket on the woman's head. Sergeant Swiatk
uses no other tools than his pooket knife.

AMERICAN RED CROSS

LaCOGNATA, John, Tech Sgt.

No.::

"WEARY WILLIE KELLY*

Figure, painted, on wood

Official address: 210th Signal Depot Co.

APO 502, o/o APR P.M., S.F.

Home address:

Chicago, Ill.

Send to:

Mrs Rose L Cognata
2115 N. Menard Ave.

Chicago, Ill.

CARD LEGEND:

Penknife, razor blades, and sandpaper were the tools used
by Sgt. LaCognata to make this figure, which is oopied from a
pidure in ESQUIRE. LaCognata, who was an atheltic director in
Chiago before the war, spends most of his spare time whittlin'
on one thing or another.

"To volunteer old to the sick and wounded of armics To act in mettace of
accord with the

United States of America - their and navel Army and Nevy ... The Charter American National (*) Cross
By Act of Congress January 5, 1903.

PORT

AMERICAN RED CROSS
HUGHES, Pvt. D.

No 1

PLAQUE-PAINTING

oil on wood

Official address: Unknown
Home address:

Paul's Valley,

Oklahoma

Send to:

Beatice Recgan
2432-201 S. . N.U.
Washington D.C

CARD LRGEND:

Believe it or not, old bits of dried housepaint pigment
found in discarded paint cans, plus even a bit of cement
applied to wood resulted in this attractive painting"
Some artists even use tar, when they can't get hold of
black paint.

+
AMERICAN RED CROSS No:

MENDENHALL, Pvt William M.

CARVED WOODEN CANE

Official Address: 153rd Co. 358 Port Bo

APO 502, c/o P.M., San Fran cisco

Home Address: Los Angeles, Calif.

Send to:

Alfonso mendenhall

151 - 111th St.
Los Angeles, Calif.

CARD LEGEND:

Private Madenhall Bays he is always whittling on something
or other, but his job doesn't leave him much spare time these days

This
cane was made in New Caledonia of natio wood;
it is carved
for hiswooden
father.

AMERICAN RED CROSS

No.:

"VARGA BLACK MAGIC"

Desk Ornament

BREEDING, William C., USN

Official Address: Medical Storehouse No. I
Navy 131 - c/o F.P.O., S.F.
Home Address:

Bowie, Texas

Send to:

S.J. Breeding

Montague Star Route

Bowie, Texas

CARD LEGEND:

This desk ornament, that would please the eye of any
serviceman, was made in about three hours of spare time.
The picture is backed by 3-ply wood: the base is mahogany.
The tools used were a coping saw, a pocket knife, and a
wood rasp.

AMERICAN RED CROSS
UN-NUMBERED

LANE, Edward J., Pharmicist's Mate First Class

Shell necklac)

SHELL BRACELET
SHELL GISMO

Official address:

Section Base,
Navy 131

F.P.O., S.F.

Home address:-

Dos Angeles, Calif.

Send to:

Mrs E. Lane
1621 - 4th Ave.

Los Angeles (6 )

California

CARD LEGEND:

Some men a pend their off time one way L some another.

This sailor likes to poke along the coral reefs looking
for shells. He must have been thinking of this present
for his wife when he carefully selected the ones for
this necklace, bracelet, and gismo". The shells are
secured with cotton, on which plaster of Paris is applied,
then dipped in varnish.

"To furnish volunteer aid to the sick and wounded of armies and "To act in matters of voluntary relief

and in accord with the military and naval authorities a medium location between the people

United Statee of America not chair Army and Nevy The Charter of the American National Red Crom
By Act of Congress January 5, 1905.

the

310
619

photostats

The Blue Network

mm gamble

m smith

BLUE NETWORK COMPANY INC

30 ROCKEFELLER PLAZA TELEPHONE CIRCLE 7-5700
NEW YORK 20. N.Y.

June 7, 1944

The Honorable Henry Morgenthau, Jr.

Secretary of the Treasury
Treasury Department
Washington, D. C.

Dear Mr. Secretary:
Your warm words of praise and your

generous feelings about the work of the War Advertising
Council and my part in it are in themselves a heartening
reward for my efforts and those of my associates in the

Council.

But it was your appreciation and
vision of what advertising could do that stimulated and
led all of us on to making advertising the useful and

powerful force it has been in this war.

Whatever any of us has done is dwarfed
and looks pretty small along side of your own achievements
which have been accomplished with good grace, modesty and

clarity of purpose.

To have worked so closely with you and
to have gotten to know you so well has been a deep source

of satisfaction. It is a friendship that I want to make

last.

Sincerely,
Chester J. LaRoche
bam

Chif instoche

311
UNITED STATES SAVINGS BONDS-SERIES E
WAR SAVINGS BONDS
1944

Department Circular No. 653

TREASURY DEPARTMENT.

Second Revision

First Supplement

OFFICE OF THE SECRETARY,

Fiscal Service

Washington, June 7, 1944.

Bureau of the Public Debt

Department Circular No. 653, Second Revision, dated August 31, 1943, fixing the terms and
governing the issue of United States Savings Bonds of Series E, currently designated War Savings
Bonds, is hereby supplemented, as follows:
of
1. An additional denomination of $10 (maturity value) is hereby authorized, the issue price
which will be $7.50: Provided, the bonds of this denomination may be purchased only by persons in
the Military and Naval Forces of the United States, under such conditions as may be prescribed and
through such agencies as may be provided within their respective establishments by the Secretary of

War and the Secretary of the Navy, and Provided further, that on original issue the bonds of this
denomination shall be registered only in the name of any such person either alone or with any other
person added as coowner or designated beneficiary as provided by regulation.

2. The bonds of this denomination may not be obtained on partial redemption of bonds of a
higher denomination; and except for restrictions on purchase and issue, the terms of bonds in the
denomination of $10 now authorized and the conditions of their issue and provisions for their redemption shall conform to those of bonds of Series E of other denominations authorized by said Circular
No. 653, Second Revision.

HENRY MORGENTHAU, Jr.,
Secretary of the Treasury.

TABLE OF REDEMPTION VALUES
showing how bonds of Series E in the denomination of $10 (maturity value) increase in redemption
value during successive half-year periods following issue:
Issue Price, $7.50

First 1/2 year
1/2 to year

Redemption value

during period

Period after

$7.50

5 to 5% years

7.50

51% to 6 years
6 to 61/2 years
61/2 to 7 years
7 to 71/2 years

1 to 1 1/2 years
1 1/2 to 2 years

7.55
7.60

2 to 21/2 years

7.65

21/2 to 3 years
3 to 31/2 years

7.80

3 1/2 to 4 years

7.90

4 to 4 1/2 years
41/2 to 5 years

Redemption value

issue date

during period
$8.20
8.30

8.40
8.60
8.80

71/2 to 8 years
8 to 81/2 years
81/2 to 9 years

9.20

8.00

9 to 91/2 years

9.60

8.10

9 1/2 to 10 years

9.80

7.70

AT MATURITY (10 years from issue date)

9.00
9.40

$10.00
16-39924-1

issue date

Period after

OFFICE OF

6/7/44

312

THE SECRETARY OF THE TREASURY

message from mr. Lester
Judge Chinosis Office
War Labor Board figures
show for
October 42- - October '43

109,000 voluntary application
for wage increases
25,000 of these were joint
employer union applications in

norest
Unions involved
the
5000 dispute Cases
Therefore 5 times as many
your employer union

applications as dispute Caser
21 times as many voluntary
as dispute Cases.

313

TREASURY DEPARTMENT

BUY
WAR

PROCUREMENT DIVISION
WASHINGTON 25

OFFICE OF THE DIRECTOR

June 7, 1944

SECRET
MEMORANDUM TO THE SECRETARY:

There is submitted herewith the
weekly report of Lend-Lease purchases.

A requisition has been received from

Mexico for forging dies necessary for the
manufacture of howitzer and mortar shells.

Director of Procurement
for Citizen E. Mack

LEND-LEASE

TREASURY DEPARTMENT, PROCUREMENT DIVISION
STATEMENT OF ALLOCATIONS, OBLIGATIONS (PURCHASES) AND

DELIVERIES TO FOREIGN GOVERNMENTS AT U. S. PORTS

AS OF MAY 31, 1944

(In Millions of Dollars)
Administrative
Total

U. K.

Russia

China

Expenses

Allocations

$4765.7

$2314.4

$1882.3

$133.9

$12.6

(4749.4)

(2298.5)

(1882.3)

(133.9)

(12.6)

Requisitions

$ 139.8

$ 42.3

$ 43.5

( 21.4)

( 53.5)

.2)

in Purchase

( 127.1)

Requisitions not
Cleared by W. P. B.

$ 97.2
( 125.4)

( 45.6)

Obligations

$3630.8

$1894.9

$1441.5

(Purchases)

(3613.9)

(1890.2)

(1433.4)

( 61.6)

Deliveries to Foreign

$2071.3

$1298.3

$ 707.6

$ 23.1

(2051.5)

(1291.6)

( 695.6)

Governments at U. S.
Ports*

$ 27.3

$ 60.7

( 46.7)

(

$ .2

( 21.7)

$ 62.9

( 23.1)

Miscellaneous &

Undistributed
$422.5

(422.1)

$ 53.8

( 52.0)

$ 9.0

( 11.4)

$11.6

$219.9

(11.6)

(217.1)

$ 42.3

( 41.2)

*Deliveries to foreign governments at U. S. Ports do not include the tonnage that

is either in storage, "in-transit" storage, or in the port area for which actual
receipts have not been received from the foreign governments.

