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DIARY
Book 809
January 11-15, 1945
-
Book
Page
American Federation of Labor
See also Financing, Government: War Savings Bonds
6th War Loan Drive)
Speaking invitation accepted by HMJr - 1/15/45
809
325
American Manufacturers Association
See Stettinius, E. R., Jr.
Appointments and Resignations
Berkshire, Stewart: Barkley recommends for Assistant
Commissioner of Internal Revenue - 1/13/45
Surplus Property, Disposal of: Kansas City, Missouri:
Truman and Hannegan-freasury correspondence concerning
appointments and dismissals - 1/12/45
Correction by Pehle - 1/26/45: See Book 812. page 314
Appropriations, Treasury - Fiscal year 1946
203
143,147
See Statements by HMJr
Athenagoras, His Grace Archbishop
See Financing, Government: War Savings Bonds (Greece)
-BBandages
See Post-War Planning: Surplus Property, Disposal of
Berkshire, Stewart
See Appointments and Resignations
Business Conditions
Haas memorandum on situation. week ending January 13, 1945 1/15/45
334
-0Cabinet Legislative Committee
'Connell memorandum on Acheson's proposal discussed by
Treasury group (Viner present) - 1/12/45
(Acheson letter and proposal: page 353)
a) Treasury group recommends that Treasury "go it alone"
on Bretton Woods, etc. HMJr disagrees - considers
Stettinius really anxious to cooperate
Acheson-HMJr conversation - 1/12/45
Acheson-HMJr correspondence concerning re-draft of
memorandum for submission to Secretary of State and
Director of Budget - 1/15/45
a) O'Connell memorandum of opposition
Budget Director Smith has signed copy sent him by Acheson White tells HMJr - 1/18/45: See Book 810, page 212
FDR's memorandum now signed by Secretary of State,
Secretary of Treasury, and Director of Budget, and OK'd
by FDR ("but add Vallace") - 1/18/45: Book 810, page 291;
Book 811. page 87
a) FDR-HMJr discussion - 1/19/45: Book 811. page 71
b) Executive Order signed - 1/19/45: Book 811, page 92
70
71
84
348
350
- C - (Continued)
Book
Page
Correspondence
Mrs. Forbush's mail report - 1/12/45
809
123
--Federal Reserve
See Financing, Government: Var Savings Bonds
(6th War Loan Drive)
See Financing, Government: Federal Reserve Legislation
Federal Reserve Bank of New York (Fiscal Agent of U.S. Treasury)
See Financing, Government
Financing, Government
Federal Reserve Bank of New York (Fiscal Agent of
U.S. Treasury): HMJr considers transferring some of
Treasury business to either Chicago or Boston Federal
Reserve Banks - 1/13/45
(See also Book 811, page 271 - 1/22/45)
Federal Reserve Legislation
Conference of Treasury group; Currie and Viner present 1/13/45
194
179
a) Ratio - legislation to change as soon as
possible recommended by Viner, Currie, and Bell
1) HMJr opposed to legislation but in view
of Budget Message feels Treasury must go
along.
b) HMJr-Eccles conversation - 1/13/45
182
188
c) Eccles-0 Connell-Congressmen Spence and
Wolcott conference - O'Connell memorandum 1/23/45: See Book 811. page 886
Conference of Treasury group: discussion of timing
legislation; Bell advocates no overlapping with next
War Loan Drive - 1/24/45: Book 812. page 3
(See also Post-War Planning: Bretton Woods
legislation: Book 812, page 1)
War Savings Bonds
Greece: His Grace Archbishop Athenagoras thanked for
assistance - 1/11/45
6th War Loan Drive
Presidents of Federal Reserve Banks thanked for
assistance - 1/12/45
16
111
Presidents of certain railroads thanked for
assistance - 1/15/45
314
Gaston memorandum - 1/15/45
317
New York Times critical editorial discussed in
a) Hass-Gaston nemorandum - 1/16/45:
See Book 810, page 49
b) Discussion by 9:30 group - 1/17/45:
Book 810, page 124
American Federation of Labor-Treasury correspondence
concerning Los Angeles representative cooperation 1/15/45
319
-I - (Continued)
Foreign Financial Policy Board
Book Page
See also Book 807
Crowley-HMJr conversation at Cabinet reported to
Treasury group - 1/12/45
809
103-G
a) Crowley "is in Treasury corner"
b) HMJr asks Crowley to check Cox
Foreign Funds Control
Office of Strategic Services told type of information
that would be of value in locating hidden enemy assets -
1/11/45
30
Lasard Freres: Progress report on investigation of
remittance to France - Schmidt memorandum - 1/13/45
224
France
Lasard Freres: See Foreign Funds Control
-0
Germany
Hitler: Report on physical condition sent by Office of
Strategic Services - 1/13/45
246
Greece
See Financing, Government: Var Savings Bonds
-HHannegan, Robert B. (Chairman, Democratic National Committee)
See Appointments and Resignations
Harper, Fowler
See War Refugee Board
Hitler, A.
See Germany
-IInternational Labor Organisation
Departments of Labor and State relation to ILO discussed
in Perkins-EMJr correspondence - 1/13/45
213
-IKaltenborn, H. V.
Thanks HMJr for cooperative interview - 1/15/45
Kansas City, Missouri
See Appointments and Resignations: Surplus Property,
Disposal of
-LLasard Freres
See Foreign Funds Control
212
- L - (Continued)
Book
Page
Legislative Committee (Cabinet)
See Cabinet Legislative Committee
Lend-Lease
Purchase contracts - for methods of making see
Procurement Division
Executive Reports as of November 30, 1944 - 1/11/45
U.S.S.R.: FDR asks for complete cooperation pending
formulation of Fifth Protocol - 1/11/45
809
35
39
United Kingdom
Federal Reserve Bank of New York statement showing
dollar disbursements, week ending January 3, 1945 1/11/45
45
Aircraft flight delivery as at December 31, 1944 British Air Commission report - 1/15/45
386
-NManufacturers Association, American
See Stettinius, E. R., Jr.
Missouri
See Appointments and Resignations: Surplus Property,
Disposal of
Morgan, J. P., and Company
Attitude toward Jews outlined
374
Morgenthau, Henry, Jr.
Inclosures in Treasury Pay Envelopes: See Treasury Dept.
-NNew York Times
See Financing, Government: War Savings Bonds
(6th War Loan Drive)
-0O'Dwyer, General William
See War Refugee Board
Office of Strategic Services
See Foreign Funds Control
-PPost-War Planning
Surplus Property, Disposal of (Kansas City, Missouri)
See also Appointments and Resignations
Bandages - re-sale of discussed in Mrs. FDR-Treasury
correspondence - 1/15/45
Withdrawals of property previously declared surplus
by Army and Navy - Pehle report - 1/17/45:
See Book 810. page 166
272
- P - (Continued)
Book
Press Conferences
Staff members present discussed in Gaston memorandum 1/11/45
809
Page
12
Procurement Division
Purchase Contracts (Lend-Lease, etc.): Mack memorandum
describing - 1/11/45
18
R-
Rosenman, Sawuel I.
Father-in-law's appointment to Surplus Property discussed
by HMJr and Pehle - 1/15/45
254
a) Rosenman-HMJr conversation
b)
257
accepts suggestion of transfer to
Surplus Property - 1/25/45: See Book 812. page 191
S-
State Department
See Cabinet Legislative Committee
Statements by HMJr
Treasury Appropriation fiscal year 1946: HMJr's testimony
before House Ways and Means Committee - 1/15/45
289
Stettinius, E. R., Jr.
See also Cabinet Legislative Committee
American Manufacturers Association attacked by Stettinius
in White House anteroom in presence of Winthrop Aldrich
and Eric Johnston - 1/13/45
Stevenson, Adlai
193
See War Refugee Board
Surplus Property, Disposal of
Kansas City, Missouri: See Appointments and Resignations
Bandages: See Post-War Planning
-TTaxation
Refunds - delay in settling discussed by HMJr, D.W. Bell,
Gaston, Blough, and O'Connell - 1/11/45
a) Nunan's memorandum of explanation - 1/12/45
1
119
Treasury Appropriations (Fiscal year 1946)
See Statements by HMJr
Treasury Department
Inclosures in Pay Envelopes
See also Book 805
First letter by HMJr - 1/15/45
Truman, Harry 8. (Senator, Missouri: Vice President of U.S.)
See Appointments and Resignations
310
-U-
Book Page
U.S.S.R.
