Full text of Diaries of Henry Morgenthau, Jr. : Volume 785 : Part 1

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DIARY

Book 785

October 24, 1944

-DBook

Page

Democratic Campaign of 1944
See Book 783

See also Book 782: Speeches by HMJr

---Financing, Government

War Savings Bonds: Department of Justice asked to assist
in suppressing vicious practices in redemption of

Bonds, particularly in Philadelphia - 10/24/44

785

147

France
See Lend-Lease

Justice, Department of

Asked to assist in suppression of vicious practices in
redemption of War Savings Bonds: See Financing, Government

-K-

Kaiser, Henry J.
See also Democratic Campaign of 1944

Speech at Waldorf-Astoria Hotel, New York City (New York
Herald-Tribune Forum on Current Problems): Jobs for All (10/17/44

122

-LLend-Lease

France: Stettinius-EMJr discussion of present status of
negotiations - 10/24/44

132

United Kingdom - Phase 2
See also Book 783

HMJr discusses with White his own reaction to British
needs - 10/24/44
Conference of American delegation - 10/25/44:
See Book 786, page 37

a) War Department communications on ground forces

and air forces discussed (see pages 57 and 60)
Conference of American and British delegations 10/25/44: Book 786, page 63

a) War Department discusses certain points:
Book 786, page 63

b) Navy Department discusses certain points:
Book 786, page 69

c) Acheson presents certain points agreed upon by

American delegation: Book 786, page 81
War Department transmits to HMJr joint recommendations

of representatives of British Army and United States

War Department - 10/25/44: Book 786, page 86

139

- L - (Continued)
Book

Page

Lend-Lease (Continued)
United Kingdom - Phase 2 (Continued)
War Department (Patterson) memorandum noting certain

items of non-munitions requirements in which they
have a direct interest - 10/25/44: See Book 786,
pages 110,111

(See also Book 793, pages 232,235 - 11/11/44)
December 1 as date for abolition of White Paper

restrictions on British exports and suggestions for

dealing with the problem of stocks - memorandum
enlarging on Keynes suggestions - 10/26/44:

Book 787. page 86

Conference of U.S. committee - 10/25/44: Book 787,
page 140

Conference of U.S. subcommittee held in White's
office - 10/27/44: Book 787, page 143
Conference of American and British delegations 10/27/44: Book 787. page 145

a) Keynes memorandum showing Lend-Lease stock

in United Kingdom of certain commodities:

Book 787. page 152

Resume' of negotiations as of October 28, 1944 Casaday memorandum: Book 787, page 259

-P.
Philadelphia, Pennsylvania
Suppression of Vicious Practices in Redemptions of War
Savings Bonds: See Financing, Government
-S

Savage, Ralph S.

Reinstated at Mrs. FDR's request - 10/24/44
-UUnited Kingdom
See Lend-Lease

-WWar Savings Bonds

Suppression of Vicious Practices in Redemptions:
See Financing, Government

785

141

October 24, 1944
9:48 a.m.
Operator:

Go ahead.

HMJr:

Hello.

Operator:

Here you are, sir.

Henry L.
Stimson:

Yes.

HMJr:

Henry talking.

Yes.

HMJr:

Good morning.

Good morning. I tried to get you yesterday
afternoon to tell you that I am very happy to
accept your suggestion and I wanted -- wanted
to send the man over -- in question -- to see
either you or Danhy Bell

HMJr:

Well

and since you both were out, why, I held

it over until this morning.
HMJr:

Yeah. I returned your call last night. I don't
know whether they told you.

Yes.

HMJr:

Well, I could see him at eleven-thirty.
At eleven-thirty?

HMJr:

Yes.

All right. His name is General Groves,
G-r-o-v-e-s.

HMJr:

General Groves, G-r-o-v-e-s.

Groves, yes.

HMJr:

What section is that?

He'll give you the details.

-2HMJr:

Harry, what section?

Oh, he comes -- he's -- I think he's in the
Service Corps. He's in the -- he was picked
out of the Army so long ago for this special
thing

HMJr:

I see.

that I don't recall exactly what branch
he originally belonged to.

HMJr:

Well, I'll be very glad if he

He can tell you that.
Eleven-thirty.

HMJr:
S:

Eleven-thirty. Groves, G-r-o-v-e-s.

HMJr:

Right. I'll look forward to seeing him.

Thank you very much.

HMJr:

Good bye.

October 24,1944
10:00 a.m.

PROPOSED DRAFT OF SECRETARY'S SPEECH OF OCTOBER 27.

Present: Mr. White
Mr. Gaston
Mr. Blough
Mr. Murphy

Mr. Barth
Mrs. Klotz

H.M.JR: The reason I am having this group here,

Alan, is this. They all have pieces, you see, and
very much in confidence, the President says he is going to
give this speech that I sent you a copy of - didn't I?
MR. BARTH: Yes.
H.M.JR:

.Thursday night - Friday night?

MRS. KLOTZ: Friday night.

H.M.JR: Anyway, the night of the 27th. I wanted
you to know that. He read it last night. He has agreed
to do this. Now, White has read it, and Gaston has, and
if you two men haven't, you should.
MR. BLOUGH: I have not.

H.M.JR: You and Henry Murphy should. You can get it
from White.
MR. GASTON: That is the higher standard of living speech?

H.M.JR: No, the one of White - economic bill of rights.
Now, he has agreed to do it. Of course,the conservatives
around him haven't had a crack at it yet.

-2

MR. WHITE: Anyway, it will have to be cut very
substantially.

H.M.JR: He said last night, "Of course, I will do it

in my own language." "

MR. GASTON: Yes.

H.M.JR: But I wanted you to know that. And I am
supposedly, Alan, to follow him. The reason I have in-

vited these people in is that they are all working with

me on different pieces. For instance, Sam Kosenman

called for the part on taxes, you see. So I am saving
my time and yours, also for the benefit of what their
brains may throw off. I want them to know what I am doing.
I don't think I can sit back and waitfor the President
to give me the last draft, the way I did once before.
At that same Businessman' League, you remember, I waited
and waited until the last minute.
MRS. KLOTZ: Mr. Gaston was there.

MR. GASTON: Yes, the President of the American

Locomotive Company presided.

H.M.JR: So I think we have just got to do one and

make up our minds that it isn't in conflict with the

other one. And I strongly recommend to the people here
who have been working with me, the October 21 Nation,
plus that supplement.
MR. BARTH: Yes.

is it?MR. GASTON: It is a supplement to the same number,
MR. BARTH: Yes, it is a transcript of the Nation's

associates' meeting, short addresses by a number of

people.

H.M.JR: That is compulsory reading.

At your service, sir.

-3MR. BARTH: I had this done in a rush, so there is a
correction right on the front page.

H.M.JR: I am a little bit excited because all over

the weekend I have been on this thing with the President,
you see, and more or less with Mrs. Roosevelt. So I
haven't had a chance to think of myself. When we get
through, Herbert, we might check up where I stand on my
speech, and all the rest of that, because I am counting
on your contacting the businessmen.
MR. GASTON: Yes.

MR. BARTH: Do you want me to read it?

H.M.JR: If you please, and I think we will listen
to it once without any interruptions.
H.M.JR: Before we start, Henry, did you have a nice

weekend in Los Angeles?

MR. MURPHY: Very nice. My mother was in fine shape;
the same for my step-father.

H.M.JR: It was pleasant and you didn't worry?
MR. MURPHY: I didn't worry unless an hour's conversation with Benjamin Anderson could be considered worrying.

H.M.JR: That is torture, not worry!
(Mr. Barth reads attached proposed draft of Secretary's

speech of October 27)

(The Secretary holds a telephone conversation with
Secretary Stimson, as follows:)

October 24, 1944

10:09 a.m.
Operator:
Henry L.

There you are, sir.

Stimson:

Hello.

HMJr:

Henry speaking.

Henry, I'm full of mortification.

HMJr:

Yes.

There has been a misunderstanding here and

Groves went out of town last night on an

inspection trip

HMJr:
S:

Oh.

to be back tomorrow -- he'll be back --

he could -- anytime Thursday morning.
HMJr:
S:

HMJr:
S:

Not 'till Thursday?
Thursday he'll be back, yes.
Pardon me?

I don't want to -- I could call him in but
it's too -- it's really pretty -- he's on a very
stiff job.
Well, let's give him -- I'11
Is -- is Thursday all right?
Thursday, the same time -- at eleven-thirty.
That's awfully good of you and I -- I thought
it was understood with him yesterday when I
made the fixed date with you, but there's been
some slip-up between us.

HMJr:

Well, we -- I'11 look forward to seeing him.
Thursday at eleven-thirty.
If you please.

Thank you very much.

HMJr:
S:

-4(The Secretary holds a telephone conversation with
Henry Kaiser, as follows:)

October 24, 1944
10:19 a.m.

HMJr:

Hello.

Operator:

Go ahead.

Henry J.
Kaiser:

Hello.

HMJr:

Mr. Kaiser?

Yes.

HMJr:

Morgenthau speaking.

Oh, good morning.

HMJr:

How are you?

I'm fine, thank you.

HMJr:

Where did I locate you?

In my office.

HMJr:

In Washington?

Yeah.

HMJr:

Well, now look, Mr. Kaiser, I came down on the

Yes.

HMJr:

And I've given him a very carefully prepared

train last night with the President.

speech on jobs.

Yeah.

HMJr:

And he is very anxious that I show 1 t to you and
that you show me your five-point program.

Okay.

HMJr:

Now, when can we get together?

Right away if you want to.
Are you free at lunch?

HMJr:

-2K:

No, I'm not. I'm going out with Joe Davies.

HMJr:

Joe Davies?

Yeah.

HMJr:

Well, I think -- are you free this afternoon?

Yes, I am.

HMJr:

Around three o'clock?

Three o'clock. That will be perfect. Three
o'clock, I'11 be there.

HMJr:

And I will show you what we've given him and
if you'd be kind enough to show me what your

plan for reconversion is

That's wonderful. You can show me -- I can, for
instance, go over yours first and then I can give
you some idea because if you've given him a talk,
why, I'm sure that's wonderful.

HMJr:

Well, we have and

When is that for?

HMJr:

Well, between us, he said last night that he would
do it in Philadelphia.

That's wonderful. God,it's just wonderful.

HMJr:

And it's a complete program.

That's
just wonderful. All right, I'll be glad to
see you.

....

HMJr:

I'll look forward to

Where will I come to?

HMJr:

Right to the Treasury and if you -- are you coming

by car?
K:

Yeah, by my own -- yeah, my own car.

HMJr:

Well, I'll tell you. If you come on the East
Executive Avenue, just

-3K:

HMJr:

East Executive Avenue.

You know that's between the Treasury and the

White House.
K:

Between the Treasury and the White House. All
right.

HMJr:

And if you'll come in on the -- from the
Pennsylvania Avenue side, I'll notify the
police that you're coming.
All right. Thank you.

HMJr:

From the Pennsylvania Avenue side, it's the

avenue between
K:

Pennsylvania Avenue side.

HMJr:

And then you come all the way down the -- the

Treasury and it's the last entrance of the
Treasury on the left-hand side. But I'll have

somebody meet you there at Pennsylvania Avenue.

All right. All the way down -- that's on
Pennsylvania Avenue

HMJr:

You come in at Pennsylvania at the Avenue between
the White House and the Treasury.

The White House and the Treasury.

HMJr:

Someone will -- I'll have a man meet you at
that entrance and bring you right to my office.

Thank you very much.

HMJr:

Thank you.

This is very thrilling. Thank you.

-5H.M.JR: Mrs. Klotz, I am going to tell Judge Rosenman.
MRS. KLOTZ: Yes.