Note: Figures in parentheses are those shown on report of May 24, 1944.

315

EATER

THE ASSISTANT SECRETARY OF WAR
WASHINGTON
SECURITY

4868
WAS

OFFICE

June 7, 1944

Dear Mr. Secretary:

I have your note of June 7, and we

will undertake to keep you informed of the progress
we are making on the matter of avoiding excessive
spending by American troops in France.
Sincerely,

Janfelly

Hon. Henry Morgenthau, Jr.

Secretary of the Treasury
Washington, D. C.

316

June 7, 1944

Dear Mr. McCley:

Thank you for your letter of June 4, 1944
enclosing a copy of your letter to Mendes-France
concerning the matter of the pay of American
troops in France.
I am glad to see that steps are being
taken to prevent by voluntary means excessive
spending by American troops in France. I feel
that it is of the greatest importance that we
avoid creating the impression that American
troops are draining the French towns and countryside of products which will be sorely needed by

the local population. I would like to be kept

informed of the results of the measures now in
effect as well as those contemplated, and of
any information which you may get concerning
the reaction of the French people to the spending of American troops.
Very truly yours,
(Signed) H. Morgenthau, Jr.

Secretary of the Treasury.
Mr. John J. MeCley,
Assistant Secretary of War
Room 4E-886, Pentagon Bldg.
Washington 25, D.C.

MLH/efs 6/6/44

THE ASSISTANT SECRETARY OF WAR
WASHINGTON

UNITED

4 June 1944

Honorable Henry Morgenthau, Jr.

Secretary of the Treasury

Washington 25, D. C.

Dear Mr. Secretary:

Enclosed is a reply which I have sent to
Mendes-France and which I understand is being
communicated to him by Monnet relative to the

matter of pay of American troops.
Sincerely,

Hello
Inc.

ASSISTANT SECRETARY OF WAR

ROOM 4E-886, PENTAGON BUILDING
WASHINGTON 25, D.C.

Jane 4 1944

Better, inclosure, dated

M of Allied Swoope in France

La adilian-the province of the War Boyart-

to this subject only Sunfar as as
s. Spoops. Relative to the letter, I

with Englessre, dated 12 May 1944, from
have replied Blat the Mar Repartment is
unforcemble impact on the economy of

taxes of K. 8. military personnel.

Department 00 prevent by voluntary

x a. sweps in vurious Sheatres of

effective is high degree. Further volu-

this

the I and are contemplated and -

have already born transmitted to General
⑉Shape have also boom taken to acquired British
that passillet considerations my be advanced in

with the M of British troops.

as w. 8, Sroops are connerned, the War Department

to give careful consideration to this subject,

the megestions specified in year above sectioned

Sincerely,
(STORED) JOHN J.
JOHN J. HOCLOY

Assistant Secretary of Var

3194
White
WAR DEPARTMENT

OFFICE OF THE ASSISTANT SECRETARY
WASHINGTON, D.C.

7
DWB

7 June 1944

Honorable Henry Morgenthau, Jr.

Secretary of the Treasury,

Washington, D. C.
Dear Mr. Morgenthau:

We had a short talk over the telephone the other day in
regard to the initial rate of exchange to be decreed by the
Supreme Commander, AEF, for German mark currency.

From the military standpoint the prime requisite for

the initial mark exchange rate is that it will insure, to the
maximum extent possible, the maintenance of repose and

tranquillity in the wake of battle and throughout the areas
under military administration. Paramount interest and
responsibility of the War Department being the furtherance

of the military effort, as compared with matters of longer
range financial policy, it is from the former of these

approaches to the subject that we view the exchange rate problem. We have no desire to urge any specific exchange rate,

but we feel that in the determination of the rate, weight
should be given particularly to existing price and wage levels
in the area; also that the rate should be one which will tend
to curb rather than strengthen inflationary factors in the
situation.

Administrative problems with which the military authorities
will be faced will be increased in case of financial and
economic collapse in Germany during the period of military
responsibility.
There is inclosed herewith a summary of latest OSS factual
information regarding price and wage levels in Germany, which
has been prepared at my request following our above mentioned
conversation.

Sincerely yours,
FOR VICTORY

BUY
STATES

WAR
BONDS
AND

STAMPS

Dan 1 Incl. Bell: Prepare ans. for
my This sig. to Harry Mirror White things

320

RESTRICTED
OFFICE OF STRATEGIC SERVICES

Research and Analysis Branch

R. and A. No. 2216
6 June 1944
NOTES ON THE CURRENT PRICE LEVEL IN GERMANY

Prices of cost-of-living items have been rigidly
controlled in Germany during the war, and have risen com-

paratively little. Prices were stabilized at a point very near
the depression level, with increases allowed since that time for

only a few commodities. The total cost-of-living (according to
Wirtschaft and Statistik, February, 1944) now stands at 92.1, if
1928-30 is used as a base.

The Black Market plays a comparatively small part in

Germany. Illegal transactions take place, but mostly in luxury
commodities such as tea and coffee. As local shortages develop,

cigarettes, butter, white flour, good cuts of meat, high-quality

textile goods, etc., are also sold surreptitiously or bartered
for other scarce goods. Under the existing system of tight controls, however, the Black Market has been unable to organize
and develop to such an extent as in German-dominated countries.
The information available shows a wide range of Black Market
prices for each commodity.

Index numbers of retail prices for November, 1943, to

January, 1944, as quoted in Wirtschaft und Statistik for February,
1944, are shown in Table I.

RESTRICTED

321

In Tables II and III are presented actual retail prices of foodstuffs, and wholesale prices of some industrial raw materials
important in the manufacture of cost-of-living commodities, such

as textile fibers, hides and leather, fertilizers, paper, and
building materials.

TABLE I

Cost-of-Living Index: Averages for
72 communities (1928-30 = 100)
Commodity

November

December

1943

January
1944

January 1944
compared to
January 1943
(%)

Bread and rolls:
Bread

White rolls

Flour Products:
Wheat flour
Wheat groats

Barley groats
Oat flakes
Noodles
Sugar

Potatoes
Vegetables

Meat and meat products:
Beef
Pork
Veal
Lamb

Milk & Milk products:
Whole milk
Butter

Margarine
Eggs

Beverages, spices:
Beer
Food

Housing

78.3

75.6
84.9
75.0
72.4
70.8
79.1
90.4
67.4
122.9
88.1
56.4
77.3
71.7

69.0
80.4

76.6
87.2
84.7
87.7
115.4
82.9

103.7
108.9
87.8
95.4

78.3
75.6
84.9
75.0
72.2
70.8
78.9
90.5
67.3
122.9
89.5
57.6
77.2
71.7
69.0

80.6
76.6
87.1
84.7
87.7

115.4
84.3
104.1
108.9
88.2

95.4

RESTRICTED

78.3

-0.4

75.6
84.9
75.2
72.4
70.8
79.1
90.8
67.3
122.9
92.4
62.8
77.3
71.6
69.0
80.5
76.6
87.2
84.7
87.7
115.4

-0.4

8812

104.2
109.1
89.0
95.4

+0.1

-0.3
-0.1
-0.8
-0.6
+0.4

-1.2
0.0
+0.5
+1.9
+0.7
0.0
+0.1
0.0
0.0
0.0

-0.4
+0.5

0.0
+2.7
+0.5
-0.1
+2.7
0.0

322

RESTRICTED

Coal

Gas & electricity

Heat & light
Textile goods:

Outer clothes

Underclothes
Shoes and soling
Clothing

Cleaning, personal
hygiene

83.6
90.9
87.5
111.6
117.3
101.5
95.2
106.7

85.2
90.9
88.2
111.7
117.5
101.4
95.4
106.9

118.0
101.8
95.7
107.3

+0.7
0.0
+0.2
+3.0
+2.2
+5.1
+1.9
+2.8

81.2

+0.2

90.4
93.3

90.4
93.3
84.3
93.7
88.6
87.8
91.6

90.3
92.6
84.3
93.7
89.0
87.8
92.1

-0.3

85.2
90.9
88.2
112.7

Education and

entertainment:
Daily papers
Cinema tickets
Furniture
Transportation
Miscellaneous
Total

84.3

93.5
88.6
87.8
91.4

RESTRICTED

-0.8
0.0
+1.6
+1.1
+0.5
+1.9

323

RESTRICTED

4TABLE II

RETAIL FOOD PRICES (AVERAGE 40 COMMUNITIES) AS OF 15 JANUARY 1944

(In Rpf. per kg.)

Price

Commodities

Bread

White rolls

Wheat flour
Barley groats
Oat flakes

Rice

Peas (yellow)
Beans (white)

88
71

Sugar

Potatoes (5 kg.)

Carrots

RM 1.66
RM 1.64
RM 2.02
RM 1.90
RM 2.13
RM 2.10

Beef (with bone)
Pork

Veal (with bone)
Lamb (with bone)
Bacon

Lard

Whole Milk (11.)

Skim milk (1i.)

14 fresh; 11 storage

Eggs (each)

Lager beer (11.)

Anthracite coal (50 kg.)
Brown coal briquettes
Butter

RM 1.93
16

RM 3.60 (1943)

Most frequently purchased type.

Anthracite briquettes. in two cities.