See Lend-Lease
"
United Nations Relief and Rehabilitation Administration
United Kingdom
See Lend-Lease
United Nations Relief and Rehabilitation Administration
U.S.S.R. difficulties as outlined in memorandum transmitted
809
by Luxford - 1/15/45
376
-VWar Refugee Board
Full-time Director discussed by Pehle and Treasury group 1/12/45
a) Fowler Harper suggested
b) Adlai Stevenson suggested
c) General William O'Dwyer suggested
1) Pehle reports O'Dwyer is interested -
1/17/45: See Book 810. page 140
2) McCloy-EMJr conversation concerning 1/25/45: Book 812. page 201
3) HMJr's letter to McCloy: Book 812. page 203-A
4) War Department agrees: Book 812, page 262;
Book 813, page 54
5) Grew-HMJr conversation - 1/26/45:
Book 812. page 265
a) Grew agrees: Book 812, page 290
6) Pehle's formal resignation and designation of
O'Dayer as succeeding Executive Director 1/27/45: Book 813, page 55
7) FDR sent formal notice of change:
Book 813, page 59
8) Letter to Grew concerning appointment 2/1/45: Book 815, page 63
9) Resume' of appointment by Pehle - 2/3/45:
Book 816, page 42
Var Savings Bonds
See Financing, Government
91
91
97
149
January 11, 1945
10:25 a.m.
INTERNAL REVENUE
Present:
Mr. D. W. Bell
Mr. Gaston
Mr. Blough
Mr. O'Connell
Mrs. Klotz
MR. O'CONNELL: You and Dan ought to know something
in connection with the refunds. We made the suggestion
last fall that they couldn't get all the refunds paid
by an early enough date. It was my thought that they
ought to pay the refunds on the basis of the taxpayers
returns and check for discrepancies or errors afterwards.
In any event, we are up against this situation. Five
and three-quarters million of the sixteen million claims
for refunds for 1943 have not been paid, and will not
have been paid by the 15th of March. This means that
when people file on March 15 of this year, presumably a
good part of the five and three-quarters million will
deduct the amount of their 1943 refunds. Some may not
file a return at all, and by that time they will have
good reason to be griped about not having got what they
were entitled to get.
MR. BLOUGH: That is an understatement.
MR. O'CONNELL: The average amount of refund is
thirty-four dollars.
H.M.JR: How much?
MR. O'CONNELL: The total amount of refund is about
one hundred and ninety-five million dollars.
H.M.JR: One hundred and ninety-five?
O
2
-2-
MR. O'CONNELL: One hundred and ninety-five million
dollars would be the total amount of refunds. We would
pay them right away. The nine or ten million we have
already paid involves three hundred million dollars, so
we are assuming we will maintain the same average. They
made a couple sample checks of a couple thousand cases in
different districts which have been handled by a laborious
process of matching documents and being sure they are ab-
solutely right. The average error in these cases was
two dollars and sixty-one cents. Now, from time immemorial
the Bureau has had a tolerance of two dollars, and the errors
are not much more than that. It is not practical to check.
MR. GASTON: Two dollars and sixty-one cents. Let's
deduct the sixty-one cents.
MR. BELL: Let's raise the tolerance to three dollars.
MR. O'CONNELL: Assuming we lose two dollars and
sixty-one cents on each five and three quarters million
dollars--it is the worst assumption we could make--it would
cost us thirteen million dollars. That is a literal im-
possibility. Assuming two dollars and sixty-one cents
is right, we are going to make a check of the returns,
especially those in which there is more money involved,
and we will get back any substantial amounts we overpay.
It is costing us a million dollars a month interest,
incidentally, because all refund claims bear six percent
interest.
H.M.JR: Why not say that first?
MR. O'CONNELL: I'm saving the best gun for last.
The proposal is the same we discussed last fall. Take
these five and three-quarters million claims and pay them.
MR. BELL: I was worried about it first-MR. O'CONNELL: I was worried about it and called
a conference of Harold Graves and Nunan.
3
-3-
H.M.JR: John Sullivan comes in here and tells me
all these things and he promises this thing, that every-
thing will be out by the first of January. He goes up
and has his picture taken--up there in my shop. Everything is lovely.
MR. BLOUGH: They more or less promised him--
H.M.JR: It's the same thing all over again. The
first time I walked in, this Assistant Secretary of
the Treasury from Connecticut--the Fiscal Assistant
Secretary we were three or four billion dollars off
in our figures then. I said, "Why didn't you tell the
President?"
He said, "He didn't ask me."
I don't want anybody like that around me.
MR. BELL: Harold was pretty certain he would have
election.
all of the claims out of the New York office before
H.M.JR: Why doesn't Nunan tell me this?
MR. BELL: They all thought they would have it
into the collector's office.
H.M.JR: They are five and three-quarters million
behind. Why doesn't Nunan tell it to me?
MR. O'CONNELL: This has been building up.
H.M.JR: You want me to say at ten-thirty we are
going to pay it?
MR. O'CONNELL: No indeed. I would like you to
tell me it is all right for the Bureau to do it.
MR. BLOUGH: Pay the money and then tell them.
o
-4-
MR. O'CONNELL: In the first place we have handled
ten million of these the other way and this is a kind of
emergency proposition. We hope we won't have to do it
again, and I don't think it is a good idea to tell people
at this stage of the game that without checking we are
going to pay out one hundred and ninety-five million dollars.
MR. BELL: They really had quite a problem on their
hands.
MR. GASTON: I am inclined to think the boys are right.
It is too much confession of error. We have gone along
so long and said we were doing all right and now to tell
the boys we gave up because we found we were cockeyed
and didn't know what we were doing--
H.M.JR: How wonderful it is for a head of a
department for once to say he was wrong!
MR. GASTON: There's something in that.
MR. O'CONNELL: We may not have to do this for next
year.
H.M.JR: How wonderful it is to say we are wrong. I
have had these complaints--I have taken hold of this thing.
I was advised we could do it. We haven't been able to do
it and this thing is going to go out and I want the
American public to know it.
MR. GASTON: I don't think we ought to tell them on
this five and a quarter million we're paying without
checking. I would be inclined to do it first, or get
going, and then next week, next Monday, perhaps--can we
get started on the thing?
MR. O'CONNELL: They are waiting. I was supposed to
speak to the Secretary yesterday. They are waiting in the
Bureau for word from the Secretary.
H.M.JR: I'll do it on one condition. The Bureau has
got to write me a letter and say they fell down over
Nunan's signature. The Bureau was wrong. They have
5
-5-
to write me that kind of a letter, "We were wrong. we
estimated wrong. We told you wrong. We have fallen down
on our face. Now we want to do it this way. I want that
kind
of a letter.
MR. BELL: Mr. Secretary, one reason for falling down is
lack of personnel. They haven't been able to get people.
H.M.JR: Wait a minute. I have been out there in the
Chicago office. Unless I've had the wool pulled over my
eyes by the fellow doing bonds, he's getting the people.
MR. BELL He isn't. lie lost fifteen hundred people
last year.
H.M.JR: How many did he put on?
MR. BELL: Two thousand, but he lost a net of fifteen
hundred people. We are down to sixty-eight hundred. We
have a serious situation in Chicago personnel.
H.M. I want a letter from the Bureau, the great
Bureau that is all over there by themselves. I think I
am going to insist I want them to give me the whole gist
of the situation, an analysis of where they fell down and
made promises and weren't able to live up to them and why.
MR. O' 'CONNELL: I would like to have that letter
signed by a fellow that isn't here.
H.M.JR: Who is that?
MR. O'CONNELL: It seems Harold Graves is the one
responsible.
H.M.JR: I don't care. Let them go back on the record.
I have to have a record on why I am going to pay back
five and three-quarter million people without examining
it. I want a reason for it. I have to have a record if
I'm pulled up before Congress.
6
-6-
MR. BELL: I think you can make a record as far
as you are concerned without blaming a lot of people.
H.M.J.: Now look. 1 want a letter from Nunan
giving me the history of what they promised, where
they fell down and why they fell down, and now he
recommends to me I do what you said.
MR. BELL: That's all right.
MR. O'CONNELL: Now may we tell them to go ahead
without waiting for a letter, because they ought to
start right today in getting things in shape?
H.M.JR: But I want the letter by two o'clock.
MR. O'CONNELL: It's impossible. If you want that
kind of a letter, you have to give him a day or two to
write a good letter. They have to analyze it and get
figures.