H.M.JR: Well, I am supposed to speak first. You
did what I asked you to do with this one exception. I
don't think you drove home this thing which I said,
which you might not have liked, that the proof of the
pudding is the eating thereof, and that the record of the
last twelve years is far more convincing - the attitude
of the Administration toward business - than any promises
that somebody might make. Over a twelve-year period

Mr. Roosevelt has done this, therefore if they are at
all fair-minded he should have convinced them of his
fairness, and they should have confidence that he will
continue the next four years to treat them as fairly as
he has in the last twelve. Now, I don't think that the
point is made. I think that could be done very well in
the last paragraph.

I am going to be very honest, as I am with you all.
My trouble is, I would have been very enthusiastic about
this speech three days ago, but I have sort of tasted
red meat in this thing that was done for the President
on jobs and I am disappointed in my own ideas after
having read the other one, do you see? You have done

just what I asked you to do.

The other thing is this, you take the position all
through this thing, "Well, this is what Dewey said in his
acceptance speech, and then we are constantly on the
defensive all the way through - negative, I me an. I don't

know - I would like to hear from other people, whether
we couldn't turn this thing around and do it in a positive
manner. I don't know - I would like to hear from some
others. My trouble is that my own ideas sound thin to
me after the other. Of course, if the President does go
through with that, anything I might say would sound thin.

I still believe this is the thing to do.

too-- Incidentally, Herbert, if you would be here at three,

-6MR. GASTON: Today, yes.

H.M.JR: Let's start with Herbert. You and I know
each other well enough that we can be honest. I am
criticizing myself and not you, because you have done
beautifully what I asked you to do.
MR. GASTON: I think the general line is good. I
think it might be possible to get a little more substance
in the way of data than there is here. We are dealing
here only with a few income tax figures, corporation
profits, primarily. There are other evidences of business growth and prosperity that might be used.
H.M.JR: I didn't see this stuff that Haas' shop

sent, did you, Murphy?

MR. MURPHY: I have just looked it over in the last
half hour, Mr. Secretary.

H.M.JR: Let's go around. White, be very frank.
MR. WHITE: I liked the whole thing. Certain parts

I don't like - certain parts I don't think fit. The

first part, particularly, where there is irony, sarcasm,
right along, I think in order to get away with that - it
is very effective under one condition, if you have got the
crowd.a hundred percent with you. When you have the

crowd a hundred percent with you, they interpret it the
way you want to, and they boo or howl at the right places.
If you don't have the crowd a hundred percent with you, or

if the inflection of your voice doesn't hit the bull'seye, it is an awfully flat tire.

I think in the kind of audience that I suspect you
are going to speak to, and your general style of speaking, as well as the position you hold, I personally don't

feel lends itself to a lot of irony or sarcasm. So I
should be inclined to shorten that, or modify it. I think
there is enough factual material in there. I think there

could be a little more of the explanatory material; there
is a good deal of it, and I like the last three-quarters
with the exception of some particular spots.

-7I think the basis of a good speech is there. I
might say this, though; it may not be as satisfactory
from your point of view. I don't know how you feel
about it. I don't think this sort of thing stems from
your heart very much, and therefore you are not very

enthusiastic about it; but this is true, if the President
goes off on the other angle - I think if the President
makes the kind of speech he has, this is a good note to
strike, though it isn't anything inspiring.
But if it is a business audience, I think there are
many good paragraphs and passages there, and I think you

can add to it if some of the other part is cut off and

even make it more effective. So I would think you have
the basis there. I would rather say if the President
didn't say the other speech, then you ought to go to town
on that, but his making it the day before-MRS. KLOTZ: Mr. Morgenthau's speech is right after.
MR. GASTON: The President speaks and then somebody

introduces the Secretary right afterwards.
H.M.JR: They have scheduled a series of dinners
around the country, how many I don't know.
MR. GASTON: They told me three.

H.M.JR: And they are trying to corral a businessman.
Places like New York, and where else, Herbert?
MR. GASTON: I don't know. He speaks in Philadelphia.

H.M.JR: And this one I am talking at, they are
trying to raise enough money to pay for his broadcast.
MR. WHITE: Well, I still think if there is needed,
and there is room for, about a page of the kind of thing
you have in mind, looking toward the future - not very
much, but for the businessman, pointing out that, after
all, the businessman benefits, as you do say, through
more business and more profits, and the way to get more

-8business and more profits, among other ways, is to have
high employment and mass purchasing power, and that one

of the major objectives of the President in the next
four years is to just do that - I think you can get a

rather effective, inspiring page or two. But I kind of
think that has a good basis.

There are forty million workers, ten million farmers,
and one hundred and thirty-five million consumers, and
business cannot prosper, cannot have profits, unless they
prosper. That is the objective that the New Deal is
striving for. They make up the various categories.
I rather think this is a good basis for a speech.

H.M.JR: Well, let me just think out loud. I am
exhausted from having sort of got all excited in trying

to present this thing to the President, which was done up
until eleven-thirty last night, so as usual, I come second,
which is correct. But it has left me exhausted.

Might I just try this thing out on you? If we are
going to use this quote, then if I was going to do that I
would repeat it about five times, and as we make these
points I could get the audience to say - let's say that
the United States Steel has done this, and I would say
"In the words of Mr. Dewey, is this consistently hostile
and abusive to American business and industry?" Then I
would make another point and I would say again quoting

Mr. Dewey, "Is this hostile," and so forth. I would bring
home about five times that he has said this is hostile
and abusive to American business. You forgot it. I mean,
that is the thing, "When we bring the national income
up from forty-two to seventy-one, is this hostile," and

so forth. I would keep bringing that home, driving it
home that Mr. Dewey said that. I am offering that as a
technique - "Is this, in the words of Mr. Dewey, consistently hostile and abusive to American business and
industry?"
(Mrs. McHugh enters the conference)

-9H.M.JR: (To Mrs. McHugh) Mrs. Pratt is going to

send me down a lot of speeches from the Businessman's

League. I wondered if they had come. I asked her to
send them special delivery.
MRS. McHUCH: All right, sir.

MR. GASTON: I would rather disagree with your idea

of taking up a quotation from Dewey and following it
through. It seems to me to follow the President the best

line of argument is without directly referring to the

President's statement that the people who have a record
of business prosperity, helping business, putting things
on the up-grade, are the people to entrust with the business future of the country, and not the people who are
making mere promises; and then I would go into the record
as you have gone into it here, and I think perhaps that
there are some other items in the record of helpfulness
to business.
And I think you can show a philosophy - which is the
philosophy you mentioned, Harry - the philosophy that you
can only build business, not by doing special favors to
business on top, but by building the demand and building

the economy so, as a result, it does build business. I
think you can express that philosophy in this speech.

H.M.JR: (To Mr. Barth) Of course, the thing that
you are working with, with me - so that I don't get you
down - this kind of thing is completely foreign to me.
I mean, it is like asking a doctor who is an expert in

children's diseases to get up before a medical audience
and talk on cancer. But for the campaign, for the
audience, I don't know anything better that I can do to
make votes for Mr. Roosevelt - particularly as I have

never done it - and I don't know of anything better, if
he is going to do this job thing. But there ought to
be, damn it, Henry, better material that we can give
Barth than we have. I am not satisfied with what we have
given him and, after all, he is, I will say to his face,

the best technician that I have had working with me on
this kind of stuff. But it is up to us to give him the
material.

- 10 -

MR. MURPHY: It seems to me, Mr. Secretary, that as

far as material is concerned, that it is weakest on the
side of small business. We have to male a stronger case
for small business, and just since I got the call from
Mr. Fitzgerald and heard about this this morning, I had
looked up an article in the Federal Reserve Bulletin;
it is a table I would like to show you. I have marked
a column which compares--

H.M.JR: Why don't you explain it to everybody?
MR. MURPHY: This is an article from the "Review

of the Month" in the July Federal Reserve Bulletin.
H.M.JR: This year?

MR. MURPHY: Yes, sir. The Federal Reserve Board
received some figures from Robert Morris Associates,

which is a private statistical organization, giving a
sample of the profits of small business, and here is what
they find: Comparing the percentage increase in profits

of small and large business, respectively, between

December 1940 and December 1943, in the food business, the

profits of the large companies increased eleven percent;
small companies, fifty-nine percent.

H.M.JR: Wonderful! I wouldn't have believed it.
MR.MURPHY: Textile, large companies two percent,
small companies one hundred and nine percent; chemical
business, large companies decreased fourteen percent,
small companies increased seven percent; petroleum,

large companies increased fifty-nine percent, small
companies one hundred and twenty-nine; steel, large
companies decreased thirty, small companies increased
twenty-six; electrical equipment, large companies decreased
ten, small
increased one hundred and thirty-nine.
There
are acompanies
couple more.
MR. GASTON: From '40 to '43 - small companies are

in a better position to cheat on the OPA regulations.

- 11 -

MR. WHITE: And small companies start from a very
low level.

H.M.JR: What is the difference? that is the
California air.
MR. WHITE: It remains a fact that the Government

has, in its handing out of contracts - I will swallow

when I say that - has helped small business. There is

the proof. Believe it or not.

MRS. KLOTZ: Nobody else will believe it, either.
MR. WHITE: They have prospered.

MR. GASTON: I think you are talking about business,
not about small business, in this speech, anyway, aren't

you?

MR. WHITE: I think it would be better to talk about
business in general than small business, because if you
do walk on small business, there is an implication, almost
an admission, that while you may not have done so good

with big business, and it is big business you are not
friendly to - well, it is a `curious feature about the
small businessman that he likes to think of himself as
being identified with big business. He thinks if you
are agin" big business, you are "agin" business.
MR. MURPHY: I don't think it has to be handled
that way, Harry. Big business has prospered, but small
business has prospered even more, and I think these

figures are what you would expect, considering that the
national income and corporate profits as a whole have
gone up so much more than the profits of concerns, for
example, that are represented in Dow-Jones.

Where did the business go? It went to railroads
and in large part to smaller businesses.
MR. WHITE: As long as you don't mention the magni-

tudes, it is impressive.

- 12 -

MR. MURPHY: It seems to me that a case should be

made on the small business side. I think that can be
made without reflection on the large businesses, but I
think there is the feeling which you have to swallow

about distributing contracts. I think there is a feeling
that small business hasn't gotten the break, and I think
that a very positive case should be made that small
business has done well - that big business has done well,
but small business has done better.

MR. BLOUGH: After you talk about business there is

an implication that this is business in general, but
there may be a sneaking suspicion that some segment of
business has been walking off with the lion's share.
MR. WHITE: Bring it in that way.

MR. BLOUGH: This isn't merely the concentration of
control, and so on; this is the mass of business as is
illustrated by the fact that the smaller businesses have
really done better.
MR. WHITE: "When big business prospers in a democracy

there is something wrong, but when all business prospers,
then things are right" - something of that character.
Show that the prosperity has permeated, or is wide-spread,
rather than paying your respects to the fact that you have
helped small business.
MR. BLOUGH: I think those national income figures
are not good to use because they look at them, you
listen to them, it looks like we went down in three years
and came back in three years, from '33 to '36, and after
that time we just sort of slushed around.

MR. WHITE: And it was only the war that let us out.

There is a lot of truth in that.

H.M.JR: This was October 23, 1936, "I am here to
report to you, the stockholders of America, about the
financial management of your great corporation, the United
States Government. What I shall say looks more to the

- 13 -

future than the past because I believe it is in the future
that you are particularly interested." Then I go on.
MR. WHITE: That is a good line.

H.M.JR: Then I finish up, "It is quite interesting,"

and so forth.

MR. WHITE: Of course, in 1936 you could have made
a wonderful case.

H.M.JR: Then I finish up, "Some people are broadcasting America short. No one is fool enough to sell
America short."