RESTRICTED

324

RESTRICTED

-5 TABLE III

Wholesale prices for some industrial raw materials,
for January 1944 (in R.M.)
Price

Anthracite coal:
14.50
20.80
18.00
14.40
6.70
202.00
4.82
4.25
1.45
0.30
10.15
0.41
4.90
10.00
19.30
47.50
30.70
5.24
46.00
23.75
24.00
35.00
18.20
33.00
52.25
215.30

Essen
Hamburg

Anthracite briquettes
Brown coal briquettes
Wool

Flax

Linen yarn, #18
Rayon

Cellulose

Ox and cowhides
Horsehides

Calfskins
Sole leather

Upper leather (boxcalf)
Thomas phosphate

Sulphate of ammonia
Superphosphate

Potassium salts
Producer gas

Sulphite cellulose
Newsprint
Wrapping paper
Cardboard

Brick

Roofing tiles
Lime

Portland cement

308-384.00

Piping, wrought iron
Piping, cast iron
Plywood

Unsawn timber
Window glass

Roofing paper
Linoleum

RESTRICTED

76.19
5.39
63.00
53.50
0.97
34.00
3.35

Quantity
1 ton
1 ton
"

1 kg.
100 kg.
1 kg.
1 kg.
1 kg.
2/2 kg.

1 hide
à kg.
1 kg.
100 q.d.m.

100 kg. P205
100 kg.N
100 kg.N

100 kg.

100 li.
100 kg.
100 kg.
100 kg.
"

1,000 pieces
"

10 tons
"

100 m.
Piece
1 cbm.
"

1 qm.
100 qm.
1 qm.

325
RESTRICTED

OFFICE OF STRATEGIC SERVICES

Research and Analysis Branch

R. and A. No. 2219

HOURLY WAGE RATES IN GERMANY

Average rates by industries and industry
groups as of December 1942, with accomanying notes.

6 June 1944

Copy No.

RESTRICTED

326
RESTRICTED

HOURLY WAGE RATES IN GERMANY

Table 1 contains a schedule of wage rates for male and

female skilled and semi-skilled workers and helpers in 17
principal branches of industry and transport in German Altreich
for December 1942. When these schedules of wage rates were

originally promulgated under the Act to Regulate Labor of
23 January 1934, they were minimum rates. However, with the
achievement of full employment in the early war period
employers had a strong incentive to offer higher rates than
those contained in the official schedule. In connection with
the German policy of stabilizing wage and price levels, the
War Economy Act directed officials operating under the
Ministry of Labor to fix maximum wage and salary rates,
which in fact tended to become the realized rates. It is
believed that this is what is contained in the attached
table.

It should be noted that the data presented are hourly
wage rates. Because of higher overtime rates and additions
to pay in the form of allowances for dependents, not included

in the table, hourly earnings are somewhat higher. For
instance in December 1942 gross average hourly earnings for
all workers in the same group of industries was 90.7
Reichapfennig considerably above the average hourly wage

rate indicated in the attached table.
1

Wirtschaft und Statistik, November 1943, p. 279. RESTRICTED

-2-

327
RESTRICTED

It is believed that the hourly wage rates have not
changed significantly from December 1942 to date. The

existence of a powerful system of wage controls and the
very minor trend from the beginning of the war through 1942
lend support to this view.

Wages of agricultural labor are not included in the
above. Since a large portion of the compensation received
by agriculturallabor consists of goods and services, it is
difficult to compare the wages of this group with the wages

of industrial workers. However, in general it may be said
that wages of agricultural workers are below those paid
unskilled factory workers.
Comparison of these wage rates with those for other

countries would be of little use in establishing reasonable
exchange rates, since no account is taken of relative labor
productivities. Further, use of wage rates as indicative
of earnings and, therefore, relative standards of living in
various countries is extremely hazardous, since there are
important international differences in the length of the
work week.

RESTRICTED

328
RESTRICTED

Table 1. SCHEDULE OF AVERAGE HOURLY WAGE RATES IN
GERMAN INDUSTRIES, DECEMBER 1942

(In Reichspfennig)

Male workers

skilled

Industry

and

skilled

1. Hard coal
2. Brown coala
3. Metal fabricating&

4. Chemical®

5. Construction

6. Paper manufactur-

Female workers

104.3
75.8
79.4
87.8
84.9
76.6

semi-

skilled
-71.0
72.0
72.3
---

semi-

helpers

skilled

60.5
67.4
62.4

68.1
58.2

---

69.0
79.7
61.2
58.9
55.3

52.7
--43.4
52.8
48.4

ing&

7. Paper processing

8. Printing

9. Wood

10. Fine chinaware

Textile

12. Clothing
13. Shoe

14. Brewing&

15. Confectionary

16. Railway&

17. Postoffice

92.9
96.2
79.6
70.8

83.8

66.7
--

66.1
74.1

79.2

59.9
---

helpers
46.9
47.6

39.3
43.0
48.9
36.1
41.1

105.1
80.8
85.4
80.4

74.2

92.9
69.1
72.8
67.0

85.8

64.7

62.1

-52.3

44.6

52.3

44.6

-75.7

59.8
46.4

Summary by industry
groups:

I. Production goods
industry (1-9)
II. Consumption goods
industry (10-15)

III. Total Industry

74.1

(1-15)

80.5

70.0

63.5

communication (16-17)

84.7

75.5

71.9

80.8

70.4

64.1

IV. Transportation and
Total (1-17)

Source: Wirtschaft und Statistik, March 1943, p. 80.

1. All statistics apply to the Altreich only.

Wage rates in this industry include social additions to the basic
wage rate in the way of family allowances, etc.
RESTRICTED

329
619

June 9, 1944

photostal of

incoming
My dear Mr. McCloy:

In the absence from the city of

Secretary Morgenthau, I am acknowledg-

ing receipt of your letter of June 7,
with regard to the initial rate of exchange for German mark currency.
Just as soon as Mr. Morgenthau

returns to his office, I shall see that

your communication is brought to his attention.
Yours sincerely,

(Signed) H. S. Klotz
H. S. Klotz,
Private Secretary
Honorable John J. McCloy,

Assistant Secretary of War,
War Department,

Washington, D. C.

or whats

330

JUN 7 1944

Dear Mr. Clayton:

Thank you for your letter of June 5, relative to

the Foreign Disposal Advisory Committee which you have

created to advise you in matters relating to the disposal abroad of surplus war property.

You suggest that in view of the interest which the
Treasury Department has in the financial aspects of disposal of surpluses abroad, the Treasury Department should
have a representative on this committee.
I agree with this suggestion, and have designated
Mr. Robert E. McConnell as my representative on this

committee. Copy of this letter Is being sent to Mr.

Lauchlin Currie, Deputy Administrator, Foreign Economic

Administration, for his Information.

Mr. McConnell will, of course, keep me informed as

to the progress of this work, and, in addition, I will be

very happy to discuss personally wi th you any of the

problems which concern this Department on which you may

wish to obtain my views.

Sincerely yours,
(Signed) H. Morgenthan, Jr.

Secretary of the Treasury.
Honorable N. L. Clayton,
Administrator,
Surplus War Property Administration,

Washington, D. C.
REM:ESD

OFFICE OF WAR MOBILIZATION
SURPLUS WAR PROPERTY ADMINISTRATION
OFFICE OF ADMINISTRATOR

June 5, 1944

011 VERMONT AVENUE NW.

WASHINGTON 25. D.C.

My dear Mr. Secretary:
Some time ago, I appointed a committee with
Mr. Lauchlin Currie, Deputy Administrator of the FEA,

as chairman, to advise me in matters relating to the
disposal abroad of surplus war property.

In view of the interest which the Treasury
Department has in the financial aspects of disposal of
surpluses abroad, it occurs to me that you should have
a representative on this committee. Mr. Currie agrees.

If you are also in agreement, I will appreciate
it if you will advise Mr. Currie the name of such representative.
Sinc

W. L. Clayton
Administrator

Honorable Henry Morgenthau

Secretary of the Treasury

Washington, D. C.

332
shown
the

333
THE UNDER SECRETARY OF STATE
WASHINGTON

June 7, 1944

Dear Henry,

I refer to my letter of yesterday's

date relative to the possibility of Dr.
Kung coming to Washington. In this con-

nection I have just heard from the President
that he would be able to see Dr. Kung about

the 22nd of the month. I have informed the
Chinese Ambassador accordingly, and we are

in touch with the Army as to the possibility
of providing accommodations on a C-54 from
Karachi to Washington.

With best wishes,
Sincerely yours,

The Honorable

Henry Morgenthau, Jr.

Secretary of the Treasury
Washington, D. C.

334

Exchange Stabilization Fund

JUN 7 1944

Nicholas N. Butler, President
Columbia University,

New York, New York.

We should like to appoint Dr. Mubel Newscaper as one of the
delegates to the United National Monetary and Financial Conference

which will convene on July 1, 1944. Dr. New informs - that
she is scheduled to teach during the suinner session at Calumbia
)

University. Under the circumstances, I hope you will consent to

release Dr. Newcomer from teaching at Columbia this - in order
to enable her to accept appointment as a delegate to the Conference.

I would appreciate an early reply.
(Wigned) H. Morgenthan. Jr.

Secretary of the Treasury

6/6/44

335

June 7, 1944

Mr. Collado
Mr. White

Please send the following message to all countries invited to the

Conference.

"From Secretary of the Treasury to the Minister of Finance.
"In connection with the United Nations Monetary and Financial
Conference to be held in the United States beginning July 1, the
American technical experts in consultation with those of the United
Kingdom, the U. S. S. R. and China are inviting the technical experts
of a number of other countries to cooperate with them in the preparetion of a draft agenda which will be submitted to the United Nations
Monetary and Financial Conference for its consideration.