H.M.JR: All right. Tomorrow at two 'clock.
That's the deadline.
MR. BELL: You start it. It's my responsibility
from now on. You dump things on the Disbursing Office.
Now we have--
H.M.JR: I want a letter by two o'clock.
MR. GASTON: I think the last time we saw them
they told us-H.M.JR: Two o'clock tomorrow.
MR. GASTON: I think they told us they wouldn't
finish until February.
H.M.JR: The first of January.
MR. GASTON: When we reviewed it, the time Dan spoke of,
they wouldn't promise better than February 15.
-7-
MR. O'CONNELL: They have since changed it to
February 28 and March 15 now.
H.M.JR: Send the preliminaries in.
O
8
Mr Blough
TICKER NEWS
WCNS
8:53 a.m.
January 11, 1945
Chairman George of the Senate Finance Committee took issue with the
recommendation of Federal Reserve Board Chairman Marriner Eccles that
individuals get postwar tax relief ahead of corporations.
When relief is possible, George said, it should go to individuals
and corporations at the same moment. That, he insisted, is the only
way to stimulate productive capacity-which means jobs--and buying power.
Eccles discussed his postwar tax views in the current issue of the
Federal Reserve Bulletin. He advocated drastic reduction of excise
taxes, lowering of personal income taxes in the lower brackets and
later reductions in corporate taxes. And he called for a halt in
deficit financing as soon as possible.
George agreed with Eccles' attack on deficit financing which, the
Senator said, should be abandoned "at the earliest possible moment"
to avoid "calamity."
He also endorsed the idea that excise taxes should be "drastically
reduced," but he pointed out that the high wartime excises now in
effect will die by statute six months after the war.
George said he did not believe Eccles went far enough in proposing
that corporate excess profits taxes be reduced to "around 65 per cent."
9
January 11, 1945
10:30 a.m.
PRE-PRESS
Present:
Mr. D. W. Bell
Mr. Gaston
Mr. Blough
Mr. Shaeffer
Mrs. Klotz
Miss Chauncey
MR. BLOUGH: Senator George has made another comment.
H.M.JR: Are you all right? I am going to have the
press in. All right.
MR. BLOUGH: Apparently the papers yesterday carried
the old story about Eccles' speech before the National
Industrial Conference Board which was printed in the
Federal Reserve Bulletin in December. The Washington News
and this morning's Her Tribune carried that as a new
story and George apparently was asked about it, and reacted to it, and Eccles recommended excise taxes and
individual income taxes be lowered first and corporation
taxes afterwards.
George said they ought to be lowered at once. This
is no time to talk about it.
MR. BELL: It is really an old story and they made a
new one out of it.
MR. BLOUGH: I just wanted to call it to your attention.
H.M.JR: I have nothing to volunteer.
MR. SHAEFFER: Wilcox is going to ask what the Treasury's
program is in taxing municipal bonds, and also if you have
any comment on the refusal of the Supreme Court to review
that adverse ruling on the Port Authority Bonds.
MR. BLOUGH: What happened was the Supreme Court said
as far as it was concerned, it would not review a decision
10
-2-
of the Circuit Court of Appeals, that the Statute exempts
the Port of New York Authority Bonds--the interest on them-from taxation. No constitutional question was decided by
the Court in any way.
MR. GASTON: Was it raised?
MR. BLOUGH: The question was raised throughout the
trial but it was decided in every court, both in the Tax
Court and the Circuit Court of Appeals on a statutory
issue, and not on a constitutional issue. There has been
nothing to throw any light on the constitutional issue.
It seems to me that we can't properly comment on the
Supreme Court's decision except to point out that it
clearly did not touch the basic constitutional question
of the power to tax, and as far as the Treasury's position
on taxation is concerned, I see no reason for any change
in position whatever.
H.M.JR: why not just say that?
MR. SHAEFFER: It's all right. Wilcox is going to
ask the question.
Mic. BELL: You have no plan at the moment to carry
it any further.
MR. GASTON: To recommend a law to tax municipals?
Have we?
MR. BLOUGH: We have no plan. This decision hasn't
had any effect on tax plans.
H.M.JR: Now, I want to know who the fellow was that
made me stick my neck out on this New York Port of Authority
case. Was that Paul? Somebody made it a great personal
issue to force that thing through.
MR. BLOUGH: The Port of New York Authority case?
that?
H.M.JR: Who was SO sure we could win that and all
MR. BLOUGH: I better look into that. I think it was
Kades.
11
-3-
H.M.JR: I would like to know. I know there was
somebody around my shop.
MR. BELL: I think it came up under-H.M.JR: Somebody made it a personal issue.
MR. BLOUGH: Neither Paul nor Wenchel thought we
could win the case.
H.M.JR: Will you find out?
MR. . BLOUGH: Yes.
H.M.JR: Now, this thing in the New York Times about
Stettinius and Morgenthau calling on the President with a
report to meet on Bretton Woods. I won't say anything
unless they ask me.
MR. SHAEFFER: All right.
MR. GASTON: I guess all you can say about a call on
the President is that you called on the President, isn't
it?
H.M.JR: Yes.
Show them in.
12
January 11, 1945.
M
Memorandum
TO: Secretary Morgenthau
FROM: Mr. Gaston
Shaeffer talked to the boys and girls in the press
room about having members of your staff present at press
conferences. They said they approved and Charlie is
positive that there will be no unfavorable reaction.
The customs of some of the other Cabinet members are:
Ickes - He has a whole army of bureau heads and staff
assistants with him at conferences, as many as thirty at a
time. He checks his replies to questions with the bureau
head affected and frequently asks them to reply directly to
questions from newspapermen.
State Department - Conferences are usually a one man
show, except of course for the presence of Mike McDermott;
who is in charge of public relations. Occasionally
Stettinius will have one or more of his aides if he knows
of special matters that are coming up on which they would
be useful. When Dumbarton Oaks was ready for discussion,
he had the whole delegation present.
Stimson - Always has General Surles and Colonel
Parmentier. Stimson reads a review of events of the week
and answers only those questions that have been submitted in
advance. He doesn't answer anything off the cuff. If a
new question is submitted to him in conferences he refers it
to Surles to have it looked up.
Forrestal - He has his public relations man present
and if he knows of any particular subject that is coming up
he will have the appropriate men in to discuss or check on
that subject.
Perkins, Walker and Jones rarely hold press conferences.
Jones holds one only when he has something special to tell
and usually has two or three of his assistants with him.
2039
-
ASSISTANT SECRETARY OF THE TREASURY
At
3
January 11, 1945.
Memorandum
TO:
Secretary Morgenthau
FROM: Mr. Gaston
Charles J. V. Murphy is no
doubt the man you saw this morning.
He was with the World in 1928 and
has been with Fortune since 1936.
He went with the second Byrd expedi-
tion in 1934, in charge of radio
broadcasts. He had previously
written a biography of Byrd.
vr
14
ASSISTANT SECRETARY OF THE TREASURY
January 9, 1945.
Memorandum
TO:
Secretary Morgenthau
FROM: Mr. Gaston
As ammunition for use by salesmen with the 16 millimeter film on
E Bonds which is being made, War
Finance is also getting up a booklet
on objectives of saving and the use
that can be made of funds saved by
the E Bond method.
The attached open letter will,
if you approve, be reproduced in the
booklet.
you
JAN 11 1945
TO THE OWNERS OF WAR BONDS
We know what your War Bonds have meant to the
Government and to the War, but do you know how much
they can mean to you?
For the past three years you have been investing
your savings in a security unique in the history of
Government financing -- the E Bond. This Bond was
especially designed for your protection. It's yours
in your name, and it has the guarantee of the greatest
concern in the world -- the United States Government.
It has special privileges such as joint-ownership,
the right to name a beneficiary, guaranteed values
and -- if held to maturity -- will pay a rate of return
not obtainable on any like security anywhere.
As Secretary of the Treasury, I can assure you
that the Government will stand back of this Bond and
fulfill every provision of it. It will be paid precisely
and exactly according to the terms under which it was
issued.
You have only to hold on to your Bonds to receive
the maximum return, for they are designed to favor those
who hold them the longest. Keep buying them regularly
and hold them to maturity.
Sincerely,
(Signed) Henry Morgenthau, Jr.