MR. WHITE: If I might say, Mr. Secretary, there

seems to me a little of this possibility, too. If you

make the kind of speech that you would like to make, and
I think that we all would like to have you make, under

the circumstances, I wonder if there isn't a little bit
of either of these two characteristics, or both; either
that that is the party line and you have received instructions to supplement it, or that it is a "me, too" proposi-

tion. Coming on the same night, and the Secretary of
the Treasury speaking, it seems to me that that note
about business being prosperous is a more appropriate one.
That is my own feeling.

H.M.JR: Than just being a "me, too"? Oh, I think

so. I haven't changed. I think this, put it another

way, Harry. This man made this statement that the
Administration is constantly hostile to and abusive to
American business. Now, somebody should answer that.
MR. WHITE: That is the Secretary of the Treasury's
business. He is the man who is usually regarded as being
pre-eminently concerned with finance, with business, with

profits, and it comes infinitely more appropriately from

you than from any other Cabinet Member.

H.M.JR: Unless it was the Secretary of Commerce.

- 14 -

MR. WHITE: No, I think the Secretary of Commerce is

usually regarded as dealing with foreign and international
trade. He doesn't, but he should be.
H.M.JR: I deal with business, he deals with foreign
trade. How did we get turned about?
MR. WHITE: Well, because the Treasury stands, as I

say, for business, for finance, for those things which
are usually thought of in terms of profits as well as
taxes. He is the high-grade bookkeeper in the sense

that he watches the bookkeeping of the nation, he watches
the profit and loss statement, he watches business. He

is interested in good business not for any ethical or
ulterior profit, but because he wants the machinery to
work well. There is something of that in the connotation
of Minister of Finance.
MR. GASTON: Historically, the Department of Commerce
began as the Department of Commerce and Labor; it was a

statistical organization and it still is. It was split

because Labor felt that the Secretary of Commerce has

always been a sort of representative of business in the
Administration, and Labor didn't like that. They wanted
their own representative in the Administration. That is
what the Department of Labor was to be, according to their
ideas. But Commerce has always been a statistical organization.

MR. WHITE: Is Jones making any speech?

H.M.JR: I haven't heard of any.
MR. BLOUGH: I am fascinated by the opening paragraph,

but I think it is a little dangerous. "hat you are

practically saying is, "Now let me tell you one! Every age
has its mythologists. There are a lot of myths going
around. Now, watch out, I am going to give you one.
a little worried about the "fanous--famous" - no use building him up. That has a connotation that is not bad.
MR. WHITE: I think that is satire.
I

- 15 -

MRS. KLOTZ: Depends on how you read it.

MR. BLOUGH: There again I agree with Harry that it

is very difficult to get away with.

MRS. KLOTZ: Believe me, they are going to be a cold

audience.

MR. WHITE: Unless you can get a lot of our friends

up there.

H.M.JR: I don't think so.
MRS. KLOTZ: They are going to be cold because they
have plunked down the fifty bucks.

MR. GASTON: They are certainly all going to be
Roosevelt supporters, I should think.

MR. WHITE: I think they have to be more than that.
I think they have to be very friendly to the speaker to
catch the nuances when it is irony, otherwise they can
be swept off their feet. But when it comes to subtle
sarcasm and irony--

H.M.JR: I am not too good at it.
MR. WHITE: There are very few who are. The President

is a past master. I don't think Dewey is any good at it.
H.M.JR: It isn't natural for me.
MR. BLOUGH: It didn't go as well Saturday, even
for the President.

MR. GASTON: I don't think the President is a past

master.

H.M.JR: The man who is a past master is Churchill.
MR. GASTON: I think he always over-acts it, overstresses it.

- 16 -

MR. BLOUGH: Good irony is understatement, isn't it?

MR. WHITE: It is to a man like yourself, but the
other one hundred and twenty-five don't respond. But I
must say, Mr. Secretary, I think you have the basis
there to build on without too much change.

MR. MURPHY: It seems to me that it is a pedestrian
job, that somebody has to do it and you are the most
appropriate person, as Secretary of the Treasury, to do
it. Somebody has to sound the note, somebody in a high
position.

H.M. JR: I tell you what Mrs. Klotz wants, you see.
If you would like a little music under the thing, and
then drama beforehand--

MRS. KLOTZ: Don't! I hate music.
MR. WHITE: Parade of the forty-eight States.
MRS. KLOTZ: No, I think if the Administration had
been wonderful to small business, and Mr. Morgenthau

talked about it, and raved about it, it would be different.
But the Administration has done very little for small

business.

MR. MURPHY: That means you have to talk longer.

MRS. KLOTZ: And it wouldn't do you any good, now.

H.M.JR: Let me just ask Blough, in reviewing the
thing, wouldn't there be some things that you could
introduce on taxes that we have done for business?

MR. BLOUGH: I think so. I don't think they think
so.

H.M.JR: Could you take a hand at it?
MR. WHITE: How about the reconversion and the profits?

- 17 -

MR. BLOUGH: Certainly, you have some of that in

here now, certainly. The present law, now, war-time
law, is very favorable to them. There is no doubt about

that. I think that is mentioned in here.

MR. GASTON: There is something there about this

liberal approval of advertising expenses. I think that is
a little dangerous to incl ude. After all, we haven't

passed on any of those accounts yet, and it indicates
that we are going to let anything go, which we probably
are, but-MR. WHITE: I can't comment objectively on that.
MR. GASTON: They haven't dealt with them yet.

MR.WHITE: I feel too sore about that.
MR. BLOUGH: I am with Harry on that.

MR. BARTH: I am, too, but you might as well get the

credit for it.

MR BLOUGH: I don't think Henry meant this was a

"pedestrian" speech.

MR. MURPHY: No, it is a pedestrian subject.

MR. BARTH: By Golly, I do not think it is a pedestrian
subject. I think that this Administration has a wonderful
case as a friend of business and that it is appro priate
for the Secretary of the Treasury to make the case.
H.M.JR: You do think so?
MR. BARTH: Yes.

H.M.JR: I have no doubts about that, and I think
that this is what these people want.
Now, Roy, I wish you would get busy and see what you

can do; then we can look at it, you see.

- 18 MR. BLOUGH: I can't do too much, but I can do something.

H.M.JR: I mean, do whatever you can, right away.

I would like you to read that speech as a matter of
amusement - the one I quoted from. But for God's sake

be careful with it, will you? You might read it before
you go out.

MR. WHITE: What is meant by a friend of business,

really? What is business? Business is the function or

enterprise of making money, making profits, and being

a friend to business means so ordering affairs that
there are sustained and wide-spread profits. And if that
is what you mean by being a friend of business, yes, this
Administration has been a friend of business because it
has made that possible and will make more possible. But
being a friend to business is not to be confused with
being a friend of certain vested and special interests to use a phrase used in the other speech - to have certain powerful groups being the spoiled darlings of business at the expense of other business.

H.M.JR: Let me just say this a minute. I haven't

contributed anything up to now.

MR. WHITE: I have an appointment with Lord Keynes
at eleven o'clock.

H.M.JR: All right, supposing you go.
MR. WHITE: I can get through quickly.

H.M.JR: I would like to have this thing continue.
When to you have to go to work for the Post today?
soon.

MR. BARTH: I have to go to work for the Post fairly
H.M.JR: When will you be available again?
MR. BARTH: About five o'clock.

- 19 N

H.M.JR: We will see who will be available here
from five o'clock on to meet with you. How is that?
Mrs. Klotz will contact you.
MR. BARTH: I am very unclear now about what you want
to do.

H.M.JR: So am I.

MR. BARTH: Well, frankly, if we are to cut out the
irony, then we have to start from scratch, I think, and
forget about this. That would be better.
(The Secretary holds a telephone conversation with
Mr. Henry Kaiser, as follows:)

October 24, 1944

11:08 a.m.

HMJr:

Mr. Kaiser.

Henry J.
Kaiser:

Yes.

HMJr:

I wonder if you would care to and had the time
to read this draft between now and three o'clock.
Oh, I'd love to do that.

Supposing I send it over very confidentially to

you.
K:

Right. Now, you know where I am.

HMJr:

I -- I don't know where you are. Hello?

1210 18th Street.

HMJr:

1210 18th Street.

Yeah.

HMJr:

Is that all the address I need?

That's all the address you need.

HMJr:

What -- what's on the outside of the building?
Well, it's the Kaiser Company. They just go up
the -- just go to the -- take -- to the third
floor.
Third floor.

And my private office is on the third floor.

HMJr:

1210 18th Street.

1210 -- will you send it right away?
It will be there immediately.
Immediately. All right.
That will save us ....

HMJr:
K:

HMJr:

-2-

That's right. Save us time and I can -- I'11
go over it and can make -- with these other things
that I have will be prepared to present my things
that I have to you.

HMJr:

Right.

Thank you very much. Good bye.

- 20 -

MR. WHITE: Mr. Secretary, I would suggest a little
note saying it is a preliminary draft, has to be cut.

H.M.JR: Oh, well, we will tell him that later.
MR. WHITE: Otherwise he is apt to pay too much

attention to it.

H.M.JR: Well, he won't mind, he knows.

What I wanted to say was this, in talking about a
friend of business, the thing which I have spent so much

time on, is the fact, talking as Secretary of the

Treasury, that business has been treated fairly in the

sense that we have only prosecuted the crooked business,
and everybody who hears my voice knows that ninety-nine

and nine-tenths percent of the time, the representatives
of Internal Revenue are unbribable and fair.
(Mrs. McHuch enters the conference)

H.M.JR: (To Mrs. McHugh) This should be put in
an envelope, 1210 Eighteenth Street, The Henry Kaiser
Company. Stamp on the outside "Confidential, and on
each page - stamp each page "Strictly Confidential. "
He is waiting for it. (Mrs. McHugh leaves)

In this Administration, Customs, all the police
powers that we have in the Treasury, ninety-nine and ninetenths of the time the thing has been administered fairly.
I just want to throw that thing out. And there is no back
door to the Decretary of the Treasury. Nobody can say that
he has ever got a case settled one way or the other.
MR. WHITE: And yet there is a front door to the
Treasury. Everybody with a legitimate request has always -

and I think that is very true. Use that as an illustration,

that business has been treated in the most friendly fashion.
H.M.JR: And I have always told the man, "Come in and
see me, yourself; you don't have to hire a lawyer, come

in yourself. I will see you if you have any troubles."

Anybody can come in.

- 21 MR. GASTON: Isn't there something in this, that
they are talking about mistreatment of business, abuse
of business? That implies that they are thinking of some
particular class, some section of people who ought to be
treated with particular consideration; whereas, to build
an active functioning economy, to do good for everybody,
you don't consider people as classes of people and say,
'We will hand this fellow something; we will hand that
fellow something." Our concern is not with classes, but
with the whole economy of the country.
H.M.JR: You can say this, "As far as business is

concerned, sure we have prosecuted Moe Annenberg; sure we

have prosecuted the fellow in Atlantic City," and I will
give you half a dozen. You can say that that was crooked

business and the Treasury Department has put them in jail.
Those are the kind of people that we have prosecuted,
and that Mr. Dewey ought to understand very, very well,
because when he first started as Prosecutor he asked me to
help him and give him people from the Treasury Department
to help him in the City of New York, which I did, and I
have the record. So he understands what I am talking
about. He came to the Treasury for help when he started,
and that kind of business - "Yes, we have prosecuted" - and
analyze a half dozen cases. "And those people went to

jail, including" - why not put the boss in St. Louis -

Pendergast in Kansas City--

MR. BARTH: I will tell you why not, because too

many people are thinking of Frank Hague.
MR. WHITE: He is going.