# The countries invited are the following:
Australia

Belgium

Brasil

Canada

Chile

Cuba

Csechoslovakia
French National Committee
India

Mexico

Netherlands

EMB:ff 6/7/44

Treasury Department

Division of Monetary Research

Filed 6/4
DateMay 2,
To:

Miss Chauncey

From:

Mr. White

336

1944

I think the Secretary will be interested

in reading the parts of Adler's letter which I
have marked in red crayon.
H.D.W.

337
Letter from Adler, April 13, 1944

There are a number of points I wish to cover in this letter.
1. USAAF expenditures in China.
The estimates of current fapi needs made by the Army Engineers which
Acheson made available to me and which I utilized in my cable on the subject have been drastically revised downwards by them. I suppose it is
incomprehensible to you that responsible men should first make estimates
which get both the Embassy and the Treasury unnecessarily alarmed and

then find that they have been way out; in their defense it must be said

that costing is a very difficult process in China at present. It appears

that expenditures in March totalled CN $2 1/2 billion-- which brings
total expenditure in the first 3 months of 1944 to over CN $5 and under
CN $6 billion-- that expenditures in April will run at about CN $2.8
billion, and that expenditures in May and June will not exceed CN $3
billion per month, i.e., the amount which I suggested in my cable it
was desirable not to go beyond, if possible.
There has been no further progress in the financial negotiations.
Acheson is rightly stalling for time so that current construction work
can continue unimpeded; it looks as if the Chengtu projects will be
finished by the end of this month, and as long as the Chinese Govern-

ment continues with the execution of the work and continues to advance
us the money we need there is no point in initiating acrimonious debates.
If, of course, Kung presses us for a new proposal, then Acheson will come
out with the scheme which has already been approved by Treasury, Army,
and State Department.

2. Have not yet received any answer from the Ministry of Finance on the
question of remittances to occupied China.

3. The rate of deterioration in the economic situation is definitely

increasing. Prices have been jumping (as soon as I can get the official

indices for the last two months shall get off a cable), interest rates

are now 7% per month, and the Government is experiencing a marked short-

age of currency. One day last week the Central Bank ran out of currency
and did not make any payments for 3 hours, resuming payment with new

notes fresh from the printing press of the Central Trust factory in
Chungking.

Government banks are restricting their cash outpayments to
CN $30,000 maximum per check and commercial banks are paying out even

less. These restrictions naturally incommode both the normal conduct
of business and the functioning of the government. According to the
head of the note issue department of the Central Bank the fapi reserves

of the Government are still about CN $10 billion, so that it is diffi-

338

-2cult to understand how the above situation arose; presumably this
reserve is cached away and was not immediately accessible. Another

difficult thing to understand is the failure of the Government to
release CN $500 bills, but as previously pointed out it attaches

inordinate and disproportionate importance to psychological considerations whose relevance diminishes with the worsening of the economic

picture. The one bright factor at present is that the crop prospects
are pretty favorable, though it is reported that in outlying areas
peasants are refusing to pay the land tax.

4. The black market has been pretty dead of late, and it has not been
easy for the US Government agencies now financing themselves by selling
US currency to find buyers.

The British would appear to be taking a very unrealistic picture
of our financial requirements in China, which I suppose they can well

afford to do. The talk of possible unfavorable psychological reper-

cussions which might ensue from a realistic readjustment in the exchange rate in the British Treasury memo sounds very much like Hall-

Patch who was never noted for his economic acumen.

Am reliably informed that the Chinese Government sales of gold

have been largely fictitious. Therefore it is tempting to make the
conjecture that their recent request for another ten tons of gold and

for US $20 million of US currency was based on the desire to build up
an internal political slush fund which would come in handy as the
economic situation deteriorates and the political power of the Central
Government concomitantly weakens. Of course, this is only-conjecture,

but it is a possibility well worth bearing in mind.

There has been a marked increase in the rate of economic deterio-

ration, and signs of the strain on the Central Government are multiplying. In this situation growing peasant discontent, unrest in the
Army, and further attempts at putsches on the lines of the Army College
conspiracy, not to mention increasing autonomy on the part of the
provincial warlords, are to be expected. My own feeling is that as
the situation worsens the Gimo will be forced into appealing to us for
help and advice but that he will defer doing so for as long as possible.

(One sign of strain on the Government is the difficulties it is experiencing in providing sufficient supplies of food for Govt. officials;
another is the fact that it is hard put to finding enough cash to meet

bank payments; yet another is the report of disturbances in front of

339

-3rice stores in the suburbs of Chungking-- but this has not yet been

confirmed). In spite of the fact that the strength of the Central
Govt. is visibly declining-- or maybe because of it- it not only

does not mend its ways but intensifies its previous policies. No one
I have met believes that it means business in the forthcoming discussions with the Communists. Its war effort is more inert than ever

before. It fails to understand that the attitude of the American

people and Government towards it is changing, and believes that it
can quieten American criticism by the usual stupid and self-contra-

dictory semi-official and official statements (e.g., Chen Li-fu's
recent reply to the Harvard professors re thought control). Its

bungling of relations with countries other than the US was made

clear in my last letter.

Well, this is the usual dismal story, but it is hard not to be a

Cassandra when writing from China.

There are one or two other items I should like to take up.
a. Incredible as it must sound our Army here delivers messages
from the President through it to the Gimo not to the Gimo personally
but to Madame Chiang (In one case when both the Gimo and Madame were

out of town such a message was delivered to Madame Kung.). This is

extraordinarily stupid as Madame Chiang will, if she feels it expedient,

hold up messages. I happen to know that one message was sent on

April the 3rd and has not yet been delivered. And in any case she cannot be depended on to deliver them without garbling them for her own
purposes. This is an entirely unnecessary complication, as the Army
has the means to have the messages translated and delivered in person

to the Gimo in Chinese. I am calling this to your attention in view
of the importance of the matter. You may wish to raise it with the

Secretary.

b. Hsi Te-mou has cabled Kung that the monetary conference and particularly

the meeting of the drafting committee is likely to take place fairly
soon and that Dr. White particularly asked for the return of T. L. Soong
to participate in them, adding that Dr. White particularly emphasized
how valuable T. L.'s contributions had been in the past. No reference

was made by Hsi to any other person. I don't know how expedient it may
be to do anything about it, but it would certainly strengthen China's

representation if Dr. Chi were one of its delegates or at least experts.

I suppose you are head over heels in work what with the forthcoming
monetary conferences and only wish I were there to do my share. But

perhaps it is felt that in view of the critical nature of the situation

here it is best to have someone on the spot and on hand though actually
I don't think it would matter much if I were away for a couple of months.

This is a figment of Hsi Te-mais immogination!

340

-4- -

It might be of interest to you to hear of a characteristic

example of our Army efficiency. As you know, Kung asked us for
US $20 million of US currency, and our Army agreed to bring in

US $5 million and keep the rest in India. Apparently the US $5
million (I don't know about the other US $15 million) were put in

charge of an Army officer who was supposed to be going all the way

to Chungking; actually he got off at Delhi. The parcel containing

the US $5 million was put on an Army plane destined for Chungking
without anyone being informed of the contents. The plane stopped
off in Kunming overnight and was neither unloaded nor guarded during

the night. Next day it arrived in Chungking but it continued to be
neither unloaded nor guarded. The day after a coolie arrived at

Army headquarters and dumped the parcel there. Mirabile dictu the
parcel was intact and when it was opened the full US $5 million of
currency was still there. As it happens Kung has not yet asked for
the US $5 million and we all agree it would be unwise to turn it

over to him if he does unless he shows a real inclination to sell
them and allows us a voice in sale; the only rider to the above is
that it might be worthwhile to turn them over if doing so were part

of a deal indemands.
which the Chinese went half way towards meeting our
reasonable

The last point I wish to take up is as usual personal. In the

telegram on my appointment as Treasury Representative reference was

made to the fact that my per diem allowance would be fixed later.
Presumably you had in mind the possibility that the current financial
negotiations would be consummated fairly soon. I should like to call

your attention to the fact that this possibility is fairly remote, the

odds being that they will drag on for quite some time. In the meantime my supply of fapi is running out, and unless some other arrangement is made I shall have to finance myself by converting at 40 to 1.

If that is o.k. with you, all right; but in all fairness to myself I

should like to point out that a corresponding adjustment in my per diem
allowance should be made, as otherwise my living expenses at 40 to 1
would absorb all my salary plus the normal per diem of US $7 and possibly

even more. It may sound ungracious to raise the subject but I don't
want to find myself in the position of having to live beyond my income.