JAN 11 1945
Your Grace:
Please accept my thanks for your untiring
efforts in behalf of our War Loan campaigns. I
am informed that you have been kind enough to
insert stirring War Loan appeals into your various sermins before Creek Orthodox congregations
throughout the nation. I am told that the recent
recording in behalf of the Sixth War Loan Drive,
under the auspices of the Treasury Department and
the office of Far Information, has been rebroadcast in many communities with excellent results.
with such wholehearted cooperation on the part
of leaders such as you, we cannot fail in our task
of financing this great struggle for human freedom.
Sincerely,
(Signed)
His Grace Athenagoras
Archbishop of the Greek Orthodox
Church of North & South America
10 East 79th Street
New York, New York
RWC
Form OKM-88
EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE FOR EMERGENCY MANAGEMENT
OFFICE MEMORANDUM
TO: Mr. Burton Davis, Field Promotion Desk
War Finance Division, Treasury Department
DATE: January 8, 1945
FROM: Achilles N. Sakell, Chief M.S.
Domestic Foreign Language Press & Radio, OWI
SUBJECT:
Appended is a suggested draft of a letter to His Grace Archbishop Athenagoras of the Greek Orthodox Church of North and South
America. The letter is for Mr. Morgenthau's signature and is self-
explanatory.
The Archbishop has been doing an excellent job in making
Greek-Americans War Bond-conscious.
During the Sixth War Loan Drive he prepared a stirring War
Bond appeal which was recorded under the auspices of the OWI. Some
100 transcriptions of the recording were distributed to an equal
number of Greek-American communities with instructions by the Archbishop to form local committees and give the recording the widest
possible play.
In this address the Archbishop stressed the stake of the United
States and all freedom-loving peoples in this war. He emphasized the
necessity for bringing this war to a speedy and victorious conclusion.
This, he said, will be achieved not only through the valor of our
armed forces, who are "a veritable shield of the Republic" but through
extensive production of adequate weapons of war. This he followed
with a fervent appeal to help our government finance this war for
freedom. Americans of Greek extraction, he said, have a double duty
toward the United States. Here, he said, the noblest ideals of
Hellenism have been transplanted and came to full fruition.
A copy of this excellent address was published in all the
Greek-language newspapers and periodicals in this country.
Kindly call me up as soon as Mr. Morgenthau mails the letter
to the Archbishop. A letter along the same lines will be sent to
His Grace by Mr. Elmer Davis.
/
Y VICTORY
BUY
WAR
TREASURY DEPARTMENT
House
INTER OFFICE COMMUNICATION
DATE
January 11, 1945
Secretary Morgenthau
J. W. Pehle
During one of our recent discussions on Procurement
matters you inquired with respect to the method used by the
Procurement Division in buying goods, and particularly
whether competitive bidding was used. I indicated to you
that competitive bidding was used to a considerable extent
but that negotiated contracts were used for a great deal
of the Lend-Lease purchases.
There is attached a memorandum prepared at my
request by Mr. Mack, indicating the methods employed by
the Procurement Division in making purchase contracts.
The great bulk of the purchases in monetary value are ne-
gotiated contracts, authorized under the authority of the
First War Powers Act and used for Lend-Lease and similar
purchases.
Jose
19
DIVICTORY
TREASURY DEPARTMENT
PROCUREMENT DIVISION
BUY
WAR
WASHINGTON 25
OFFICE OF THE DIRECTOR
MEMORANDUM TO MR. J. W. PEHLE
In accordance with your request this memorandum will
briefly outline our methods of making purchase contracts.
1. Indefinite-quantity term contracts; that is,
contracts definite as to period of time, but
indefinite as to quantity. These would include
General Schedule of Supply contracts and certain
other special types.
2. Open-market contracts; that is, purchase of
definite quantities, for delivery at definite
times and places. These would include purchases for other agencies of the Government,
and purchases for replenishment of Procurement
Division warehouse stocks.
3. Negotiated contracts; that is, contracts entered
into under authority of the First War Powers Act,
1941, or similar authority such as provided in
the Critical and Strategic Materials and Red Cross
appropriation acts. These would include purchases
against Lend-Lease appropriations, primarily.
The distinctive features of each type are described
hereunder.
General Schedule of Supply contracts are based on
estimated needs of two or more agencies of the Government.
The schedules are actually digests of several contracts in
the same commodity class and are generally available to all
Government agencies both in Washington, D.C. and in the field.
20
-2In these contracts the supplier agrees to deliver such
quantities as may be required, and the Government agrees
to purchase its requirements from the contractor for a
specific period of time during the life of the contracts,
which may range anywhere from three months to a year depending on the type of commodity. The main feature of
General Schedule of Supply contracts is the fact that
they are intended to cover items in common use in two
or more departments and considerable economies are accomplished because the agencies concerned have merely
to place purchase orders on the schedule contractors for
such amounts as they may require.
In addition to the General Schedule 01 Supply con-
tracts there are other special classes of indefinite-
quantity contracts which include annual and semi-annual
contracts for typewriter and computing machine ribbons,
carbon paper and scotch tape; these contracts being
entered into for the account of the Stores Branch. Other
types of contracts in the same class would be those for
news ticker service, packing of office furniture, motion
picture laboratory work, reporting service for hearings,
stencil cutting, manufacture of identification badges,
burglary service, lumber and grading inspection service,
marketing research reporting, newspaper mat service, and
packing of typewriters for export.
The major steps in processing and distributing General
Schedule of Supply contracts are as follows:
1. Preparation of specifications and proposals.
2. Issuance of proposal.
3. Receiving and tabulating of bids.
4. Review and recommendation for award by Commodity
Group.
21
-35. Review and approval of award by contracting
officer.
6. Notification to contractor of award by
Contract Section.
7. Preparation of General Schedules by Editorial
Section.
8. Printing and distributing of General Schedule
of Supply to departments.
Open market purchases are based on specific requirements of several Government agencies, made known to the
Procurement Division by the presentation of requisitions
or purchase authorities. These requests for purchase
result in definite-quantity contracts, that is, for the
delivery of a specific amount of material and supplies
at a definite date. The Procurement Division solicits
bids for such requirements, and in general the purchase
is made from the lowest responsible bidder meeting specifications. This is more generally known as "regular purchasing procedure," that is, in accordance with Section
3709, Revised Statutes, which provides in pertinent part
that all purchases for material and supplies must be made
after public advertisement from the lowest bidder who
has offered a product in accordance with the specifications.
A substantial portion of stock-replenishment require-
ments for the Stores Branch is purchased on the open-market,
as above defined. In this sense the Stores Branch is
regarded as one of the customer agencies of the Contract
and Purchase Branch.
The principal steps in processing open market transactions are as follows:
22
-41. Receipt and recording of requisition by
Control Section.
2. Preparation of specifications and proposals.
3. Issuance of proposals.
4. Receiving and tabulating of bids.
5. Review and recommendation for award by
Commodity Group.
6. Review and approval of award by contracting
officer.
7. Issuance of contract and purchase order to
contractor.
8. Following up by Control Section until delivery
is completed.
9. Transmittal of receipted documents to Finance
Division for payment.
Negotiated purchases are those made under the authority
of the First War Powers Act. The emphasis in war powers
purchasing is that of speed. Some secondary factors, such
as keeping out of labor shortage areas, favoring smaller
manufacturers, evaluating excessive transportation costs
are considered but speed and time of delivery are the
important factors.
The matter of price is arrived at by discussion and
bargaining with the supplier who has been selected on the
basis of best delivery. All purchases under this program
originate principally with the Foreign Economid Administration and the Red Cross and the requisitions are formally
cleared with the War Production Board before commitments
are made.
23
-5The major steps in processing Lend-Lease requisitions
are as follows:
1. Receipt and recording of requisitions by
Control Section.
2. Preparation of specifications and issuance
of informal proposals either by telephone,
telegram or letter.
3. Receiving and tabulating of bids.
4. Discussion and bargaining with supplier with
best delivery.
5. Recommendation for award by Commodity Group.
6. Review and approval of award by contracting
officer.
7. Notification to contractor by letter or wire
commitment 01 award.
8. Notification to Inspection Division of award.
9. Preparation of formal contract and transmittal
to contractor.
10. Approval of formal contract and distribution t
Inspection and foreign missions.
Under all types of purchasing whether regular or
negotiated, examinations of all proposals are carefully
screened for the following matters:
24
-61. See that the bidder complies with all terms
and conditions of the request for bids delivery date, quality of commodity offered,
etc.
2. That prices do not excees Ceiling Prices.
3. See 11 any contingent fees, commissions,
royalties or any other irregularities are
involved.