H.M.JR: Now, I will tell you something about
Frank Hague; there is nothing in Frank Hague's tax cases.

Frank Hague has paid his taxes.

MR. WHITE: You might say the Treasury is just waiting

for him to slip.

H.M.JR: No, there is nothing on Frank Hague. Why
can't you turn it about and say, Sure we have prosecuted

crooked business"?

- 22 -

MR. WHITE: How about some of the monopolies?

H.M.JR: I would stick to the Treasury. Do you want
to go, Harry? You won't miss anything. We will see you
later.
I would like to say that - "Sure we have prosecuted

crooked business."

MR. BARTH: Yes. If we say that without mentioning
the cases, then I think the cases could be brought in
with the section that deals with unfair competition.
H.M.JR: why not mention some of the outstanding
cases?

MR. BARTH: All right, sure.

H.M.JR: The bigger they are the easier they fall.
Well, I am throwing it out.
MR. BARTH: Yes.

H.M.JR: I don't blame you for being in a dither; I
am in a dither myself, and what I would like to do is
this, I would like these boys, White and these fellows, to
think about the thing - and Gaston - during the day, and
then maybe meet with you at five o'clock this afternoon not necessarily Gaston, because he is carrying too many

other things, but if he has any other ideas he can put

them down and give them to me. Then maybe we could meet
again tomorrow morning.

MR. BARTH: I am wondering if somebody else ought not

to take a crack at it. Your time is short. I am worried

about your time. Perhaps you ought to have another draft
from a Treasury point of view, because this is all couched
in a certain vein which seemed to me the way it ought to
be approached, because I was bothered about the problem

that Mrs. Klotz raised, that the recitation of figures
is liable to be dull. So in order to take the curse of
dullness off, I treated them ironically.

- 23 Your point about quoting Dewey five times - I think
it is quoted ten times, because he comes back all the time

to this reiteration of the phrase, "Is this abusive of

business," or "the profits came, no doubt, due to the
hostility of business." SO I don't know whether you want

to get away from that entirely, or do more of it.

H.M.JR: Well, would you mind, sometime around five,
meeting with this crowd?
MR. BARTH: No, fine.

H.M.JR: And then see what they think. And if,
after thinking about it during the day, you want to sort
of stick to the format of your draft; maybe, as you say,

let somebody else try another one, and then we could have

a look at it.

What is a good time for you to start in the morning?
MR. BARTH: The earlier the better.

H.M.JR: Nine-fifteen?
MR. BARTH: Fine.

H.M.JR: Put it down for nine-fifteen, Mrs. Klotz. It

gives the other people a chance to get in. You and I would

be here!

Lock, if Gaston and Murphy and Blough would be thinking

about this thing hard during the day - will you?

MR. MURPHY: Yes, sir. Could I suggest, Mr. Secretary,
introducing these quotations of Dewey would make it more

defensive rather than less. It didn't strike me as particularly defensive now, but I think it would be more so.

MR. BARTH: Mr. Secretary, this is no more defensive
than the President's teamsters speech. You are taking
misrepresentation which is made by the opposition and you

tear it to shreds. That is about as defensive as Jack

Dempsey.

- 24 -

H.M.JR: I am mentally not in a frame of mind to
argue, do you see? I have been through this thing over
the weekend, trying to get the President interested. Now
I find myself let down, and I have to pick myself up
again. He has sucked me dry on this thing, on his own
problem. I haven't changed as to wanting to do the business thing.

Well, we will get in touch with you if you are available, and maybe during the day I will talk to these people.
I may get something, myself; I don't know. But we will
see.

MR. BLOUGH: On this other matter, the problem of
tax material for Rosenman, I don't know just how that I haven't seen the speech into which it presumably would

go. I don't know-how it would fit in. we have been
working.

H.M.JR: Get a copy from White.

MR. GASTON: I don't think it is to go in that. No,

I think it is totally foreign to that. I think it is for
another speech.

H.M.JR: I want to see whatever goes over, anyway.

MR. BARTH: Here is a copy that is burning a hole
in my hands because it is so carefully labelled.

H.M.JR: Here, you fellows read this. You can share
it. (Hands Mr. Blough Mr. Barth's copy of President's speech)
MR. BLOUGH: Do you think it would be feasible to get

in touch with the Judge and find out in what context the
tax material is going to fit? We have something now, but
I would rather not bother you with it until we know whether

it fits the situation.

H.M.JR: Right, and you tell him for me, before the
thing is in final form, I personally would like to go over
it with him.

- 25 -

MR. BLOUGH:

Tax material, yes.

H.M.JR: Gaston, if you have a minute, I would

like to talk to you.
Alan.

I will be seeing you certainly tomorrow morning,

First Barth

Secretary's Address 34
New York City

Draft-10kHxyEvery age had its mythology -- ours no less than times gone

by. Myths, I think, are something like currency, and Gresham's

law is about as applicable to the one as to the other. This is
to say, paraphrasing Gresham a little bit, that of two forms of
myth the inferior or more depreciated tends to drive the other

the

out of circulation. And this is particularly true in a period
when propaganda has been elevated into something of a science.

the For propaganda is a form of counterfeiting. It puts into circulation fancies instead of facts, manufactures bogus nostrums,
coins phrases and passes them off on the unwary as sheer gospel.
I make this somewhat philosophical approach because I want

to talk to you about myths this evening -- in particular about
one myth which seems to me one of the most remarkable propaganda

achievements of our time. Let me state the myth for you as it
was expounded earlier this year in a famous acceptance address by
a famous young prosecuting attorney with a famous fondness for

said
prometror
Administration, quote his famous words

sweeping indictments and extravagant accusations. "The present

"has been consistently hostile to and abusive of
American business and American industry, although it is in

business and industry that most of us make our living."
Now I do not for a moment mean to suggest that the myth --

n
in this particular instance -- was invested by the prosecutor. On
the contrary, it is one of the most hackneyed, timeworn and over-

worked myths of the 20th Century. It has been in circulation,

I should guess, for pretty nearly a full decade. It was tried
out with great gusto by campaign orators in 1936, was dusted off

and trotted forth as a brand new discovery in 1940, and today --

such is the originality of its sponsors -- it is being tried
again, evidently on the assumption that if it is repeated often
enough somebody may believe it. The technique is a well known
one.

Now it is about time, I think, to take a good, close look
at this myth, turn it upside down, rattle it and see what there

is inside it. If you will bear with me while I recite some facts
and figures, I should like to undertake such an analysis here
tonight.

Let us heave the war years altogether out of account for
the moment. Our friend the prosecutor seems to regard the war
as nothing more than a contrivance, engineered by the New Deal,

to overcome what he is pleased to call the "Roosevelt depression."

So, let us go back instead to the 7-year period before 1940 when

the Administration halded the precipitous deflation of the early

*30s and built up steam in a cold boiler to start industry once
more on the upgrade.

I am glad to think that time has dimmed the memory of the

dark days before Franklin D. Roosevelt revived out-faith in ourselves by telling us that the only thing we had to fear was fear

itself. In 1932, the year before he took office, corporations
reporting to the Bureau of Internal Revenue showed an aggregate

deficit of $4,115,000,000. There WEB still a deficit in the
year 1933, the first year of the Roosevelt Administration.
However, it was a bit less than one third as large as the year
before.

By 1934, the present Administration had abused business and

industry to such an extent that they began to report profits
instead of losses to the Bureau of Internal Revenue. The profits
of corporations that year -- after payment of taxes -- amounted

to $2,374,000,000. In the following year, due no doubt to the

hostility of the Administration, net profits of corporations
just about doubled. They stood at $4,688,000,000. In 1936, the
Administration must have hounded business and industry unbearably:

net profits rose to slightly more than six and a half billions.
The punishment continued in 1937 and profits remained at just

about the same level. They sagged badly, it is true, in 1938 -you see, I want to give you the entire picture. That was the
result of the general recession which took place at the end of

-4rate profits were knocked down to three-and-a-

ions. But in 1939 they were up again to about six

lars.
All right, now let's take a look at the terrible beating
endured by retail trade during this period. Total retail sales
in 1933 amounted to 24 billion dollars. In 1939, under the
cruel ladh of the Administration, they were a bit better than

42 billions. If this was abuse, I have an idea that most
storekeepers would like to be abused constantly.

I don't want to burden you with too many figures. You can
take any index to the economic well-being of this country and
find the same pattern repeated. Dividend payments, for example.
Between 1933 and 1937, they more than doubled. They a ropped

back in 1938, although not nearly down to the depression level,
and rose again in 19391

The steel industry affords a pretty good clue to our general
economic health. In 1932, it was operating at 19.7 per cent of
its capacity. In 1939, before the war orders began to come in,
at 64.5 per cent. The United States Steel Corporation had a net
income in 1932 of minus 71 million dollars. That was when it
was functioning under an Administration that professed great

friendship for business. In 1939, U. S. Steel was ruthlessly

-5forced to relinquish the pleasure of taking such a loss; the
New Deal abused it into accepting a net profit of 41 millions.
There wasn't anything special about the experience of the

United States Steel Corporation. Manufacturing concerns in
general reported themselves in the red for 1932 to the tune of
$1,616,000,000. In 1939, they were $2,946,000,000 in the black.
The net income of firms engaged in wholesale and retail trade

shifted from minus 787 millions in 1932 to plus 648 millions in

1939. Class I railroads had an aggregate deficit of 139 million
dollars in '32; they scored 95 million dollars on the other side
of the ledger in '39.

If this be hostility, make the most of it. I should think
the mot to of businessmen might very well be -- Lord, protect

us from our friends; we can take care of our enemies.
Of course there is not now, and there never has been, any
enmity on the part of the Roosevelt Administration toward busi-

ness and industry. What there is, and has been from its inception,
is a firm determination to avoid the kind of quicksand crust of
pseudo-prosperity on which this Nation danced such a frenzied,

precarious jig during the twenties. There was nothing solid
underneath it because millions upon millions of Americans were
unemployed or employed as such low wages that they could not

afford to maintain any decent standard of living. It was

-6inevitable that we should crash through such a crust as we aid
80 tragically in 1929.
This Administration has sought, instead, to develop a
balanced and expanding economy, based on a high volume of

purchasing power. It has recognized that enduring prosperity

must have a solid foundation, that it must be built from the
groud up. It has operated on the premise that what advances

the general welfare of the people of the United States also
advances the welfare of the business and industry in which they

engage. And this is the very simple explanation for the growth

in corporate profits which I have noted -- for the increase in
dividend payments, for the mounting volume of trade, for the

expansion of production. Under this Administration, the
American people as a whole have been earning the money with

which to buy the goods and services which business and industry
have for sale.

Let me just read off to you in round figures the national
income payments during the pre-war years. In 1933, they were

46 billion; in 1934, 53 billion; in 1935, 59 billion; in 1936
68 billion; in 1937, 72 billion; in 1938, 66 billion; in 1939,
71 billion. This money, this mass purchasing power is what

raised the entire level of business and industrial activity
throughout the country. Is it an abuse of businessmen to

-7provide them with good customers?

The Koosevelt Administration has had so much faith -- and such

genuine faith -- in the free enterprise system that it has sought
to keep it free. I think that no young man who wants to start
in business for himself will feel abused by an Administration
which protects him from the shackling competition of monopoly.