ECRET

AIRGRAM

VIA COURIER
FROM

American Embassy

San Salvador, El Salvador
DATED June 7, 1944

REC'D June 21, 8 am
SECRET

Secretary of State
Washington

A-237, June 7.
Embassy's secret airgram A-186 of May 3 and De-

partment's Secret circular airgram of May 11, 7:30 p.m.
Protection of refugees with Latin American documents
was again taken up with the Foreign Office (which as the
Department realizes has undergone a complete reorganiza-

tion), which advises that the Minister for Foreign Affairs

has sent the following note on May 20 tothe Spanish Minister:

(TRANSLATION)

"The Minister for Foreign Affairs of E1 Selvedor begs
HIS Excellency the Envoy Extraordinary and Minister Plenipotentiary of Spain and Representative of the Interests of
Germany in this Republic, to consider as modified the request
referred to in the note verbale addressed to him by (the
Foreign Minister's) predecessor, Dr. Arturo Ramon Avila,

that he interest himself, if there are no objections, with

a view to safe guarding the lives of all those persone who
bear Salvadoran passports or who prove (justifiquen) that
they possess Lalvadoran citizenship, in order that the
German Government, for humanitarian reasons, extend to the

said persons all the privileges, rights and immunities granted
to interned civilians in conformity with the Convention of
Geneva on Prisoners of War. Julio Enrique Avile thanks in
advance His Excellency the Duke of Bailen for his courtesy

in taking t is action, which, if it appears opportune to him,
he would appreciate done by cable, and renews to him the
assurances of his distinguished consideration. San Salvador

May 20, 1944."
THURSTON

711
GC/mgm

341

342

CABLE TO AMBASSADOR WINANT, LONDON

The American Jewish Joint Distribution Committee has received
the following message from Dr. Emanuel Scherer, Member of the Polish

National Council: QUOTE Elected by just created council for rescue
Jews in Poland to report budget consider duty consult you before
making definitive propasals STOP Accordingly my knowledge large
scale financial help delivered quickly could contribute very much

to save those still alive STOP This kind help relatively easy

STOP Think bdget not less than 2 to 4 millions dollars should
be proposed until end year for rescue relief all Jews now Poland
not only Polish Jews STOP Help Jewish underground political
activities apart this cable doesn't deal with STOP For many

reasons think not less 60% should give Polish government 40 Jewish
resources STOP Please let me know your opinion to what extent your
helppossible STOP Because matter very urgent awaiting answer
quickly possible address Polish National Council Stratton Houde
London W 1 STOP Matter strictly confidential. UNQUOTE

The American Jewish Joint Distribution Committee has asked
the advice of the War Refugee Board and the latter whald appreciate
your views before commenting.

********
June 7. 1944
10:15 a.m.

LSLessertale

6/6/44

343
PARAPHRASE OF TELEGRAM RECEIVED
FROM:
TO:

American Embassy, London

Secretary of State, Washington

June 7, 1944
NUMBER: 4556

DATED:

SECRET

Reference is made herewith to Department's cables of
March 25, No. 2292, and of April 22, No. 3243, for the War
Refugee Board.

We have just received a letter from the Foreign Office saying
that the British Government agree to the setting up of a refugee
camp in Tripolitania.

The letter from the Foreign Office goes on to suggest that it
will be necessary to consider what practical measures will be
required for the working out of this scheme on the basis of
Joint maintenance, et cetera, to be shared between the American
and British Governments.

It has been stated orally by Randall, head of the Refugee
Department of the Foreign Office, that he is of the opinion
that this camp in Triploitania will be able to accommodate between
1,000 and 1,500 people. The securing of adequate medical and

administrative personnel will be the greatest difficulty and we
invite the suggestions of the War Refugee Board with respect to

this question. It was further confidentially stated by Randall that
the political problems involved in setting up a camp in Cyrenaica are

so acute that the Foreign Office had reluctantly come to the conclusion
that to establish a camp there is absolutely impossible.
WINANT

344
PARAPHRASE OF TELEGRAM RECEIVED
FROM:

American Enbassy, London

TO:

Secretary of State, Washington

DATED:

June 7. 1944

NUMBER 4557
SECRET

The considerations set forth in Department's cable dated
June 3g No. 4413, concerning removal of refegges from Southern

Italy, have been discussed indetail by the Embassy with the
Foreign Office. The head of the refugee department of the
Foreign Office, Randall, was very syspathetic and remarked that
there would be no fundamental objection on the part of the
British Government to facilitating the entrance of Jews not
now in Southern Italy to Palestine, suggested in Department's

cable, It was pointed out by him, however, that the facilities

in Palestine for the reception of such refugees were not unlimited
and that it had been the British Government's policy to
facilitate the entry primarily of those refugees who were in
immediate danger of their lives, such as those in Hangary now.
It was stated by him that within the past month nearly a
thousand Jewish refugees have entered Palestine via Turkey,
having . scaped from areas in which their lives were endaggered

seriously. It was also pointed out by Bandall that the UNERA
camps in the Middle East were able to take 25,000 refugees in
addition to those who had arrived before May 1, and he was
hopeful that these camps might play a part in relieving
pressure on Southern Italy. As pointed out in Embassy's cable
No. 4556, the British have now agreed to the opening of a
camp in Tripolitania which should accommodate about 1500
people.

We left a paraphrase of pertinent sections of Department's
cable with Bandall and he promised that he would give serious
and immediate consideration to the matter.
WINANT

345

CORRECTION OF

PARAPHRASE OF TELEGRAMRECEIVED
FROM:

American Embassy, London

TO:

Secretary of State, Washington

DATED:

June 7, 1944

NUMBER: 4557
SECRET

In line 7 delete the word "not". That sentence should
then read "The head of the refugee department of the Foreign
Office, Randall, WAS very sympathetic and remarked that there

would be no fundamental objection on the part of the British
Government to facilitating the entrance of Jews now in South-

ern Italy to Palestine, suggested in Department's cable."

346
PARAPHRASE OF TELEGRAM RECEIVED
FROM:

American Embassy, London

TO:

Secretary of State, Washington

DATED:

June 7, 1944
4559

NUMBER:

4469
SECRET

Reference is made herewith to Embassy's cable of May 12,

No. 3857, and previous, for the War Refugee Board.
The Enbassy has just been informed by the Foreign Office
that word has been received now that the Germans have refuged

to grant a safe-conduct for the BARDALAND to enable her to

evacuate refugees. It is stated by the Foreign Office that

it is settled German policy to refuge in every way to facilitate
the evacuation of Jews to Palestine and that, therefore, there

does not appear to be anything further that can be done in this

special case. The British intend to accept notice of sailing
of the BARDALAND from Piraeus on Juhe 10g unless the War Refugee

Board urgently expresses their disapproval.
WINANT

PARAPHRASE OF TELEGRAM RECEIVED
FROM:

American Embassy, London

TO:

Secretary of State, Washington

DATE:
NUMBER:

June 7, 1944
4560

SECRET

Following message is for WRB and the Department.

Reference is made herewith to Department's May 18

telegram No. 3953.

The following comments relative to WRB's suggested

approach to neutrals, as setforth in cable under reference,

has been sent to the Embassy by the Foreign Office after
consultation with NEW.

1. Government of Great Britain is prepared to
instruct its representatives in Turkey, Spain and Portugal
to join with representatives of the United States in
giving assurances that if a more generous policy toward

reception and care of refugees is adopted by country

concerned, the provision of additional supplies will be
arranged to meet refugees' needs. The work "provision"
is preferred by British in place of work "shipment" since
general shipping situation may render impossible actual

despatch in own ships.

2. British feel sure as regards Switzerland and Sweden,
that both these countries are fully aware of our appreciation of generous attitude they have shown toward refugees,
and draw attention to joint note sent by our two Governments to Swiss last January in which latter were assured
that requests for additional supplies tn assist refugees

would be given favorable consideration. It is also pointed
out by the British that in reply to an inquiry which they

sent some time ago to Sweden, they were assured by the
latter that Sweden was prepared to use her own resources

for refugees assistance. However, the British would

be happy to take part in renewed assurances and instructions are being sent to representatives in Bern and
Stockholm to concert action with their colleagues from
the United States.
WINANT

347

348

PROPOSED CABLE TO AMERICAN LEGATION, HELSINKI

Please report if central European refugees referred to
first paragraph your 399, May 16, have received visas and
departed for Sweden.

**********
June 7, 1944
10:15 a.m.

MStandishilen 6/5/44

349

PROPOSED CABLE TO AMERICAN LEGATION, STOCKHOLM, FOR OLSEN

Please ascertain if the central European refugees referred to in Legation's 1379, April 21, have
actually arrived Sweden from Finland.
THIS IS WRB CABLE TO STOCKHOIM NO. 24

June 7, 1944
10:15 a.m.

MStandish:lem 6-5-44

350

CABLE TO STOCKHOLM

From War Refugee Board to Johnson for Olsen

1. Reference paragraph 1 of Department's no. 1000, May 24, 1944
(WRB no. 18). Goodyear Akron advises transaction effected with approval

of foreign exchange office and is asking for payment here of countervalue.
Please confirm.

2. Reference Stockholm's 1820, May 22, 1944 (your WRB no. 20).

We expect to have funds available shortly for the Lithuanian and Latvian
projects. In the meantime you are authorized to use as you see fit a
part of the funds referred to in paragraph 1 above for these projects.
3. The Treasury has licensed Vaad Hahatzala Emergency Committee

to remit, notwithstanding General Ruling No. 11, the equivalent of $10,000
to Rabbi Wolbe and/or Hans Lohman provided that such funds may be

utilized by the payees only as authorized by you, as representative of
the War Refugee Board. For your guidance, the Vaad Hahatzala desires that

the major portion of these funds be used for the Lithuanian program
outlined in cable no. 1820 of May 22 from Stockholm (your WRB no. 20).
The necessary funds, goods or services may be acquired from persons

in enemy territory against payment by any of the three methods which are
prescribed under Section (A) of License No. f-2152 issued to the American

Relief for Norway, Inc. and set forth in Department's cable no. 619 of
April 8, 1944. Periodic reports on operations engaged in under this
license should be filed with Treasury through Legation.
THIS IS WRB CABLE TO STOCKHOLM NO. 25

June 7, 1944
2:30 Peme

001 Miss Chauncey (for the Sec'y), Abrahamson, Cohn, DuBois,
Friedman, Hodel, Laughlin, Lesser, McCormack, Stewart,

Central Files, Cable Control Files.
FH,lab 6/6/44
db

351
DEPARTMENT

OUTGOING

DIVISION OF

COMMUNICATIONS
AND RECORDS

STATE

MMS

This telegram must be
paraphrased before being

June 7, 1944

communicated to anyone

1 p.m.

other than a Governmental
agency. (RESTRICTED)

RESTRICTED

AMLEGATION,
STOCKHOLM.