4. If any unusual terms or conditions are imposed
or suggested by the supplier, these are forwarded
to the Chief Counsel for decision before award is
made. In addition to these types of submission
to the Chief Counsel all cases involving an expenditure of $100,000 or more are formally submitted to his office for review before award is
.
made.
Clifton E. Mack
Director of Procurement
25
1/11/45
Mr. White
Secretary Morgenthau
I understand that Beardsley Ruml and a Committee
of the Federal Reserve Bank are going to report unfavorably
on Bretton Woods.
Since Ruml is a friend of yours, I wonder if you
or some one in your office couldn't see him and talk to him.
White talked to Puml 1/18/45.
22
Home
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE
January 11, 1945
TO
Secretary Morgenthau
FROM
Mr. Luxford and Mr. DuBois
We think that you should ignore these statements
for the time being. Jessie Summer's remarks are merely
further evidence of the significant part Russia is
playing in the thinking about Germany.
haygro
27
January 10, 1944
To: Mr. Luxford
Mr. Du Bois
The Secretary would like to have
you advise him whether he should do
anything about this.
28
TREASURY DEPARTMENT
PuBris
INTER OFFICE COMMUNICATION
DATE
Inpl
6
Jan. 10, 1945
TO
Secretary Morgenthau
FROM
Mr. Lynch AL
Yesterday in an address to the House on the subject
of the unconditional surrender policy, which she described as "an anachronism", Miss Jessie Summer of Illinois made the following statement:
"Recently we saw German resistance
stiffen because of the revelation of the
Morgenthau plan. But the American people
have not been Fold that the reason was be-
cause it seemed to confirm the devilish
Nazi dogma which says that unconditional
surrender means the shattering of Germany
into Communistic revolutionary chaos with
middle-class people being killed or carried
off into Russian slavery. Germans are seeing neighboring countries liberated only to
fall into the hands of Stalin through internal revolution. They know that Stalin's
army killed or carried into slavery worse
than death, great numbers of anti-Nazi Poles
and Lithuanians. They know that they, the
German people themselves - the hated enemy -
need expect a fate no better and probably
worse.
"If Mr. Churchill and President Roosevelt intend to impose upon the German people
a fate less harsh than chaos, death, and
slavery worse than death, they owe it to our
gallant fighting men to spare our servicemen
needless suffering by saying so plainly, unequivocally, and reliably. Can they? Unfortunately, President Roosevelt and Mr.
Churchill, to say nothing of Stalin, have
not kept to the high moral level of trust-
worthiness as did Woodrow Wilson. Their
6
-2evasive dealings with Polish and Yugoslavian
agreements and the Atlantic Charter have
greatly discredited them. Therefore, the
task is perhaps the most difficult, though,
perhaps, also the most important they have
yet undertaken." (Congressional Record,
January 9, 1945, page 151)
The above quotation gives a summary of Miss Sumner's
diatribe against the policy of unconditional surrender.
The Record also includes in the Appendix a speech
on foreign policy given by Representative Robert Hale,
at Portland, Maine, on January 2, 1945, in which the
following statement appears:
"In any case an essential of any peace
terms would seem to be to make possible some
sort of an economy under which the German
people can live. There will be no German
economy left after the war. It would ob-
viously be more humane to send 80, 000, 000
men, women, and children to the firing squad
or the Vernichtungslager than to have them
starve to death over the years. The suggestion of Secretary Morgenthau to destroy all
German industry would have left no assurance
of any economic future for Germany.
(Page A82)
O
30
January 11, 1945
M
MEMORANDUM FOR THE SECRETARY
I thought you would like to know that the information handed to you Tuesday by the two representatives
of O.S.S. is of little value in locating hidden enemy
assets and is of a type which we have been receiving
for quite some time. After leaving your office, I explained to the representatives of O.S.S. the kind of
information that would be helpful to us. I am supplementing my oral explanation with a brief memorandum, a
copy of which is attached for your information.
Oars
O
TOP
SECRET
JAN 10 1945
25
Memorandum for E. J. Putsell, 0.8.8.
In accordance with your suggestion of yesterday, I have indicated
below some of the types of information which would be most helpful to the
Treasury Department in connection with the Safehaven project. As a general rule, the more specific the information the more useful, and wherever
possible such facts as names of persons or institutions participating,
amounts involved, dates of transactions, place in which funds are held,
names in which held, etc. should be obtained.
1. Individuals or institutions in neutral countries holding, or to
or through whom transfers are made of, enemy assets including bank balances,
gold, currency, securities, diamonds, art objects, etc.
2. Individuals or private institutions in the neutral countries buying
or selling substantial amounts of gold.
S. Individuals or institutions in neutral countries buying gold from
Germany.
4. Individuals and institutions in neutral countries dealing in United
States dollar currency or dollar stocks and bonds issued in the United States,
where there is reason to believe such currency or securities have emanated
from enemy or occupied territory.
5. Names of attorneys in neutral countries whose business has been
that of representing important German interests and any information concern-
ing any recent activity on behalf of such clients.
6. Investments, whether cloaked or open, of new capital in any form on
behalf of enery persons or firms. Such investments may include, among others,
the establishment of now business enterprises, trusts, or holding companies;
acquisition of majority or minority interests in new or established enterprises; purchase of real estate, securities, gold, patents, trademarks, etc.
7. Any information on trips made to neutral countries by representatives of important German banks, financial institutions, industrial or commercial organisations, and the like. For example, a month or so age we
learned that Wolff and Von Medel, directors of the Reichsbank, visited
Switserland for the purpose of carrying out a plan to protest German assets
from anticipated Allied post-hostilities control. Their plan was to induse
large Swiss banks to grant loans to German companies which the German companies
--would repay with funds held in their accounts in Switserland. The funds
received from the new loans, however, were to be placed in oloaked accounts.
As a result of this operation, funds whi ch the Germans had been holding
openly in Switzerland would be wiped out and put into hiding. This proposal was made to the Swiss Bank Corporation, which reportedly refused to
grant such loans.
8. Any sales to persons in neutral countries of enemy properties,
whether or not they appear to be bona fide, and any information bearing on
the bona fide character of the transaction (such as, for example, adequacy of
compensation, method of payment, etc.).
9. Any sales or transfers of enemy patents and trademarks, and agreements relative thereto.
10. Individuals or institutions participating in the disposition of
looted assets of any kind, regardless of ourrent ownership.
11. Individuals and institutions in neutral countries who are parties
to the creation of new enemy credits arising from delivery of merchandise,
performance of services, or otherwise, where such credits are or may be
retained in the neutral countries for postwar collection or liquidation.
12. Persons or firms, in neutral countries, utilizing enemy technical
or managerial help.
Information of any activities of the above types would be extremely
valuable.
(Stimed) Orvin A. Scholf%
Orvis A. Sohmidt
Director
TOP
SECRET
OASchmidt:rhb 1-10-45
33
SECRET
OFFICE OF STRATEGIC SERVICES
WASHINGTON, D.C.
11 January 1945
white has These
Honorable Henry Morgenthau, Jr.
Secretary of the Treasury
Treasury Department
Washington, D. C.
My dear Mr. Secretary:
In accordance with your suggestion to Lt.
Putzell of this office we are pleased to hand you
herewith copies of the following documents prepared
by our Research & Analysis Branch:
"South Germany", volumes I - VI inclusive,
dated 22 September 1944.
"The Belgian Situation" (through 30 November 1944)
dated 26 December 1944.
"Liberated Belgrade" dated 6 January 1945.
"Hungary and the Peace" dated 2 January 1945.
"Political Conditions and Foreign Relations of
Bulgaria" dated 22 December 1944.
"Sicilian Problems and Prospects" dated
8 November 1944.
"Present Political Party Trends in Yugoslavia"
dated 22 December 1944.
"Views of a German Conservative" dated
22 December 1944.
"Weekly French Intelligence Report No. 12"
dated 1 January 1945.
"Nazi Plans to go Underground" undated.
"The Pattern of Illegal Anti-Democratic Activity
in Germany after the Last War: The Free Corps"
dated 13 October 1944.
"The Clandestine Nazi Movement in Post-War Germany"
dated 13 October 1944.
"Russian Reconstruction and Postwar Foreign Trade
Development CEOOL September 1944.
SECRET
2
34
SECRET
"Russian Economi
Edulis in Germany in the
Period of Military Occupation", Part I, dated
28 October 1944.
"Concentration Camps in Germany" dated
3 October 1944.
"Capabilities and Intentions of the Chinese
Communists" dated 8 December 1944.