I think that no banker or broker who wants the public to invest
in anhonest enterprise will feel abused by an Administration
which protects him from the competition of irresponsible market

manipulators and gold brick salesmen. I think that no honest
employer will feel abused by an Administration which protects
him from the competition of sweatshops.
These and other measures instituted under the New Deal have
given American enterprise a new freedom. To speak of them as

abusive is as silly as to speak of a surgeon as abusive because
he cuts out an inflamed appendix or a cancerous growth. Business

and industry in America are healthier today and have greater

opportunities for the future because this Administration has

been a true friend to them. Oh, yes, I know that the opposition
now endorses these reforms and any evening on the air you can

hear the Johnnesscome-lately hollering "me, too." But you can
also hear them hollering that the present Administration "has

-8been consistently hostile to the abusime of American business and

industry." And I think that you can get from this a fair measure

of their sincerity.
Now, I want to turn for a moment to the war years. The
achievement of the American industrial machine during this war
has brought heart and hope and wonder to our friends, consternation
and despair to our enemies. We have kept our pledge to serve as
the arsenal of democracy. We have built and equipped a mannoth

army of our own and the greatest navy in the world. And at the
same time we have met all the essential needs of our civilian
economy. Does anyone seriously think these things could have
been donw without a well balanced economy developed before the
war began?

Business itself has fared pretty well in the performance of

this magnificent job. The total of corporate profits for the year
1943, after payment of taxes and after renegotiation, was the

highest in the history of this Nation -- higher even than in
the frenzied boom of 1929.

But what is much more important to business in the long run

than its profits during the war isself is the fact that, despite
the conversion of our resources to war production, the domestic

-9economy has been kept sound and stable. There has been no out-

of-hand inflation in the course of this conflict. The purchasing
power of the American dollar has been kept firm. You must

certainly credit this in Is rge measure, I believe, to the stabilization program and the methods of war finance undertaken by
your Government. The economic policies pursued in the war years

have safeguarded business and industry not only against inflation

but also against the disastrous sort of deflation which struck this
country in 1920 and 1921.

We in the Treasury have conducted our fiscal operations in
such a way as to minimize the postwar burden of the debt and to
promote mass buying power and balance in the postwar economy.

Let me enumerate a few of the benefits: (1) Eighty million
individual investors now hold bonds of their Government with an

aggregate value of 23 billion dollars. These bonds, non-negotiable
and with a guaranteed redemption value, assure their holders
against market fluctuations and give them a sense of securi ty
which will enable them to spend their current incomes for consumer

goods when these become available. (2) Interest rates have been
kept low, averaging about 1-3/4 per cont in comparison with 4-1/4

per cent in the first World War; the reduction will not only save
about four billion dollars in the postwar Federal budget but will also

- 10 give business much more favorable borrowing opportunities than

it had at the end of World War I. (3) Securities sold to
banks and corporations, all of them of short maturity, have
provided an unparalleled liquidity which should assist greatly
in the financing of postwar reconversion and expansion. (4)
Business coin erns have been allowed extremely generous deductions

from income taxes for advertising purposes in order to perpetuate

public confidence in their trade names. (5) Provision has bean
made for the refunding of excess profits taxes to guarantee corporations against losses in the years immediately following the
war. Can any reasonable man find in such measures an indication

of hestility to American business and American industry?
No, I believe our friend the prosecutor has been prosecuting

a myth. Or perhaps I should say that he has been chasing a
shadow - the shadow that fell upon American enterprise when men

without any understanding of our economis problems took over the
reins of Government in 1921. The prosecutor has convicted only

himself. He has convicted himself of a nostalgic yearning for
the dead and dreary past. You businessmen who are here this

evening have your eyes upon the horizon of the future. You look

toward it with confidence and with enthusiasm. Your real friends
are those who have worked to make that future free.

M. y. C. - Barth

L 3 - 44

revised draft

10/24/44.
I am going to talk tonight about business -- about the relationAmerican

ship between business and the ******** economy as a whole and about
the relationship between business and the American Government. I am

going to talk in plain terms about the friends and the enemies of
American business.

It is an axiom that the economic welfare of the Nation and the
economic welfare of business and industry are inseparable. This is

the principle on which the present Administration has acted. Its
premise has been that business and industry could prosper only in a
prosperous society.

But there is a handful of businessmen who do not accept this

principle and who havefought the Administration's efforts to put it
into practice. And by the noise and volume of their complaints they

have given currency to the myth that this Administration is unfreindly
to business in general. Politicians who have no constructive or

affirmative ideas to offer exphoit the myth for what they think it
may be worth.

presidential (example,

The Republican-Candidate for / made this
statement in his acceptance address "The present adminis-

consistently
tration has been
hostile to and

abusive of American business and American Industry, although

it is in business and industry that most of us make our

living."

the
Now I do not mean for a moment to suggest that thén

myth - in this particular instance - was invented by the
candidate. On the contrary, is is one of the most hacimeyed,
time-worn and over-worked myths of the present day. It has
been in circulation, I should guess, for pretty nearly a

full decade. It was tried out with great gusto by campaign
orators in 1936, was dusted off and tretted forth as a brand

new discovery in 1940, and today - such is the originality
of its sponsors - 10 is being bried again, evidently on the
assumption that 12 it is repeated often enough somebody may

The technique is a well-brown one.

believe it. The-brisk the on oth has ste
enamies,
but Shop administration.
It is about times

I think we ought to take a good, close look
at this myth. Let us leave the war years altogether out
of account for the moment and go back instead to the %-year
period before 1940 when the Administration halted the pre-

cipitous deflation of the early '20's and built up steam

By 1934, the present Administration had abused business and industry

to such an extent that they began to report profits instead of lossds to
the Bureau of Internal Revenue. The profits of corporations that year -after payment of taxes -- amounted to $2,374,000,000. Net profits rose
steadily each year after that, except during the recession of 1938, until
by 1939 they XHXB stood ab about six billions.

Pay 1934, the present such administration had abused 47

O business and injuriestry to the extent that they began
rising year after year, except during the recession of
1938, until by 1939 corporate profits reported to the
Beginning
with 1934,
business
andup
began
to show
net profits,
Bureau
of Internal
Revenue
were
to about
$6 billion.

-3. in a cold boiler to start industry once more on the upgrade.
It is this period which the Republican Candidate is pleased
to call "The Roosevelt depression".
I am glad to think that t time has dimmed the memory of
the dark days before Franklin D. Roosevelt revived our

faith in ourselves by telling us that the only thing we had
to fear was fear itself. In 1932, the year before he took
office, corporations reporting to the Bureau of Internal
Revenue showed an aggregate loss of more than 4 billion

dollars.
C

By 1934, the present Administration had about business

appeal

and industry to such an extent that they began to report
Husciden
profits instead of losses to tim Bureau of Internal Revenue.

The profits of corporations the t year - after payment of
taxes - amounted to $2,374,000,000. In the following year,
due no doubt to the hostility of the Administration, net
profits of corporations just about doubled. They stood at
$4,688,000,000. In 1936, the Administration must have hounded

business and industry unbearably: net profits rose to slightly
more than six and a half billions. The punishment continued
in 1937 and profits remained at just about the same level.
They sagged badly, it is true, in 1938 - you see, I want to
give you the entire picture. That was the résult of the
general recession which took place at the and of '37, and

guserb To

to take another example,

the General Motors Corporation, A had net

sales in 1932 worth 432 million dollars. In 1939, its sales amounted

to $1,377,000,000. It had less than a million dollars of net income
available for dividends in the earlier year, more than 180 millions in
1939. Yet Mr. Alfred P. Sloan, the president of General Motors, in a
speech last August demanding revision of the Wagner Act, referred to the

Government as dealing, -- I quote him -- "with two
groups, one equitably and the other inequitably. And last year he
spoke of the "destructive" policies of the New Deal.

curposite taxes
corporate profits WORD to
billions. Jub in 1939 thing - up to about six
billion-dolume
All right, now let's take a look at the record of
retail trade during this period. Total retail sales in
1933 amounted to 243 billion dollars. In 1939, they were
better than 42 billions, an increase of 75 percent. If
this was abuse, I have an idea that most storolespens retailer
would like to be abused constantly.
The steel industry affords a pretty good clue to OUR
20

general economic health. In 1932, it was operating at 30.7
percent of its capacity.
65 In 1939, before the war orders
began to came in, at 06.6 percent.
The United States stebl
in 1934
Corporation bad a net income R 1030 of minus 71 million
dollars. That was when it was functioning under an Admin-

istration that professed great friendship for business.
In 1939, U. S. Steel was ruthlessly forced to yelinquish
the pleasure of taking such a loss) the New Deal abused it
into accepting a net profit of 42 millions.
There wasn't anything special about the experience of

Ausert

States

the United/Steel Corporation. Manufacturing concerns M
general reported themselves in the red #3
forbilling
1932colless
to the tune
00

of $1,616,000,000, In 1939, they were $2,946,000,000 in

S-

the black. The net-income of firms engaged in wholesale
and

to plus 648 millions in 1939.

If this be hostility, I should think the motto of
businessmen might very well be - Lord, protect us from
our friends; we can take care of our enemies.
of course, there is not now, and there never has been,
any entity on the part of the Roosevelt Administration
toward business and industry. What there is, and has been

from its inception, is a firm determinati on to avoid the
kind of quicksand crust of fake-prosperity on which this

Nation dansed such a frensied, - j1g during the
twenties. There was nothing solid underneath it because
millions upon millions of Americans were unemployed or

employed at such low wages that they could not affort

to maintain any decent standard of living. It was

inevitable that we crash through such a areat so
we did so tragically in 1929.

1932 leas Its will
i73v Gend vetan

Q Slow

and 1932
⑉5.

the black. The -not-Income of firms engaged in wholesale

to plus 648-millions in 1939.

If this be hostility, I should think the motto of
businessmen might very well be - Lord, protect us from
our friends) we can take care of our enemies.
of course, there is not now, and there never has been,
any entity on the part of the Roosevelt Administration
toward business and industry. What there is, and has been

from its inception, is a firm determinati on to avoid the
kind of quicksand crust of fake-prosperity on which this

Nation danced such a frensied, - 32g during the
twenties. There was nothing solid underneath it because
millions upon millions of Americans were unemployed or
employed at such low wages that they could not about

to maintain any decent standard of living It was
inevitable that we should crash through such a crust as
we did so tragically in 1929.

1932 less Its will
izzv Gend vetan

What q slow

-6This Administration has sought, instead, to develop
a balanced and expanding economy, based on a high volume

of purchasing power. It has recognized that enduring
prosperity must have a solid foundation, that it must be
built from the ground up. It has operated on the premise
that what advances the general welfare of the people of
the United States also advances the welfare of the business
and industry in which they engage. And this is the very
simple explanation for the growth in corporate profits which
I have noted -- for the increase in dividend payments, for
the mounting volume of trade, for the expansion of production. Under this Administration, the American people as a
whole have been earning the money with which to buy the

goods and services which business and industry have for
sale.

The Roosevelt Administration has had ao much faith -

and such genuine faith - in the free enterprise system
that it has sought to keep it free. I think that no young
man who wants to start in business for himself will feel
abused by an Administration which protects him from the

shackling competition of monopoly. I think that no banker
or broker she wants the public to invest in an honest
enterprise will feel abused by an Administration which
protects him from the competition of irresponsible market
manipulators and gold brick salesmen. I think that no
honest employer will feel abused by an Administration which
protects him from the competition of sweatshops.