1140

From War Refugee Board for Johnson for Olsen.

War Refugee Board has no assigned jurisdiction at
present in general field mentioned in your 1719 May 15
(WRB no. 13). This is WRB Stockholm cable no. 19.
Assuming that your questions have to do with Europe

generally exclusive of Sweden and other neutral countries
problems will be handled by military authorities, UNRRA
and Intergovernmental Committee on Refugees all of whom
have had discussions and made plans.
STETTINIUS
ACTING
(GHW)

S/CR

WRB:GLW:KG

6/5/44

NOE

352
PARAPHRASE OF TELEGRAM RECEIVED
FROM:

American Legation, Stockholm

TO:

Secretary of State, Washington

DATED:

June 7, 1944

NUMBER: 2037
SECRET

Following is our No. 264 War Refugee Board in reply to

WRB No. 21 of June 5 (Department's No. 1113) and VRB
No. 18 of May 24 (Department's No. 1000).

You are informed that today Goodyear funds were delivered

in cash against appropriate receipts. We made inquiry as to
whether local concern was in a position to enter into further
transactions of this nature and we were advised that it would be
possible to make one additional transfer of the same amount.
This arrangement worked well and although not fool-proof, it is
desirable from security point of view. At this time we do not
recommend bank transfers as receipt of cable transfers of such size
by individuals involved in operations unavoidably attract notice

and suspicion.

We have made initial advances to Estonians, Lithuanians

and Latvians with instructions that full accounting of expenditures
is required and when possible we expect receipts. We also strongly
emphasized the objectives and programs of the War Refugee Board

in rescuing victims of enemy persecution. We advised the groups
that additional funds would be supplied against established
results and upon demonstrated ability of these groups to carry
out the War Refugee Board's directives. Weekly reports as to the
status of operators and list of people rescued and complete personal data concerning them were requested from the groups.
JOHNSON

353

MJB-186

PLAIN

Bern

Dated June 7, 1944

Rec'd 6:29 p.m.

Secretary of State,
Washington.

3637, Seventh

Budapest third reports Honved Decree mobilizing

all male Jews born 1896/1926 into military auxiliary
labor battalions.
HARRISON

EDA EMB

354

CABLE TO BERN

From War Refugee Board to Harrison for McClelland

Reference your no. 3390, May 27, 1944
Arrangements being made to send you $125,000 at once

through channels indicated for urgent relief and rescue work. Balance
of $125,000 will be sent to you through same channels when needed.

#########

June 7, 1944
2:30 p.m.

FHilab 6/6/44

THIS IS WRB BERN CABLE NO. 38

355

MESSAGE TO THE AMERICAN CONSULATE GENERAL, ISTANBUL, TURKEY

Please deliver the following message from Dr. Leon Kubowitski,
World Jewish Congress, 1834 Broadway, New York 23, New York, to

Mr. Barlas, Pera Palace, Istanbul, Turkeys
QUOTE We strongly recommend for granting Palestine certificates
fellowing outstanding Hungarian rabbis selected by special sub-committee:

List #2
Adler, Pepi, 47 yrs., and 3 children, Csaroda, Gereg megye, Hungary
Altman, Miksa, 53 yes., wife and 9 children, Ond, Zemplen megye, Hungary

Billiteer, Jenos Babbi, 55 yrs., wife and 3 children, Pilliavorosvar,
Hungary

Buksbaum, Jehosua, Babbi, 62 yrs., and wife, Galanta, Hungary

Billitzer, Efrain, Rabbi, 52 yrs. and 7 children, Bethlen, Hungary
Basch, Jakab, 17 yrs., c/o Klein, Alfred, Margitta, Hungary
Basch Szore, 15 yrs., c/o Klein, Alfred, Margitta, Hungary

Berkowits, Bernathne, 46 yrs. and 6 children, Kis Varda, Hungary
Buchinger, Endre, 16 yrs., c/o Meno Buchinger, Somoleszollos, Hungary
Buchinger, Imre, 18 yrs., c/o Mano Buchinger, Somoleszollos, Hungary
Buchinger, Eva, 16 yrs., c/o Jakob Buchinger, Jenoshasa, Hungary
Benedek, Bela, 56 yrs. and wife, Bihar, Bihar megye, Hungary
Friedman, Fani, 52 yrs. and 8 children, Illesva, Bereg megye, Hungary
Fiksler, Berta, 58 yrs., Huszt, Hungary
Fendrich, Hugo 55 yrs., wife and 3 children, Nagyaszo, Hungary
Friedman, Samuel, 60 yrs., wife and 3 children, Tonalita, Hungary
Goldberger, Sandor, 42 yrs., wife and 4 children, Syerencs, Hungary
Hager, Chajem Mayer, Rabbi, 47 yrs., and wife, Nagyvarad, Hungary
Heisler, Jakabne, 52 yrs., Sgatmarneneti, Toltes ucca Hungary
Heisler, Erno, 28 yrs., Szatmarnemeti, Toltes ucca Hungary

Heisler, Rosalia, 22 yrs., Sgatnarnemeti, Toltes ucca Hungary

Jakobiws Zseni, 47 yrs. and 5 children, Kis Varda, Hungary

Katz, Antal, Rabbi, 60 yrs. and wife, Dunasserdabely, Hungary
Kohn, Herman, Rabbi, 54 yrs., wife and 2 children, Derecake, Hungary
Kahan, Frankel Samuel, Rabbi, 45 yrs., wife and 2 children, Budapest,
Eotvos 11. 19, Hungary

Kahan, Gitel, 50 yrs., and 4 children, Kirlayhaza, Hungary

Kahan, Feige, 26 yrs., Kiralyhaza, Hungary
Kahan, Sheindel, 27 yrs., Kiralyhaza, Hungary
Lipe, Mayers Babbi, 40 yrs., and wife, Szatmarnemeti, Hungary
Lemberger, Issone, Bosenyo, Hungary

Moskowitz, Hani, 4 children, Kis Varda, Hungary

Mandula, Sandor, 57 yrs., and 2 children, Szerence, Hungary
Rubin, Salamon, 55 yrs. and wife, Derecake, Hungary

356

-2Rubin, Jossef, M. Rabbi, 45 yrs. and 7 children, Bodrogkeresztur, Hungary
Saofer, Menachem, Rabbi, 60 yrs. and wife, Marosvasathely, Hungary
Schonwald, Miklos, 55 yrs. and wife, Kis Varda, Hungary
Stern, Salamon, 57 yrs., Myirbatka, Hungary

Steif, Jonathan, Rabbi, 63 yrs. and wife, Budapest, Hungary
Wolvovitz, Ethel, 50 yreye and2 children, Issa, Maramaros, megye, Hungary
Wolwovitz, Malvin, 30 yrs. Maramaros megye, Hungary
Wolwovitz, Ignats, 27 yrs. Maramaros megye, Hungary
Wolvovitz, Aranka, 24 yrs. Maramaros megye, Hungary

Weise, Fani, 63 yrs. and 6 children, Sgatmarnemeti, Zrinyi ut. 12, Hungary
Wiesnar, Judanne, 49 yrs. and 9 children, Szerence, Hungary
Weise, Henrik, 51 yrs. wife and 3 children Perbenyik, Zemplen megye, Hungary
Weissberg, Salamon, 38 yrs. wife and 2 children, Szerence, Hungery
Jungreisz, Jakab, Babbi, 42 yrs. wife and 7 children, Nyirmada, Hungary
Weinberger, Frida, and 9 children, Nyirmada 41, Hungary
Weinstock, Leopold, 23 yrs., Dees, Hungary
Weinstock, Moses-Devid, 21 yrs., Dees, Hungary
Weinstock, Teres, 22 yrs., Dees, Hungary

Weisz, Henrik, 51 yrs., wife and 3 children, Seerence, Hungary
WORLD JEWISH CONGRESS

A. LEON KUBOWITZKI UNQUOTE

##########

June 7, 1944
4:50 p.m.

BAKzintar 6/6/44

DEPARTMENT
OF

STATE

INCOMING

357
DIVISION OF

COMMUNICATIONS
AND RECORDS

LFG-32

This telegram must bE
being
paraphrased communicated before to anyone

other than a Government

Agency. (RESTRICTED)

Secretary of State,

Chungking via NR

Date June 7, 1944
Rec'a 10:20 a.m.
DEPARTMENT OF STATE

JUN 9 1944

Washington.

DIVISION OF

COMMUNICATIONS a RECORDS

989, June 7, 3 p.m.

Dr. Arthur N. Young, American Financial Adviser
to Chinese Government, Expects to leave by air

shortly st request of Minister of Finance to join
Chinese Delegation. to Monetary and Financial
:

Conference. HE requests Entry courtesies

particularly with reference to his papers. Also
please inform his brother John Park Young in the
Department.

GAUSS

RB RR

358

DEPARTMENT
OF

DIVISION OF

OUTGOING

LIIIS

7,1944
STAT EThis telegram mustTELEGRAM
DE
paraphrased before being
6 p.m.
communicated to anyone
other than a Government

COMMUNICATIONS
AND RECORDS

agency. (RESTRICTED)
U. S. URGENT

ERMENT OF STATE

AMEMBASSY,

JUN 9 1944

QUITO (ECUADOR)
403

DIVISION OF

COMMUNICATIONS & RECORDS

Reference circular telegram May 26.