"Captured Chetnik Documents" dated 15 June 1944.
"Political Parties and Personalities in
Palestine" dated 16 June 1944.
"Italian Electoral Problems" dated 10 October 1944.
"The Political Significance of the Polish
Constitutional Issue" dated 2 December 1944.
"The Sinarquista Movement in Mexico" dated
June 1943.
"The Possiblilities of Opening Additional Supply
Routes to China" dated 14 September 1944.
"Anti-Semitism as a Weapon of Axis Political
Warfare in Latin America" dated 15 August 1944.
"The Greek Political Crisis" dated 4 December 1944.
I am also enclosing copy #9 of top secret
#3189 (In 795) of 9 January from our representative
in Bern, Switzerland, which I am asking Lt. Putzell to
discuss with you.
We will be pleased to send you other material
which may be of interest to you as it becomes available.
Sincerely yours,
Charles S. Chiston
Charles S. Cheston
Acting Director
Enclosures
SECRET
35
FOREIGN ECONOMIC ADMINISTRATION
Washington, D. C.
January 11, 1945
MEMORANDUM
To:
The Honorable Henry Morgenthau
From:
Herbert Fillett
Director of Rese rch and Reports
Office of General Counsel
Subject: Executive Reports on Lend-Lease Operations
Transmitted herewith, for your information,
are copies of Executive Reports 1, 2 and 3, on
lend-lease operations, as'of November 30, 1944.
CONFIDENTIAL
Lend-Lease Operations
Executive Report No. I
ALLOCATIONS, OBLIGATIONS AND EXPENDITURES
LEND-LEASE FUNDS APPROPRIATED TO THE PRESIDENT
Report as of November 30. 1944
(Thousands of Dollars)
Appropriation Category
Adjusted
Appropriations
Cumulative to November 30, 1944
Allocations
Obligations
Expenditures
Ordnance and Ordnance Stores
$1,467,306
$1,462,836
$1,390,363
$1,294,473
Aircraft and Aero. Material
2,474,625
2,471,048
2,370,569
2,198,805
739,273
706,762
672,688
643,497
4,121,703
3,837,667
3,636,757
3,401,398
304,288
300,562
268,946
267,810
1,087,688
1,086,909
1,056,271
1,012,722
16,690,589
15,281,796
12,562,685
10,679,801
Servicing, Repair of Ships, etc.
790,818
757,467
629,606
620,984
Services and Expenses
500,000
415,818
328,938
293,046
33,208
30,549
29,508
29,397
28,209,498
26,351,414
22,946,331
20,441,933
Tanks and Other Vehicles
Watercraft
Misc. Military Equipment
Production Facilities
Agric. and Indust. Commodities
Administrative Expenses
Total
Procuring Agency
Cumulative to November 30, 1944
Allocations
Obligations
Expenditures
War Department
$5,365,766
$5,129,937
$4,893,383
Navy Department
3,990,903
3,201,929
2,862,834
Maritime Commission and War Shipping Admin.
3,868,976
3,590,287
3,482,256
Treasury Department
5,899,471
4,488,780
3,794,598
Department of Agriculture
7,199,869
6,511,463
5,388,097
26,429
23,935
20,765
26,351,414
22,946,331
20,441,933
Other
Total
Foreign Economic Administration
Office of General Counsel
Division of Research and Reports
January 5, 1945
0-2038 Pt of 3
37
CONFIDENTIAL
Lend-Lease Operations
Executive Report No. 3
LEND-LEASE GOODS TRANSFERRED
Report as of November 30, 1944
(Thousands of Dollars)
Cumulative to November 30, 1944
Br. Empire
Ordnance (Excl. Ammunition)
U.S.S.R.
China
Other
Total
$834,744
$15,740
$293,816
$26,413
$1,170,713
Ammunition and Components
1,814,986
22,204
454,900
34,292
2,326,382
Aircraft
2,950,509
90,487
951,465
138,963
4,131,424
Aircraft Engines, Parts, etc.
1,597,400
27,573
301,083
47,640
1,973,696
Tanks and Parts
2,592,331
941
554,897
41,553
3,189,722
728,923
26,501
821,417
23,552
1,600,393
Watercraft and Parts
2,667,761
447
280,205
185,894
3,134,307
Foods
2,791,975
52
1,215,122
36,755
4,043,904
Other Agric. Products
639,993
48
15,970
131
656,142
Machinery
673,809
6,824
878,913
14,552
1,574,098
Metals
1,028,124
12,070
517,589
49,003
1,606,786
Petroleum Products
1,458,366
2,602
67,799
3,193
1,531,960
2,308,291
13,954
804,220
90,239
3,216,704
22,087,212
219,443
7,157,396
692,180
30,156,231
Motor Vehicles and Parts
Miscellaneous Materials
and Manufactures
Total
Foreign Economic Administration
office of General Counsel
Division of Research and Reports
January 5, 1945
PS sobe-final
38
FOR VICTORY
OFFICE
BUY
TREASURY DEPARTMENT
UNITED
STATES
WASHINGTON 25
AND
STAMPS
THE
SECRETARD
To:
Secretary Morgenthau
From:
J. W. Pehle
Attached is a proposed reply to the President's
memorandum of January 5 on Russian requirements.
The President's memorandum is almost identical
with a memorandum received from him on February 14,
1944, dealing with the Fourth Protocol.
Ins
39
JAN 11 1945
My dear Mr. President:
I have your memorandum of January 5, 1945,
requesting that the U.S.S.R. be provided the maximum
amount of supplies which can be delivered to her
ports, and emphasizing the importance of meeting
Russian needs.
This Department will continue to exert
every effort to meet Russian requirements as they
are made known to us. I am happy to report that
the Procurement Division is obtaining production
and delivery of Russian requirements at rates
substantially in excess of those fixed by the
current protocols.
Faithfully,
(Signed) H. Morgenthau, Jr.
The President,
The White House.
SECRET
JWPehle:dg 1/9/45
Jan. 8, 1945
Copies to:
O
D. W. Bell
Harry White
John Pehle
Ansel Luxford
Josiah DuBois
Mr. Pehle to please prepare a reply.
40
THE WHITE HOUSE
WASHINGTON
January 5, 1945
MEMORANDUM FOR THE SECRETARY OF THE TREASURY:
Russia continues to be a major factor in achieving
the defent of Germany. We must, therefore, continue to support
the U.S.S.K. by providing the maximum amount of supplies which
can be delivered to It r ports. I consider this a matter of
utmost importance, second only to the operational requirements
in the Pacific and the Atlantic.
The U.S.S.R. has been requested to state requirements
for a Fifth Protocol, to cover the period from July 1, 1945 to
June 30, 1946. It is desired that, within the limitations of
available resources, every effort be made to meet these require-
ments.
Pending the formulation of the Fifth Protecol, it is
my desire that every effort be made to continue a full and uninterrupted flow of supplies to the U.S.S.R.
Moinmelt
CONFIDENTIAL
PORTICTORY
BUY
WAR DEPARTMENT
OFFICE OF THE UNDER SECRETARY
copy to white
WASHINGTON 25, D.C.
January 11, 1945
Honorable Henry J. Morgenthau, Jr.,
Secretary of the Treasury,
Washington, D. C.
Dear Mr. Secretary:
(bask
Reference is made to your letter of December 15, 1944 wherein
you requested the cooperation of the War Department in helping to
clear up certain claims by the British for payment on account of
the transfer to the United States, in 1941 and 1942, of certain
British contracts. with Savage Arms Corporation, The Tennessee
Powder Company, and the Lima Locomotive Works.
I have been advised by the Office of the Fiscal Director,
the Office of the Director of Materiel, and the Office of the
Chief of Ordnance as follows:
1. Savage Arms Corporation ($684,000). The Comptroller General in decision B-23634, dated November 11,
1944 (Letter to the Secretary of War), and decision
B-23634, dated December 12, 1944 (Letter to Colonel D. T.
Nelson, Finance Department, U. S. Army), advised that
credit had been allowed in the Disbursing Officer's
account for the payments made on vouchers Nos. 832,
DA-6435, and DA-9595, June, November, and December 1942,
respectively, accounts of 1. S. Werman, covering reimburse-
ment to the Savage Arms Corporation.
2. Tennessee Powder Company ($292,000). This matter
is presently being considered and reviewed by the Legal
Branch, Office of the Director of Materiel, Army Service
Forces. Payment procedure is under discussion with the
British (Mr. H. J. Devaud, Deputy Director of Finance,
British Purchasing Commission), with the latter considering a proposed settlement under Section 17(a) of the
Contract Settlement Act of 1944.