-7Every piece of legislation which this Adminis cration
has spensored has directly and indirectly meant more and
better business, There is no disparement on this. Our
Republican opponents who we are hostile to business

are now saying that this is their legislation. They are
now in favor of 1t, even to the extent of endorsing the
National Labor Relations Act which they consistently fought

at ACB inception and throughout its administration
These and other measures instituted under the New

Deal have given American enterprise real freedom. To
speak of them as abusive is as absurd as to speak of a
surgeon as abusive because he cuts St an inflamed
appendix or a cancerous growth, Business and industry in
America are healthier today and have greater opportunities
for the future because this Administration has been a true

friend to them. oh, yes, I know that the opposition now
endorses these reforms and any evening on the air you can

hear the Johnnier-come-lately hollering "me, too." But
you can also hear them hollering that the present Administration "has been consistently hostile to and abusive of
American business and industry." And I think that you can

get from this al air measure of their sincerity.
Now, I want to turn for a moment to the war years. the
Ansech

achievement of the American Industrial machine during this
war has brought heart and hope and wonder to our friends,
consternation and despair to our eneates We have kept our

pledge to serve as the arsenal of democracy. We have built

11-

per cent in comparison wi th 4-1/4 per cent in the first World

War; the reduction will not only save about four billion
dollars in the postwar Federal budget but will also give
business much more favorable borrowing opportunities than it
had at the end of World War I.
Securities sold to banks

and corporations, all of them of short maturity, have provided

an unparalleled liquidity which should assist greatly in the
financing of postwar reconversion and expansion. Business
concerns have been allowed extremely generous deductions from

income taxes for advertising purposes in order to perpetuate
public confidence in their trade name By
Provision has been
made for the refunding of excess profits taxes to guarantee
corporations against losses in the years immediately following
thewar.

These
I think are the real intimes of business.
But as said in introductory remarks Amer loan business

Insert
C.

They are
has it. member

and
important powerful
enemies -- some of them
theraub business
itself

enamico doom within who would undermine the very foundations

of free enterpráse. Who are these enomics of business? T
ball you wire they
They are the "business as usual boys" who opposed the

conversion of industry from peace to war. They are the men

and renegotiation

who fought price control who would have risked the danger

of inflation for extra profits for themselves. They are the
-men whose policies, if adopted, would have marde winning the

-H-

the war on the home front Impossible.

not

The real enomics of business are the
fight against economic progress, who oppose a steadbly rising

national output. They are the labor-haters who fought against
collective bargaining, minimum wages, social security and the
other social accomplishments of this administration.

not

They
are
The real emmies of busliness the monopolists who favor

and restricted markets al home and abroad.
restricted industrial output They are the men who want monopoly at home and abroad, the mon who made international cartel
agreements with German big industry before the war and who are

just waiting for the opportunity again-Topa internet tront
certain-ani waiting to resume these international cartels
after the man.
The real enemies of business in America are the economic

isolationists, the men who oppose international economic as

well as political cooperation. They are the men who have
fought against the extension of the reciprocal trade agreements,
and who are fighting the Bretton Woods Program of mone tary and

Banking cal laborat ion to promote American and sorid trade and

prosperity

They
The real monica of
business are the men who want to restrict

credit, who want high interest rates. They are the few bankers
who bring pressure against the Treasury to increase interest rates

- 12 -

knowing full well that every increase of one percent means

an additional burden of $2 billion a year on the American

business and the
yes, men business hasit taxpayer. evemies. But they are not in the

key are the men who make it difficult for the returning Roosevell

soldier to buy a home or a farm or go into business.

Administration

They are the men who come to Washington for special favors

Bank

and not receiving them go back home to make speeches on Govern-

ap.1

ment bureaucracy. I have said many times and I repeat, as long

as I am in the Treasury there will be no backdoor to the
Treasury But the front door is wide open to all businessmen
who will receive prompt and courteous consideration.
The real enemies of business are the men who defy the laws

of the country in time of peace and war - the Girgler's, the
Weirs, the Averys, the Aldriches, the McCormicks and the DuPonts

These are the real enemies of business And for whom are they

voting? Who gets their votes and their cash?
The Republican candidate claims that he supports and endorses

many of the measures for promoting prosperity and business

activity which this Administration has taken. Maybe he does.
But you judge a man by the company he keeps.

Business and industry have a role of vital responsibility
to play in the development of the future. They mts serve as
generators
its They
must be in the future as they have been

-8and equipped a manmoth army of our own and the greatest

navy in the world. And as the same time we have met all
the essential needs of our civilian economy. Does anyone
seriousla think these things could have been done without
a well-balanced economy developed before the wax began?

not

Business itself has fared pretty well in the
production
magnificent Job. The total of
performance of
corporate profits for the year 1943, after payment of
taxes and after renegotiation, was the highest in the
history of this Nation -- higher even than in the frenzied
boom of 1929.

This war

The business prosperity of - paniad has been

well balanced. Business-profite have risen substantially;
have
fewcreated
war 1 millionnaires, for the
Dam gladt say
thatJeen
it has
rise in profits has been world distributed throughout the
business community. The virtual absence of war-made

fortunes represents the combined results a wise policy
of military procurement, the @@@@@@@ of the policy of

economic stabilization, the operation of the excess profits
tax, and the commendable restraint exercised by business

itself.

This

only

saved the taxpayers many billions 01 dollars in the cost
of the WEIT and served so maintain public morale both at

home and at the fighting fronts, but his also redounded and
will continue to redound to the great benefit of the public

relations of business itself.

9The total profits of all American corporation after

taxes, past three years been about
equal to those of the been year 1989, and have Deen higher

than these 4 any other year of our history. Both large

the war

and small concerns have shared 300 Miss prosperity. the
presponity of the large concerna-is easily absorved from

the published reports of the Augus publicly owned MOREY The prosperi ty of the smaller concerns is less

easily
oven
greater. A
(Thanobserved
that the largeactually
public owned
corporations,
survey of the relative movement of the profits of large
and small companies in eight major industrial groups,
made jointly by the Board of Governors of the Federal
Reserve System and Robert Morris Associates, shows that

in each group the smaller concerns have, during the wartime

period, improved their profit position relative to the
larger companies.

-6".

But what is much more important to business in the long

n
Fun that its profits during the war itself is the fact that,
despite the conversion of our resources to war production,
the domostic economy has been kept sound and stable. There

has been no out-of-hand inflation in the course of this conflict.
The purchasing power of the American dollar has been kept firm.

You must certainly credit this in large measure, I believe,
to the stabilization program and the methods of war finance
undertaken by your Government. The economic policies pursued

in the war years have safeguarded business and industry not

only against inflation but also against the disestrous sort
of delation which 8 truck this country in 1920 and 1921.
lie in the Treasury have conducted our fiscal operations
in such a way as to minimize the postwar burden of the debt
and to promote mass buying power and balance in the postwar

economy. Lat me comparate
have bought a for - Eighty-five

million individual investors - bonds of their Government
with an aggregate value of 28 billion dollars. These bonds,
non-negotiable and with a guaranteed redemption value, assure

their holders against market fluctuations and give them a
sense of security which will enable them to spend their
current incomes for consumer goods when these become available.

Interest rates have been kept low, averaging about 1-8/4

- 14 #

in the past, the initiators of economic progress. Theirs

the

must be the ingenuity, the know-how. of enterprise needed

to find new products, build new plants, develop new techniques.
It is to them that Americans look for the expansion of
the

production and the creation of new jobs and lifting of our
living standards. Business can do this and will do this.
But it needs an Administration that is forward-looking and
friendly, and Administration under which business can prosper
because It 18 an Administration that believes whole-heartedly that
the economic welfare of the country and the economic welfare of
business are inseparable. We have such an Administration

now. And I feel sure that business yes and labor and
agriculture too, all of the people, want this Administration
to carry on:
only

and Administration

Bubilcando it in partnership with Investment

which will support it, not werely with

fair words and special favors, but
with a dynamic program of economic

development for all the people. His
this bind of friendship for business,
as for agriculture and labor, which
the Roosevell administration has practiced

and will continue of tractic while it is
in office

I am going to talk tonight about business - about the
relationship between business and the American economy as a

whole and about the relationship between business and the

American Government. I am going to talk in plain terms about
the friends and the enemies of American business.

It is an axiom that the economic welfare of the Nation
and the economic welfare of business and industry are inseparable.

This is the principle on which the present Administration has
acted. Its premise has been that business and industry could
prosper only in a prosperous society.
But there is a handful of businessmen who do not accept this

principle and who have fought the Administration's efforts to

put it into practice. And by the noise and volume of their
complaints they have given currency to the myth that this

Administration is unfriendly to business in general. Politicians
who have no constructive or affirmative ideas to offer exploit
the myth for what they think it may be worth.
The Republican Presidential Candidate, for example, made

this statement in his acceptance address: "The present Adminis-

tration # # # has been consistently hostile to and abusive
of American business and American industry, although it is in

business and industry that most of us make our living."

-2-

Now I do not mean for a moment to suggest that the myth -

in this particular instance - was invented by the candidate. On
the contrary, it is one of the most hackneyed, time-worn and

over-worked myths of the present day. It has been in circulation,

I should guess, for pretty nearly a full decade. It was tried
out with great gusto by campaign orators in 1936, was dusted off
and trotted forth as a brand new discovery in 1940; and today -

such is the originality of its sponsors - it is being tried
again, evidently on the assumption that if it is repeated often
enough somebody may believe it. The technique is a well-known
one.

It is about time, I think, 1 to take a good close
look at this myth. Let us leave the war years altogether out
of account for the moment and go back instead to the 7-year
period before 1940 when the Administration halted the pre-

cipitous deflation of the early '30's and built up steam
in a cold boiler to start industry once more on the upgrade.
It is this period which the Republican Candidate is pleased to
call "The Roosevelt depression".
I am glad to think that time has dimmed the memory of

the dark days before Franklin D. Roosevelt revived our faith

in ourselves by telling us that the only thing we had to fear

-3was fear itself. In 1932, the year before he took office,
corporations reporting to the Bureau of Internal Revenue
showed an aggregate loss of more than 4 billion dollars.
By 1934, the present Administration had abused business

and industry to such an extent that they began to report profits
instead of losses to the Bureau of Internal Revenue. The

profits of corporations that year - after payment of taxes amounted to $2,374,000,000. Net profits rose steadily each

year after that, except during the recession of 1938, until by
1939 they stood at about six billions.

All right, now let's take a look at the record of retail
trade during this period. Total retail sales in 1933 amounted
to 24h billion dollars. In 1939, they were better than 42

billions, an increase of 75 per cent. If this was abuse, I
have an idea that most retailers would like to be abused
constantly.

The steel industry affords a pretty good clue to our
general economic health. In 1932, it was operating at

20 per cent of its capacity. In 1989, before the war orders
began to come in, at 65 per cent.

-4The United States Steel Corporation had a net income in

1932 of minus 71 million dollars. That was when it was
functioning under an Administration that professed great

friendship for business. In 1939, U. S. Steel was ruthlessly
forced to relinquish the pleasure of taking such a loss; the
New Deal abused it into accepting a net profit of 41 millions.
The General Motors Corporation, to take another example,

had net sales in 1932 worth 432 million dollars. In 1939,
its sales amounted to $1,377,000,000. It had less than a

million dollars of net income available for dividends in
the earlier year, more than 180 millions in 1939. Yet Mr.
Alfred P. Sloan, the President of General Motors, in a speech
last August, demanding revision of the Wagner Act, referred to
the Government as dealing - I quote him - "with two groups,

one equitably and the other inequitably." And last year he
spoke of the "destructive" policies of the New Deal.
There wasn't anything special about the experience of
and I general motors
the United States Steel Corporation Manufacturing concerns in

general reported themselves in the red for 1932 to the tune

of $1,600,000,000. In 1939, they were three billion dollars in
the black.

-5If this be hostility, I should think the motto of businessmen might very well be - Lord, protect us from our friends;
we can take care of our enemies.

Of course, there is not now, and there never has been,
any enmity on the part of the Roosevelt Administration toward

stet

business and industry. What there is, and has been from its

inception, is a firm determination to avoid the kind of quicksand crust of fake-prosperity on which this Nation danced such

a frenzied jig during the twenties. There was nothing solid
underneath it because millions upon millions of Americans were
unemployed or employed at such low wages that they could not

maintain a decent standard of living. It was inevitable that
we should crash through such a crust as we did so tragically in
1929.