You are requested to inform the appropriate authorities of selection of Mount Washington Hotel, Bretton Woods,
New Hempshire, 28 site of Conference, Anticipated duration

two to three weeks, beginning July 1. Location, base of
Count Weshington, White Mountains, approximately 600 miles

and eighteen to twenty hours by regular train from Washington. Special train being arranged for opening; delegations
will purchase their own accommodations.

Hotel will provide lodgings on American plan. Ample
meeting rooms available, but suitably furnished office
space restricted and hotel obliged to charge delegations

desiring offices a flat rate for these extra facilities,
Please ascertain and telegraph immediately minimum office

requirements and preliminary estimate of number of officers
and clerks expected to commose delegation. As these

figures will form basis of preliminary room allotments by
the hotel, please take oare to specify sex and to include
those persons already in the United States. Double

359

2nd

#483, June 7,6 Delian to (uito(Ecuador)

occupancy of bedrooms required, except for heads of delegetions.

As soon RE more detailed information becomes avail-

able please telegraph name, title and delegation function
of each individual, including subordinete personnel, and
also mode of travel end date and port of entry into United

States; in case of air travel this information essential
in recommending air priorities. If persons are appointed
concerning whom Devartment has not been furnished recent

biographic date, such information should also be included.
Since this is A technical wartime meeting, social

entertainment will be held to a minimum. Limited hotel
facilities will not permit the accommodation of wives off
other family members. Bueiness suits, light-weight woolene
suggested, will be edecuate for all occasions.
This telegram was sent to other missions last
Saturday and may be referred to as the Department's circular
of June 3, 6 p.m.

800.515
IC:DBC:MCL

STETTINIUS
ACTING
(WK)

ARA

6/6/44

BOL S/CR

360
DEPARTMENT

STATE

DIVISION OF

INCOMING

COMMUNICATIONS
AND RECORDS

Addis Ababa via War

RS 37

This telegram must be
paraphrased before being
communicated to anyone
other than a Government

Dated June 7, 1944

Rec'd 10:25 a.m.

Agency. (RESTRICTED) .

Secretary of State,
Washington.

DEPARTMENT OF STATE

JUN 9 1944
DIVISION OF

116, June 7, 5 p.m

COMMUNICATIONS & RECORDS

My telegram no. 115, June 5, 5 p.m.

Ethiopian delegates office requirements one room.

Ethopian Minister is first, Blowers second delegate.
Latter hopes to include H. R. Chase, Assistant Vice
President of Bank of New York as adviser to delegation
making total four including Tessema as secretary, all
male. Date and port of entry of Blowers depends on air

transportation allotted. Biographic data regarding
Blowers may be found in Legation's report no. 3,
February 28, 1944.
CALDWELL

REP
WSB

361

DEPARTMENT

INCOMING

DIVISION OF

COMMUNICATIONS
AND RECORDS

STATE

FB-14

Cairo

This telegram must be
paraphrased before being
communicated to anyone
other than a Government

Dated June 7, 1944

Rec'd 9:20 a.m.

Agency. (RESTRICTED)
DEPARTMENT

Secretary of State,

DIVIO

JUN

Washington.

GREEK 185, June 7, 10 c.m.

1944

COMMUNICA
BUH

PHINUS

The Greek delegation to the Monetary Con-

ference will comprise . (one) Ambassador Varvaressos
President; (two) George Mantzavinos Deputy Governor
of Bank of GREECE; (three) Argyropoulos (SEE my 182,

June 6, 11 a.m. paragraph ten)ond (four) Athenase She -

rounis Director of the Ministry of Finance as members plus two secretaries.
I am advised that the first two above are now
in London while the last and two secretaries whose
name s will be furnished the Department by the Greek
Embassy in Washington are in the United States.

ForEign Office adds that two offices will be
required by delegation.
MACVEAGH
BB

CSB

DEPARTMENT

362
DIVISION OF

INCOMING

COMMUNICATIONS
AND RECORDS

STATE

LC - 3

This telegram must be
paraphrased before being
communicated to anyone
other than a Government

Rejkjavik via War
Dated June 7, 1944
Rec'd 8:26 a.m.

Agency. (RESTRICTED)

Secretary of State,
Washington.

DEPARTMENT OF STATE

JUN 7 1944
DIVISION OF

US URGENT

COMMUNICATIONS a RECORDS

245, June 7, 11 a.m.
Iceland Government desires to know rank of
heads of delegations to Monetary Conference (Department's

circular telegram of June 3, 6 p.m. ) for its guidance
in selecting its delegation.
HULLEY

RR-BB

363
DEPARTMENT

DIVISION OF

INCOMING

COMMUNICATIONS
AND RECORDS

STATE

MJB-59

Bombay

This telegram must be
paraphrased before being

Dated June 7, 1944

other than a Government

Rec'd noon

communicated to anyone

agency. (RESTRICTED).

Secretary of State,
DEPARTMENT OF STATE

Washington.
JUN 9 1941
VS

URGENT

the RECORDS

318, June 7, 7 p.m.
Reference should be made to the following
despatches: 1203, January 26, 1944; 1204, January
26; 1310, March 30; 1372, May 15.

Reference should be made to the following
telegrams: 252, May 9; 254, May 10; 311, Juno 6.

Following Indian delegates to International
Monetary Conference will-depart from Bombay June

13 (repeat June 13) by air arriving Miami about
June 19 (repeat Juno 19): A.D. Shroff; Sir Chintaman;
D. Deshmukh; B.K. Madan; Sir R.K. Shanmukham Chetty,

Shroff is one of the authors of the 15 year
plan for the economic development of India, see despatch

no. 1203, and is desirous of contacting officials of
the Department

364

-2-#318, June 7, 7 p.m., from Bombay

the Department of State while in the United States.
The directors of the Tata interests mentioned in
the Consulate's despatch 1203, including, Shroff,
are valuable contacts of the Consulate and are
among the most important and influential businessmen

in India.
See despatch No. 989, August 27, 1943 regarding
Deshmukh.

Mr. J.R.D. Tata of the Tata interests has
indicated to the Consulate that he is desirous of
having Shroff contact the Department of State
while in Washington.
DONOVAN

BB WSB

DEPARTMENT

365
DIVISION OF

INCOMING

STATE

COMMUNICATIONS
AND RECORDS

PLAIN

HIS-4

London
DEPARTMENT OF STATE

Dated June DIVISION OF

Rec'd 8:30 a.m.

314

COMMUNICATIONS
AND RECORDS

Secretary of State,
Washington.

16, Seventh
NORWEGIAN SERIES
FROM SCHOENFELD

Your circular May 26
Norwegian Government accepts invitation to Monetary

and Financial Conference. Representatives chosen are
Professor Wilhelm Koilhau, director of Bank of Norway,
London, and 01c Golbjornson, Financial couselor of Norweg-

ian Embassy, Washington. Foreign Office states it takes
for granted representatives proceeding from England
will be exempted from oxisting travol ban and allowed
to return aftor conference and that representatives
can carry with them documents not subject to censorship
and may communicate freely with the Norwegian Government
in codo through Embassy at Washington.
WINANT

366

DEPARTMENT

DIVISION OF

INCOMING

COMMUNICATIONS
AND RECORDS

STATE

Pretoria

MF-279

This telegram must be
paraphrased before being

Dated June 7, 1944

other than a Government

Rec'd 10:38 p.m.

communicated to anyone

Agency. (RESTRICTED)
DEPARTMENT OF STATE

Secretary of State
Washington

DIVISION OF
JUN 0 1944
COMMUNICA

69, June 7, 6 p.m. Treasury AND pupare reply.
The acting Prime Minister, the Honorable J. H.
Hofmeyr, has requested me to convey the appreciation
of the Union Government to the President of the United

States for the invitation of the American Government
to send representatives to the forthcoming Monetary
and Financial Conference mentioned in the Department's
circular telegrams of May 25 and June 3, 6 p.m.
Mr. Hofmeyr states that his government welcomes

this opportunity for the exchange of views on a matter
of such importance to postwar world and has indicated
that the Union Government would appreciate being informed whether the question of the establishment of a
Bank for Reconstruction and Development will be included
in the agenda of the conference and would likewise be

grateful for any further information regarding the agenda.
Please reply by telegraph so that the desired information
may be

367

2-#69, June 7, from Protoria
may be in the hands of the South African delegates before their departure from Pretoria on June 12:
GROTH

JT
WTD

368

DEPARTMENT
OF

STATE

DIVISION OF

INCOMING

COMMUNICATIONS
AND RECORDS

MJK-20

Montevideo

This telegram must bE

Dated June 7, 1944

other than a Government

REC'd 9:49 a.m.

paraphrased before being
communicated to anyone
Agency. (RESTRICTED)

DEPARTMENT OF STATE

Secretary of State,

JUN 8 1944

Washington.

DIVISION OF
COMMUNICATIONS & RECORDS

519, June 7, 10 a.m.
Foreign Office states that Ambassador Blanco

will represent Uruguay as delegate to Mon tary and
Financial Conference and that no personnel will bE

sent from here. It is presumed that Department will
obtain from Blanco the information requested in its
circular telegram June 3, 6 p.m.
DAWSON

CAW

LMS

DEPARTMENT

369
DIVISION
OF

INCOMING

COMMUNICATIONS
AND RECORDS

STATE

COOPED

MRE-71

For

This telegram must be
paraphrased 1 before being.
communicated to anyone
other than a Government
agency. (SECRET 0)

Chungking via NR

Dated June 7, 1944

Rec'd 4:58 p.m.