3. Lima Locomotive Works ($100,000 and $237,000).
The Office of the Chief of Ordnance has advised that an
CONFIDENTIAL
CONFIDENTIAL
investigati on is being made with a view to appraising
the total claim and the possibility of settling the same
under the contract, or, if that is not possible, under
Section 17(a) of the Contract Settlement Act of 1944.
With respect to items 2 and 3 above, I shall advise you
further upon receipt of the information now being collected.
Sincerely yours,
RLPPTH
ROBERT P. PATTERSON,
Under Secretary of War.
CONFIDENTIAL
-2-
43
2/2
PORTICTORY
BUY
WAR DEPARTMENT
44 L
WAR
OFFICE OF THE UNDER SECRETARY
WASHINGTON 25. D.C.
January 11, 1945
careon copy to
m white
1/12/45
Honorable Henry Morgenthau, Jr.,
Secretary of the Treasury,
Washington, D. C.
Dear Mr. Secretary:
(Book 808, p.132)
Ag requested in your letter of January 8; I am
having an investigati on made of the matter involving
British-owned capital facilities, referred to in your letter.
As soon as the results of the investigation are
available and a conclusion reached, I shall advise you.
Sincerely yours,
RLPP##
ROBERT P. PATTERSON,
Under Secretary of War.
W
à
45
FEDERAL RESERVE BANK
OF NEW YORK
January 11, 1945.
CONFIDENTIAL
Dear Mr. Secretary:
Attention: Mr. H. D. White
I am enclosing our compilation for the week ended
January 3, 1945, showing dollar disbursements out of the British
Empire and French accounts at this bank and the means by which these
expenditures were financed.
Very truly yours,
/s/
H. L. Sanford,
H. L. Sanford,
Assistant Vice President.
The Honorable Henry Morgenthau, Jr.,
Secretary of the Treasury,
Washington 25, D.C.
Enclosures
COPY
ANALTSIS OF BRITISH AND FRENCH ACCOUNTS
(In Millions of Dollars)
Third
Fourth
Firth
Canadian
Account
20.9
603.6
Other
Total
Debita
1,166.7
Credits
1,828.2
2,189.8
1,361.5
1,072.3
1,793.2
2,203.0
1,235.6
1,792.2
3.4
607-4
904.8
764.0
312.7
7.7
170.4
1.197.7
300.4
61.4
223.1
280.9
835.9
153.0
19.9
80.7
21.0
50.4
124.9
7.4
99.3
56.5
54.7
74.2
45.4
2.9
25.9
92.1
Transfers
of
Securities
order
Australian
Net Incr. (*)
Other
Credits
or Decr e
in S Funds
Total
Debita
Total
Credits
Gold
(Official)
1,356.1
52,0
3.9
1,193.7
274.0
16.7
13.2
38.9
8.8
21.8
5.5
57.4
155.1
1,276.8
+125.9
18.5
916.7
308.3
10.3
4.4
1.0
253.0
1,116.6
+171.9
0.5
-
Second
the
Debita
Santa
1,369.6
-
(a)
(d)
416.2
705.4
35.0
(e)
866.3 (f)
Net Incr. (+)
or Decr. (-)
in $ Funds
(e)
(d)
+ 299.0
1,095.3(f
- 30.1
- 14.1
-
War Years (
First
Official
+
Expendi-
Total
CREDITS
Transfer to
Gov't
Confidential
BANK OF FRANCE (1)
BANK OF ENGLAND ( BRITISH GOVERNMENT
DEBITS
PERIOD
Week Ended
Strictly
Jan. 3. .945
-
9.3
-
-
1944
-
-
55.5
94.5
53.7
1.0
91.1
73.2
17.9
6.2
21.3
-
-
1.0
1.0
-
-
-
-
-
-
-
November
December
-
-
CHANGING
-
September
1945
5.9
35.00
3.0
tures
Outbreak
of
29.6
x
*
Chronel June 19. 1940 $27.6 million
(state
June 20g 1940 to March 12g 29423 $54.9 million
March
32,
19(3)
21.8
Million
-
-
6.7
-
-
44.9
-
6.2
2.5
-
1.4
38.0
4.4
-
49.1
36.8
50.1
0.5
A.O
44.9
0.4
0.1
5.9
2.2
1.8
4.5
2.7
29.6
8.4
10.0(k)
0.5
+
England
5.6
-
Sincland
Incland
-
23.1
8.1
8.1
Wookly
France
27.5
-
Dec. 20, 1944
Dec. 27, 1944
Jan. 3. 1945
-
Dann 13. 1944
-
--
9.5
See attached sheet for footnotes,
(a) Includes payments for account of British Ministry of Supply Mission, British Supply Board, Ministry of Supply Timber
Control, and Ministry of Shipping.
(b) Estimated figures based on transfers from the New York Agency of the Bank of Montreal, which apparently represent the
proceeds of official British sales of American securities, including those effected through direct negotiation. In addition
to the official welling, substantial liquidation of securities for private British account occurred, particularly during the
early months of the war, although the receipt of the proceeds at this Bank cannot be identified with any accuracy. According
to data supplied by the British Treasury and released by Secretary Liorgenthau, total official and private British liquidation
of our accuration through December, 1940 amounted to $334 million.
(d)
Includes about Ges million received during October, 1939 from the accounts of British authorizod banks with New York banks,
prominably reflecting the requisitioning of privato dollar balances. Other largo transfers from such accounts since October,
1939 apparently reprosont current acquisitions of procoeds of exports from the storling area and other accruing dollar
repeipts. Soe (k) below.
(a) Reflects not chango in all dollar holdings payable on domand or maturing in one year.
(a) For broakdown by typos of debits and credits sco tabulations prior to March 10, 1943.
(f) Adjustod to eliminate the effect of $20 million paid out on June 26, 1940 and returned the following day.
(g) For monthly breakdown BOO tabulations prior to April 23, 1941; October 8, 1941; October 14, 1942; Soptembor 29, 1943; September 6,
(b) Includes $ 18.5million apparently reprosenting current and accumulated dollar proceeds of sterling area services and
merchandise exports. and $ 8.0 million transferred from account in this market of orwagian shipping and Trave mission
(1) Transactions for account of Chisso Central .'Outro-Ler included for first time in work ended Decamber 6, 1944.
(j) Includes $14.5 million and $ 8.0 million transferred to accounts at this bank of Commonw3b.th Bank of australia a Svoriges
Riksbank, respectively.
(k) Transferre- to official French account in this market.
-
Strietly
ARALESTS OF CINAMAN
(In Millions of -
First
323.0
Second
460.4
Official
British
Others
WC
Debite
460.7
Third
525.8
723.6
Fifth
849.3
1.0
74.5
0.1
October
-
0.3
AREA
525.5
723.6
564
958.
848.3
958.5
74.4
91.8
39.8
38.8
Total
Credits
MAY
16.6
Fourth
1944
of
Gold
Sales
Transfers official
At
203
246.2
1
198.6
747
47.1
38.1
170ml
61.6
EXT
-
a
50m
53.7
2.9
For French
A/C
,
Net Temp
(c) -
Other
(-
Credits
..
5.51
x
X
123.9
+
.
1.
16.0
-
THE
IF
742,3
239.2
-
020.3
-
The
17.36
SO
-
14.9
L
.
AREDTS
Proceeds
to
Total
-
a
12
Official
Other
M
in
16.9
STATE
97.0
155.1
298.6
259.0
5.8.
10
-M
3
of
Total
to
is 31
55.5% 12.2
19.8 1222
41.91 200.4
AL
45.61
48
MI
UNIT
1.0
2.1
Gold
Sales
TO
62.9
19.2
-
War Years (a)
Total
Debits
OTTER
Proceeds
to
PERIOD
NUMBER
OF
DEBITS
Confidential
Work Ended Jane 3. 1945
Credit infinis (a)
611 4.9
18.3 + 90
05.11 S.O
200 - 3.4
2014 - 10.9
-
9.3
2.3
=
10
SA
Other
Net Inor
(+) or
Dear. (-)
-
2.
5.8
1945
January
February
arch
April
May
type
August
Week Ended
Dec. A33 1944
Dec. 20. .244
Dec. 27.004
Jan. 1945
07
14.93
3.0
14.5
1475
the
4.7
14.9
40
21.85
Average Weekly expenditures for
First year of war
Second year of war
Third year of war
Fourth year of war
Fifth year of war
Sixth year of war (through) Jan. 3, 1945)
6.2 million.