This Administration has sought, instead, to develop a
balanced and expanding economy, based on a high volume of

purchasing power. It has recognized that enduring prosperity

must have a solid foundation, that it must be built from the
ground up. It has operated on the premise that what advances the
general welfare of the people of the United States also advances
the welfare of the business and industry in which they engage.

-6-

And this is the very simple explanation for the growth in
corporate profits which I have noted - for the increase in
dividend payments, for the mounting volume of trade, for the

expansion of production. Under this Administration, the
American people as a whole have been earning the money with which

to buy the goods and services which business and industry have for
sale.

The Roosevelt Administration has had so much faith - and

such genuine faith - in the free enterprise system that it has
sought to keep it free. I think that no young man who wants to

start in business for himself will feel abused by an Administration which protects him from the shackling competition of monopoly.

I think that no banker or broker who wants the public to invest
in an honest enterprise will feel abused by an Administration
which protects him from the competition of irresponsible market

given American enterprise real freedom. To speak of them as
abusive is as absurd as to speak of a surgeon as abusive because
he outs out an inflamed appendix or a cancerous growth.

-7-

Business and industry in America are healthier today and have

greater opportunities for the future because this Administration
has been a true friend to them. Oh, yes, I know that the opposition now endorses these reforms and any evening on the air

you can hear the Johnnies-come-lately hollering "me, too." But
you can also hear them hollering that the present Administration
"has been consistently hostile to and abusive of American

business and industry." And I think that you can get from

this a fair measure of their sincerity.
These, I think, are the real enemies of business. They
are important and powerful enemies - some of them within the
ranks of business itself who would undermine the very foundations

of free enterprise.
They are the "business as usual boys" who opposed the con-

version of industry from peace to war. They are the men who
fought price control and renegotiation - who would have risked

the danger of inflation for extra profits for themselves.
They are the labor-haters who fought against collective bargaining, minimum wages, social security and the other social accomplishments of this Administration. They are the monopolists

who favor restricted industrial output and restricted markets
at home and abroad.

-8-

The real enemies of business in America are the economic

isolationists, the men who oppose international economic as

well as political cooperation. They are the men who want to

restrict credit, who want high interest rates. They are the
few bankers who bring pressure against the Treasury to increase

interest rates knowing full well that every increase of one
per cent means an additional burden of $2 billion a year on the
American business men and the taxpayer.

Yes, business has its enemies. But they are not in the
Roosevelt Administration.

Now, I want to turn for a moment to the war years. Business

itself has fared pretty well in the performance of its magnificent

production job. The total of corporate profits for the year
of 1943, after payment of taxes and after renegotiation, was the

highest in the history of this Nation - higher even than in the
frenzied boom of 1929.

This war prosperity has been well balanced. I am glad to

say that it has created few war millionnaires, for the rise
in profits has been distributed throughout the business
community. The virtual absence of war-made fortunes represents

the combined results of a wise policy of military procurement,

the success of the policy of economic stabilization, the operation
of the excess profits tax, and the commendable restraint exercised

by business itself.

-9The prosperity of the smaller concerns is less easily
observed than that of the large publicly owned corporations,

but it has been actually even greater. A survey of the relative
movement of the profits of large and small companies in eight
major industrial groups, made jointly by the Board of Governors
of the Federal Reserve System and Robert Morris Associates,

shows that in each group the smaller concerns have, during

the wartime period, improved their profit position relative to
the larger companies.

But what is much more important to business in the long

run than its profits during the war itself is the fact that,
despite the conversion of our resources to war production,
the domestic economy has been kept sound and stable. There

has been no out-of-hand inflation in the course of this conflict.
The purchasing power of the American dollar has been kept firm.

You must certainly credit this in large measure, I believe, to
the stabilization program and the methods of war finance
undertaken by your Government. The economic policies pursued

in the war years have safeguarded business and industry not only

against inflation but also against the disastrous sort of deflation which struck this country in 1920 and 1921.

- 10 -

Business and industry have a role of vital responsibility
to play in the development of the future. They must serve as
its generators. They must be, in the future as they have been

in the past, the initiators of economic progress. Theirs must
be the ingenuity, the know-how, the enterprise needed to find

new products, build new plants, develop new techniques. It is
to them that Americans look for the expansion of production and

the creation of new jobs and the lifting of our living standards.
Business can do this and will do this. But it can do it
only in partnership with an Administration which will support

it, not merely with fair words and special favors, but with
a dynamic program of economic development for all the people.

It is this kind of friendship for business, as for agriculture
and labor, which the Roosevelt Administration has practiced

and will continue to practice while it is in office.

heike

with

16/24

DRAFT

I am going to talk tonight on business -- on business

and this Administration. I am going to talk about the
friends and enemies of business. I shall tell you who
are the real friends of business and who are the real
enemies of business.

It is an axiom that the economic welfare of the
country as a whole and the economic welfare of business and

industry are inseparable. This is the principle in which
this Administration has believed. But there is a handful
of men who do not believe in this principle, who have

fought this principle. They are the one s who say this

Administration is unfriendly to business. And politicians
who have no constructive principles to offer the people

think they can get by with the claim that this Administration
is unfriendly to business.

2The Republican Candidate for the presidency made this

statement in his acceptance address: "The present adminis-

tration * * * * has been constantly hostile to and
abusive of American business and American industry although

it is in business and industry that most of us make our

living."
Now I do not mean for a moment to suggest that this

myth -- in this particular instance -- was invented by the
candidate. On the contrary, it is one of the most hackneyed,
time-worn and over-worked myths of the present day. It has
been in circulation, I should guess, for pretty nearly a
full decade. It was tried out with great gusto by campaign
orators in 1936, was dusted off and trotted forth as a brand
new discovery in 1940, and today -- such is the originality
of its sponsors -- it is being tried again, evidently on the
assumption that if it is repeated often enough somebody may

believe it. The trick is an old one. Business has its
enemies, but they are not in this administration.
First, I think, we ought to take a good, close look
at this myth. Let us leave the war years altogether out
of account for the moment and go back instead to the 7-year
period before 1940 when the Administration halted the pre-

cipitous deflation of the early '30's and built up steam

-3-

in a cold boiler to start industry once more on the upgrade.
It is this period which the Republican Candidate is pleased
to call "The Roosevelt depression".
I am glad to think tha t time has dimmed the memory of

the dark days before Franklin D. Roosevelt revived our

dollars.
By 1934, the present Administration had abused business

and industry to such an extent that they began to report
profits instead of losses to the Bureau of Internal Revenue.
The profits of corporations that year -- after payment of
taxes -- amounted to $2,374,000,000. In the following year,
due no doubt to the hostility of the Administration, net

profits of corporations just about doubled. They stood at
$4,688,000,000. In 1936, the Administration must have hounded

business and industry unbearably: net profits rose to slightly
more than six and a half billions. The punishment continued
in 1937 and profits remained at just about the same level.
They sagged badly, it is true, in 1938 -- you see, I want to
give you the entire picture. That was the result of the
general recession which took place at the end of '37, and

-4corporate profits were knocked down to three-and-a-quarter

billions. But in 1939 they were up again to about six
billion dollars.

All right, now let's take a look at the record of
retail trade during this period. Total retail sales in
1933 amounted to 24 billion dollars. In 1939, they were
better than 42 billions, an increase of 75 percent. If
this was abuse, I have an idea that most storekeepers
would like to be abused constantly.
The steel industry affords a pretty good clue to our
general economic health. In 1932, it was operating at 19.7
percent of its capacity. In 1939, before the war orders
began to come in, at 64.5 percent. The United States Stebl
in
Corporation had a net income 193 of minus 71 million
dollars. That was when it was functioning under an Administration that professed great friendship for business.
In 1939, U. S. Steel was ruthlessly forced to relinquish
the pleasure of taking such a loss; the New Deal abused it
into accepting a net profit of 41 millions.
There wasn't anything special about the experience of
States
the United/Steel Corporation. Manufacturing concerns in
general reported themselves in the red for 1932 to the tune
of $1,616,000,000. In 1939, they were $2,946,000,000 in

-5. the black. The net income of firms engaged in wholesale
and retail trade shifted from minus 787 millions in 1932
to plus 648 millions in 1939.

If this be hostility, I should think the motto of
businessmen might very well be -- Lord, protect us from
our friends; we can take care of our enemies.
of course, there is not now, and there never has been,
any enmity on the part of the Roosevelt Administration
toward business and industry. What there is, and has been
from its inception, is a firm determinati on to avoid the

kind of quicksand crust of fake-prosperity on which this
Nation danced such a frenzied, precarious jig during the
twenties. There was nothing solid underneath it because
millions upon millions of Americans were unemployed or
employed at such low wages that they could not afford

to maintain any decent standard of living. It was
inevitable that we should crash through such a crust as.
we did so tragically in 1929.

-6This Administration has sought, instead, to develop
a balanced and expanding economy, based on a high volume

and industry in which they engage. And this is the very
simple explanation for the growth in corporate profits which
I have noted -- for the increase in dividend payments, for
the mounting volume of trade, for the expansion of production. Under this Administration, the American people as a
whole have been earning the money with which to buy the
goods and services which business and industry have for
sale.

The Roosevelt Administration has had so much faith --

and such genuine faith -- in the free enterprise system

that it has sought to keep it free. I think that no young
man who wants to start in business for himself will feel
abused by an Administration which protects him from the

shackling competition of monopoly. I think that no banker
or broker who wants the public to invest in an honest
enterprise will feel abused by an Administration which
protects him from the competition of irresponsible market
manipulators and gold brick salesmen. I think that no
honest employer will feel abused by an Administration which
protects him from the competition of sweatshops.

-7Every piece of legislation which this Administration
has sponsored has directly and indirectly meant more and
better business. There is no disagreement on this. Our
Republican opponents who say we are hostile to business

are now saying that this is their legislation. They are
now in favor of it, even to the extent of endorsing the
National Labor Relations Act which they consistently fought

at its inception and throughout its administration.
These and other measures instituted under the New

Deal have given American enterprise real freedom. To
speak of them as abusive is as absurd as to speak of a
surgeon as abusive because he cuts out an inflamed
appendix or a cancerous growth. Business and industry in
America are healthier today and have greater opportunities
for the future because this Administration has been a true

friend to them. Oh, yes, I know that the opposition now
endorses these reforms and any evening on the air you can

hear the Johnnies-come-lately hollering "me, too." But
you can also hear them hollering that the present Administration "has been consistently hostile to and abusive of
American business and industry." And I think that you can

get from this a air measure of their sincerity.
Now, I want to turn for a moment to the war years. The
achievement of the American industrial machine during this
war has brought heart and hope and wonder to our friends,
consternation and despair to our enemies. We have kept our

pledge to serve as the arsenal of democracy. We have built

-8and equipped a mammoth army of our own and the greatest

navy. in the world. . And at the same time we have met all
the essential needs of our civilian economy. Does anyone
seriously think these things could have been done without
a well-balanced economy developed before the war began?

Business itself has fared pretty well in the
performance of this magnificent job. The total of
corporate profits for the year 1943, after payment of
taxes and after renegotiation, was the highest in the
history of this Nation -- higher even than in the frenzied
boom of 1929.

The business prosperity of the war period has been

well balanced. Business profits have risen substantially;
but there have been few war-made millionnaires, for the

rise in profits has been well distributed throughout the
business community. The virtual absence of war-made

fortunes represents the combined result of a wise policy
of military procurement, the success of the policy of
economic stabilization, the operation of the excess profits
tax, and the commendable restraint exercisidad by business

itself. This scarcity of war-made fortunes has not only
saved the taxpayers many billions of dollars in the cost
of the war and served to maintain public morale both at
home and at the fighting fronts, but has also redounded and
will continue to redound to the great benefit of the public
relations of business itself.