Secretary of State
Washington

DEPARTMENT GF STATE

985, June 7, 11 a.m.
TO SECRETARY TREASURY FROM ADLER

JUN S 1940
DIVISION OF

UNICATIONS a RECORDS

WEEKLY ECONOMIC

OnE. At Twelfth Plenary Session of Kuomintang
CEC following decisions of Economics significance WERE
taken:

A. Price control machinery failure of which was
ascribed to lack of experience by both government and

people is to be reorganized, with absorption of national
mobilization administrative apparatus into commodity
administration to be headed -- it is reported -- by Kung.
B, Land tax in kind to be increased in scope and made

more progressive in incidence. As Finance Ministry has
huge bureaucracy for its collection consisting of 10,000
officials who often came into conflict with provincial

and local authorities as well as populace, it was decided
that provincial and local governments should be entrusted
with part

370

-2- #985, June 7, 11 a.m., From Chungking via N.R.

with part of responsibility of collection This was
modified at subsequent conference of provincial

governors, so that collection will be divided between
Central Government and local magistrates. Conditions
render unlikely incidence of land tax becoming more progressive especially as 74,000,000 piculs SET as 1944-

1945 goal for land tax in kind a line which is more than
double 1943-19441 If serious attempts are made to collect
such large amount, burden of peasantry will be such that

it may lead to peasant disturbances. In addition it is
hoped to raise another 26,000,000 piculs from compulsory

food purchases and borrowing. 1943-1944 land tax
collections togEthEr with compulsory food purchases have
yielded 61,000,000 piculs or 95% of goal to date, Each

contributing approximately half the total. C. Sugar
monpoly to be revised and partly replaced by a tax in
kind. Salt, tobacco, and probably match monopolissto be
retained. Fate of other monopolies still undecided.
D. Efforts to be made to import ESSEntial materials
from allied countries,
E. Soldiers living conditions to be improved and
government Employee's salaries to be raised.
F. Meeting does not appear to have faced up to

gravity of

371

-3- #985, June 7, 11 a.m., From Chungking via N.R.

gravity of Economic situation.
Two. Kung is seriously considering attending
forthcoming monetary conference, and while he has not

yet made final decision chances are strong that he will
go.

Three. At recent joint meeting of five associations
of industrialists, resolution adopted pointing out that
Kuomintang policy of regulating private enterprise should
include measures for its promotion.

Four. Decline in industrial production continues
with lay-offs of workers by arsenals and reflow of skilled
labor to occupied China.

Five. Notes in circulation April CN dollars
104,363,000,000.

Six. Current market rates for United States currency:
Kweilin 160, Kunming 190, Chengtu 190, all for large notes;
Chungking 165 for small notes. United States bank ID
certificates 110 and bonds 95. Gold unchanged.
Conditions in Shanghai in March (source Second

Secretary Bokhringer). Nanking regime announced early
1944 its note circulation was CRB dollars 18,000,000,000=

20,000,000,000, but Shanghai bankers estimated it at
40,000,000,000 as Jap Army pruchases supplies in Central
China with CRB notes of which Central RESERVE Bank has

no record. Highest previous estimate of CRB circulation
25,000,000,000.

372

-4- #985, June 7, 11 a.m., From Chungking via N.R.

25,000,000,000. Exchange retess United States currency
CRB dollars 140; pre-December 1541 HK dollar CRB

dollars 4-5; FRB dollar CRB dollars 6.80 (official rate
5.55); FRB dollar CN dollers 8-9, While private dealing
in Shanghai gold market prohibited, treding continues
at CRB 14,000 per Chinese ounce Stock market still
depressed due to Jap seizure cotton and yarn stocks

last August for which they have failed to fulfill promise
to pay in gold. Real Estate values depreciating from
fear of airraids. Shipping restricted. Large volume
of smallscale private smuggling from occupied China continuing.
GAUSS
NPL
WSB

373

DEPARTMENT

DIVISION OF

INCOMING

COMMUNICATIONS
CONFIRM AND RECORDS

STATE

For security
LC - 31

This telegram must be
paraphrased before being
communicated to anyone
other than a Government
Agoney. (SECRET 0)

Socretary of State,

text

this

beChungking 0188519 warded

Dated June 7, 1944
Rec'd 10:45 a.m.

DEPARTMENT OF STATE

JUN 9 1944

Washington.

DIVISION OF

994, June 7, 6 pen.

COMMUNICATIONS & RECORDS

TO SECRETARY OF TREASURY FROM ADLER.

Ro your 107 January 20; 306 March 6: and my

685, April 19. Finance Ministry has asked mo to
obtain clarification from Washington of current
position with respect to remittances from us to
occupied China.
GAUSS

WSB-RR

374

NOT TO BE RE-TRANSMITTED

Copy No u

SECRET

OPTEL No. 185

Information received up to 10 A.M. 7th June, 1944
1. NAVAL

6th/7th Beaufighters attacked 3 German destroyers mouth of
BELLE ISLE damaging one of them. A number of U-boats have been reported off
BREST Peninsula. On 6th Cne of H.M. Submarines torpedoed
and probably sank German controlled S.S. LORION 4,800 tons
in the AEGEAN. Another ship was possible hot.
2. MILITARY

Italy New Zealana ^roops have occupied PRECASSEROLI, and Indian

troops are fighting in SUBIACC. U.K. and South African

armour have thrust ehead North of ROME, former being 11 miles along highway 4.

and latter 17 miles along high ay 3. U.S. troops are 11 miles North-west

of ROME along highway 2, while U.S. armoured elements are about 14 miles
East of ROME along highway 1.

Burma Japanese are withdrawing from the area immediatly north
and east of KOHIMA.

3. AIR OPERATIONS

Western Front

5th/6th. 5,197 tons were dropped on constal
batteries and defences in the CHERBOURG/CAEN

area. 6th/7th/ 1, 179 aircraft despatched:
ACHERES railway yards 104;

VIRE railway and road junction 112,
CAEN 129,
CHATEAUXDUN railway centre 112,

ST. LO Road junction 128,
LISIEUX railway centre 104,
COUTANCES railway and road junction 139,
CONDE SUR NOIREAU 122,
LUDWIGSHAFEN 32,

Other tasks 82,
13 aircraft minsing. 12 German aircraft destroyed by Mosquitoes.

Italy 4th/5th Allied bombers dropped 86 tons on road junction
at TERNI

5th. 446 escorted heavy bombers - 4 missing, dropped 916 tons
on railways in North and Central Italy. 422 medium and light bombers and
429 fighters (7 missing) attacked communications North of ROME.

Rumania 6th. Liberators dropped 628 tons on oil refineries
PLOESTI and 286 tons on railway centre BRASOV.

375

NOT TO BE RE-TRANSMITTED

Copy No

SECRET

OPTEL No. 183
1. FRANCE

Reports received to 9:30 p.m. 6th. Airborne landings carried out by

two U.S. Parachute divisions in CHERBOURG PENINSULA, North of CARENTAN and one

British Parachute division Northeast of CAEN. Shore-landings successfully
achieved by three U.S. and three British Divisions between CHERBOURG Peninsula
East of VALOGNES and estuary of RIVER ORNE. Enemy light naval forces attempted

to interfere but were driven off. U.S. progress unknown. British troops hold

general line RYFS (4 miles North-east of BAYEUX) to BIEVILLE (3 miles Northeast
of CAEN) and bridges over canal and ORNE at BENOUVILLE northeast of CAEN

captured intact.
OPTEL No. 184

Information received up to 10 A.M. 7th June 1944.
1. FRANCE (6th)

Our assault forces net little opposition from surface craft and none
from aircraft. Landings were effected under cover of sea and air bombardment.
U.S. assault troops landed rest of the VIRE estuary and to the eastward where
they met considerable opposition in the St. LAURENT district where there was the
heaviest resistance. Landings were endangered by mines near the beaches and it
was reported that several landing craft had capsized or stranded and some tanks
had been lost.

Very few casualties in men and aircraft was suffered during the
airborne operations. Successful attacks on shore batteries continued throughout
the day and H.M.Sf WARSPITE silenced all but one gun in an important battery
by 2:20 P.M. Follow-up forces arrived in the assault area during the afternoon.
A convoy from the THAMES was shelled by constal batteries in STRAIT
of DOVER during the afternoon and a 7,000 ton vessel was sunk. There were

approximately 430 survivors from total complement 580. A personnel convoy of
10 large troop ships containing the first build-up division passed through
the Strait without interference. During the day minesweepers swept the assault
areas and widened the approach channels.

(7th) By 12: 30 A.M. following had been occupied
ISLAND OF ST. MARCOUF

Villages of ST. MARTIN, VARREVILLE, ST. LAURENT, COLLEVILLE,
COMMES, ARROMANCHES, RYES, CREPON, BANVILLE, HENNANVILLE,
SUR ORNE.

Casualties among Allied ships; a Norwegian destroyer and a U.S.
Destroyer sunk; One of H.M. Destroyers and a U.S. minesweeper damaged.

On 6th, total 2,656 sorties flown by heavy bombers with fighter
support, and from reports so far received about 2,000 sorties flown by bombers au
fighter bombers of A.E.A.F., also supported by fighters against objectives in
and around the assault beaches, and towns and villages in the area. In addition
460 aircraft, each towing a glider and escorted by fighters were detailed to
arrive over the assault area between 8 P.M. and 9:30 P.M., Enemy casualties
7:0:3, ours 11 bombers and 27 fighter bombers and fighters missing.