-The total profits of all American corporations, after
taxes, have in each of the past three years been about
equal to those of the boom year 1929, and have been higher

than those in any other year of our history. Both large
and small concerns have shared in this prosperity. The
prosperity of the large concerns is easily observed from
the published reports of the large publicly owned corporations. The prosperity of the smaller concerns is less
easily observed, but has been actually even greater. A
survey of the relative movement of the profits of large
and small companies in eight major industrial groups,
made jointly by the Board of Governors of the Federal
Reserve System and Robert Morris Associates, snows that
in each group the smaller concerns have, during the wartime

period, improved their profit position relative to the
larger companies.

-2But what is much more important to business in the long

run that its profits during the war itself is the fact that,
despite the conversion of our resources to war production,
the domestic economy has been kept sound and stable. There

has been no out-of-hand inflation in the course of this conflict.
The purchasing power of the American dollar has been kept firm.

You must certainly credit this in large measure, I believe,
to the stabilization program and the methods of war finance
undertaken by your Government. The economic policies pursued

in the war years have safeguarded business and industry not

only against inflation but also against the disastrous sort
of delation which S truck this country in 1920 and 1921.
We in the Treasury have conducted our fiscal operations
in such a way as to minimize the powtwar burden of the debt
and to promote mass buying power and balance in the postwar

economy. Let me enumerate a few of the benefits: (1) Eighty
million individual investors now hold bonds of their Government

with an aggregate value of 23 billion dollars. These bonds,
non-negotiable and with a guaranteed redemption value, assure

their holders against market fluctuations and givé them a
sense of security which will enable them to spend their
current incomes for consumer goods when these become available.

(2) Interest rates have been kept low, averaging about 1-3/4

80
"

10 -

per cent in comparison wi th 4-1/4 per cent in the first World

War; the reduction will not only save about four billion
dollars in the postwar Federal budget but will'also give
business much more favorable borrowing opportunities than it

had at the end of World War I. (3) Securities sold to banks
and corporations, all of them of short maturity, have provided

an unparalleled liquidity which should assist greatly in the
financing of postwar reconversion and expansion. (4) Business

concerns been allowed extremely generous deductions from
income taxes for advertising purposes in order to perpetuate

public confidence in their trade name s. (5) Provision-has been
made for the refunding of excess profits taxes to guarantee
corporations against losses in the years immediately following
thewar.

But as I said in my introductory remarks American business
has its enemies -- important enemies, powerful enemies -enemies from within who would undermine the very foundations

of free enterprase. Who'are the se enemies of business? I

will tell you who they are.
They are the "business as usual boys" who opposed the

conversion of industry from pe ace to war. They are the men
who fought price control and who would have risked the danger

of inflation for extra profits for themselves. They are the
men whose policies, if adopted, would have made Winning the

- IR -

the war on the home front impossible.

The real enemies of business are the restrictionists who
fight against economic progress, who oppose a steadily rising

national output. They are the labor-haters who fought against
collective bargaining, minimum wages, social security and the
other social accomplishments of this administration.
The real enemies of business are the monopolists who favor

restricted industrial output. They are the men who want monopoly at home and abroad, the men who made international cartel
agreements with German big industry before the war and who are

just waiting for the opportunity to again form international
cartels and waiting to resume these international cartels
after the war.
The real enemies of business in America are the economic

isolationists, the men who oppose international economic as

well as political cooperation. They are the men who have
fought against the extension of the reciprocal trade agreements,
and who are fighting the Bretton Woods Program of monetary and
Banking collaboration to promote American and world trade and
prosperity.

The real enemies of business are the men who want to restrict

credit, who want high interest rates. They are the few bankers
who bring pressure against the Treasury to increase interest rates

- 13 -

knowing full well that every increase of one percent me ans

an additional burden of $2 billion a year on the American
business men and the taxpayer.

They are the men who make it difficult for the returning
soldier to buy a home or a farm or go into business.
They are the men who come to Washington for special favors
and not receiving them go back home to make speeches on Govern-

ment bureaucracy. I have said many times and I repeat, as long
a.s I a.m in the Treasury there will be no backdoor to the
Treasury But the front door is wide open to all businessmen
who will receive prompt and courteous consideration.
The real enemies of business are the men who defy the laws

of the country in time of peace and war - the Girgler's, the
Weirs, the Averys, the Aldriches, the McCormicks and the DuPonts.
These are the real enemies of business. And for whom are they

voting? Who gets their votes and their cash?
The Republican condidate claims that he supports and endorses
many of the measures for promoting prosperity and business

activity which this Administration has taken. Maybe he does.
But you judge a man by the company he keeps.

Business and industry have a role of vital responsibility
to play in the development of the future. They must serve as
its guarantor. They must be in the future 8.8 they have been

- 14 -

in the past, the initiators of economic progress. Theirs
must be the ingenuity, the know-how of enterprise needed

to find new products, build new plants, develop new techniques.
It is to them that Americans look for the expansion of
production and the creation of new jobs and lifting of our

living standards. Business can do this and will do this.
But it needs an Administration that is forward-looking and
friendly, and Administration under which business can prosper
because it is an Administration that believes whole-heartedly that
the economic welfare of the country and the economic welfare of
business are inseparable. We have such an Administration

now. And I feel sure that business, yes and labor and
agriculture too, all of the people, want this Administration
to carry on.

October 24, 1944
5:10 p.m.

HMJr:

Hello.

Operator:

Mr. Kaiser.

HMJr:

Hello.

Henry J.

Kaiser:

Hello. This is Henry -- Henry Kaiser talking.

HMJr:

Henry Morgenthau. We'd better drop the last name.

Thank you.

HMJr:

All right.

Say, I want to get the names of -- because he'll
ask me tonight the exact names of those fellows
who were present today and what this one said and
what that one said probably.
Well, one is Herbert Gaston, G-a-s-t-o-n.
Herbert Gaston, G-a-s-t-o-n.

HMJr:
K:

HMJr:

Yes.

He is what?

HMJr:

Assistant Secretary of the Treasury.

Yeah.

HMJr:

The other is Harry White

Yeah.

HMJr:
K:

HMJr:

....

who is

And he is

Assistant to the Secretary ....
Uh huh.

in charge of -- he's sitting here. (Aside:

What are you in charge of?)
K:

Have you got that written?

HMJr:

He says, "Cats and dogs ...."

-2K:

All right.

HMJr:

and the general well-being of the country. #
And the other one is Roy Blough, B-1-o-u-g-h, who
is our Chief of Tax Research.

HMJr:

Yeah. I think he's even for us now, don't you?
Yeah. Now, two things

Yeah.

you and I are going slumming for breakfast

HMJr:

tomorrow morning.
K:

What time?

HMJr:

Eight-thirty, with Mrs. Roosevelt.
Eight-thirty. Where shall I meet you?
I can pick you up at the Statler on the front -at the front door, say, on 16th Street
Pull in right in the driveway, then you -- then
we won't miss the door, right door -- is that right?
Well, I -- whatever door you say.

HMJr:

Well, I don't -- the driveway is all right.
Eight-fifteen?
Eight-fifteen, in the driveway.

HMJr:

Yeah. Now, let me read you what we've got for
Page Ten -- see? -- insert, following that other
insert.

Well, now can I take it down for a minute?

HMJr:

If you'll put a stenographer on

All right. (Aside: Will you get on, Beth? Come
on take this down. Answer: All right.)

HMJr:

Are we all together?

Yeah.

-3Steno:

Uh huh.

HMJr:

This is it: "The importance of encouraging
business men to expand their plants and to
replace the obsolete or worn-out equipment
with new equipment is far greater than appears

at first sight.

Steno:

Okay.

HMJr:

"Economic progress depends largely upon the

maintenance of a rapid rate of technological
progress in industry." =

Steno:
HMJr:

Steno:
K:

HMJr:

Okay.

"America is the great producer that it is today
because technological advance in American industry
has been the greatest in the world."
Okay.

Is that all?
No. No. "By substantially accelerating the rate
2

of depreciation for tax purposes, we probide
business men with additional incentive to expand
their plants, replace old and obsolete machinery
with modern equipment. If

Steno:

Uh huh.

HMJr:

"That means more jobs for the worker, increased
profits for the business man, and lower cost to
the consumer. If And Harry White adds, "And more

votes for Roosevelt.

(Laughs) Yes. Listen, I want to tell you that

HMJr:

Good.

That's wonderful. Are you ready to -- can I tell

HMJr:

Who?

Sam.

really means more prosperity now.

Sam that goes in?

-4 HMJr:
K:

HMJr:

Oh, yes.

All right.
That goes right in after the other insert on
page ten.

After the other insert on page ten.

HMJr:

Yeah.

All right. Well, now that's just wonderful.
I'11 meet you then at 8:15. I'm delighted
with that. Tell Mr. White he outdid himself.

HMJr:

He usually does.

Huh?

HMJr:

He usually does.

Oh, God, I think he's wonderful. I really

HMJr:

think both of them have a tremendous vision of
what -- of what we can accomplish and -- and
while Mr. Blough is a good researcher, he's
scared for the future, you see?
Yeah.

But this -- we're all together now.
I gather you like it.
I love it very much.

HMJr:

Well, you see what you can do on

And I think when he said, "The more votes...."

HMJr:

he said something.

HMJr:

See what you can do on Samuel I. Rosenman.

Oh, I'll fix that.

HMJr:

You will?

Oh, I'm -- I'11 stay right with that.

-5HMJr:

Okay.

Yes, I'11 keep talking there. Now, don't worry
about that one.

All right.
I'll tell him this 18 done.

HMJr:

Right.

HMJr:

HMJr:
K:

That this part, you're willing to
All right.
include there and I think he'll recognize
it's tremendous. And then I'll also talk tomorrow
noon about it again.

HMJr:

That's fine.

You know at the luncheon.

HMJr:

I know.

Because I've had -- a former -- I want to talk
to him about a release for jobs for all

HMJr:

Yeah.

that I want to make about the Merchant

Marines
HMJr:

Yes.

.... which ties right into this thing.

HMJr:

Yes.

And also that Admiral Land can make which ties

HMJr:
K:

into this thing.

Nobody can explain better to the President than
you the difference between reconversion and this.

You don't have to talk about reconversion. It just
confuses everybody.

-6HMJr:

Well, he's a little confused on that.

Well, it confuses everybody.

HMJr:

Right.

And this is not -- this is simple.

HMJr:

Right.

The people of the world -- the children of

our country can understand this.

HMJr:

Right.

This -- this is simple and it's a beautiful --

I want to commend you myself.

HMJr:

Right. Now, the only other thing I've got to
do is to send you back a copy of

of my talk.
And what time would you normally leave your
office?

Well, just send it to the hotel if you don't
mind -- to my

HMJr:

To the Statler?

Yeah.

HMJr:

I'll send it to the Statler. We have your

Yeah.

HMJr:

Okay.

All right. Just Harry Kaiser there -- (Aside:

HMJr:

Right.

Harry
White:

That's right.

room number.

600W isn't it? Answer: Yeah.) 600W.

-7HMJr:

Okay.

Thank you very much. And I'll see you in the

morning.
HMJr:
K:

Okay.

And we'll go over this -- now, in the morning
I'll -- you know what you want me to do in the
morning.

HMJr:

That's right.

All right.

HMJr:

Thank you.

Bye. Bye. Thank you. I enjoyed this afternoon
and I appreciate it.

HMJr:

So did I, very much.

I got a lift out of it.

HMJr:

So did I.

All right. Thank you.

HMJr:

Bye.

Good bye.