8.9 million.
10.1 million.
13.9 million.
16.1 willion.
8.2 million.
0.3
0.9
3.0
3.9
5.4
C
>
- 10%
6.1
ITO
1.0
1.1
253
2.5
1701
0.3
0.3
0.3M
17.7
(a) For monthly breakdown 800 tabulations prior to: April 23, 1941; October 8, 1941;
October 14, 1942; September 29, 1943; September 6g 1944.
(b) Reflects changes in all dollar holdings payable on demand or maturing in one your
(a) Done not reflect transactions in short term U. S. securities,
(a) Includes $ 19.2 millim deposited by War Supplies, Ltd.
and $ 1.5
william received from New York accounts of Canadian chartered banks
50
CABLE TO WINANT, LONDON, FOR MANN FROM WAR REFUGEE BOARD
Reference your 11461 of December 27. Department, War
Refugee Board and Treasury all approve proposed methods of
transfer for I.G.C. expenditures for Rumania, North Italy
and Hungary in view of the urgency of relief needs in those
areas.
THIS IS WRB LONDON CABLE NO. 36.
11:00 a.m.
January 11, 1945
0
51
MB
Dis tribution of true
reading only by special
arrangement. (SECRET w)
January 11, 1945
9 p.m.
AMEMBASSY
LONDON
238
The following for Mann is WRB 36.
Reference your 11461 of December 27. Department,
War Refugee Board and Treasury all approve proposed
methods of transfer for I.G.C. expenditures for Rumania,
North Italy and Hungary in view of the urgency of relief
needs in those areas.
GREW
(Acting)
(GHN)
WRB:ISN:ED
1/11/45
BC
SE
SHP
52
MH-1710
PLAIN
London
Dated January 11, 1945
Rec'd 12:45 p.m.
Secretary of State,
Washington.
365, eleventh
TO PEHLE FROM MANN
Please deliver the following message from
Joseph Schwarts to Moses Leavitt of the JDC.
Have been discussing with Passman setup of
Middle East Regional Office to control relief
activities Balkans and purchases and shipments
supplies to Eastern Europe through Tehran have
agreed setup JDC Regional Office in Palestine
for those purposes with Passman in charge as
Regional Director with Magnes Committee acting
in advisory capacity to him. Passman will be
directly responsible to me and it is understood
that no financial commitments and no decisions
regarding basic policy will be made by regional
office without prior clearance either with me
or when I an not available directly with you.
Passman expects leave next days and hopes proceed
soonest to Sofia and Bucharest to establish personal
contacts with our committees those countries for
proper organisation relief programmes. Trobe also
leaving Thursday on route Istanbul and Balkans and
important that Fishmohn proceed at once consider
this arrangement satisfactory from every point
of view and believe it will facilitate our work
for Balkan area. Passman indicates that he will
be able to give us at least twelve months
service this capacity.
WINANT
JMB
LFG-1930
London
reading only by special
Dated January 11, 1945
Distribution of true
arrangement. (SECRET (7)
Rod'd 11:20 p.m.
Secretary of State,
Washington.
368, January 11, 4 p.m.
FOR PEHLE FROM MANN
Please deliver the following message to Moses
Leavitt American Joint Distribution Committee from
Josoph Schwartz.
Your cable regarding parcel service and relief
liberated Poland has been discussed with Passman and
also moetings with Polish authorities here have been
held regarding situation. Polish authorities willing
continue help us with parcel service and bulk roliof not
imposing any conditions even if some confined only Jews.
They hope, however, WG will endeavour and succeed obtain
permission Russian Government to help also non-Jewish
refugees Asiatic Russia liberated Poland in which event
they are prepared to assist us on largo scale. No attempt
made by Passman to bring pressure in his negotiations
Russian authorities Tehran but simply indicated that
reasons no longer exist for our not sending parcels
to non-Jewish Polish nationals. Passman believes
also that if WO have representative in Poland we may
be able to bring about change in present parcel service
by extending it to all refugees and relieve us of paymont Russian duty. Regarding purchase thirty thousand
pairs of shoes we propose sending ten thousand to
Bulgaria and twonty thousand to Rumania. As regards
cost of shoes et cetera, Passman will inform us from
Jorusalom.
WINANT
EMB
Miss Chauncoy (for the Sec'ty) Ackermann, Akzin, Cohn, Drury,
DuBois, Gaston, Hodel, Marks, McCormack, Pehlo, Files
53
54
MF-1964
Distribution of true
reading only by special
arrangement (SECRET W)
London
Dated January 11, 1945
Rec'd 2:20 a.m., 12th
Secretary of State
Washington
377, January 11, 7 p.m.
FOR WRB FOR PEHLE FROM MANN
Please deliver a paraphrase of the following message
to Susanne LaFollette Labor Leaguo Human Rights from
Jacobus Oldenbrook.
"Just received your letter December 6. Full in-
formation has been supplied to Mann, War Refugee Board
representative London and to McClelland, Born. Have
spoken also to Irving Abramson during his stay London.
I have given all nocessary assurances and awaiting trans-
for 90 or 165,000 to Netherlands Minister Bern. You will
understand that Clomont and Krier would not stay Switzer-
land after liberation their country. Money had not yet
reached Switzerland when they left on October 13. Because
of long delay in transferring money we were and are without trustees in Switzerland. Request therefore you agree
our using intervention Nothorlands Government for transfer to Notherlands occupied territory $75,000 as already
done in respect $90,000 in October. Your gonerous offer
for 150,000 for projects in liberated territory very
much appreciated. The matter is being takon up with
trade unionists in liberated parts and projects and
names trustees will be submitted to you shortly. End
Message.
issurances referred to are those mentioned in
my 11471, December 27. I have never told Oldenbrook
outright and I considered his assurances insufficient
but have told him that I would transmit to Washington
such assurances as he had been able to give me and
pointod out that such might not be considered sufficient.
He has promised to put me in touch with Burgher, Dutch
Minister for Homo Affairs who is still in liberated part
Holland
55
-2- #377, January 11, 7 p.m., from London
Holland but expected back any day now. Abramson when
hero agreed with me that assurances received from
Oldenbroek were not sufficient. Board may care to
discuss matter with Abramson who left London January 1.
VINANT
EH
Miss Chauncey (for the Sec'y) Ackormann, Akzin, Drury, Cohn,
DuBois, Gaston, Hodel, Marks, McCormack, Pohle, Files
.
56
CABLE TO AMERICAN EMBASSY, PARIS, FROM WAR REFUGEE BOARD.
Please deliver following message to Joseph Schwartz from
M. A. Leavitt of American Jewish Joint Distribution Committee:
QUOTE ACCORDING YOUR REQUEST CHASE CABLING INSTRUCTIONS
PARIS BRANCH REFERENCE SIGNATURES OUR ACCOUNT. DOES THIS
REPLACE CREDIT LYONNAIS ACCOUNT? ADVISE BANKING INSTRUCTIONS
FUTURE REMITTANCES. ARRANGED PAYMENT OUR ACCOUNT CREDIT LYONNAIS
FRANCS 20 MILLION BY UNIVERSAL INTERNATIONAL FILMS WHICH PLEASE
HOLD PENDING FUTURE INSTRUCTIONS FROM US. ADVISE WHEN RECEIVED.
UNQUOTE
11,00 a.m.
January 11, 1945
57
PARAPHRASE OF TELEGRAM RECEIVED
FROM:
AMERICAN CONSULATE GENERAL, Jerusalem
TO:
Secretary of State, Washington
DATED:
January 11, 1945
NUMBER:
10
SECRET
The Chief Secretary informed me, during a discussion
of immigration policy, that conditions now appear easier than
they were some weeks ago when flood of illegal immigrants
was anticipated. The Chief Secretary stated that the Government
of Turkey had been informed of withdrawal of blanket permission
for Jews escaping from Balkans into Turkey to enter Palestine
and now admission will be granted only to those coming within
the allotted quotas. Therefore, Turkey will need entry certificates
prior to issuing transit visas he stated thus controlling at
the source the immigration.
Recently some six hundred in excess of the quota were
stopped at frontier of Bulgaria, however arrangements were made
whereby they would be charged to October when only a very
small number came for entrance. Further to the quota trouble
they are said to have had difficulty with the Soviet autho (#)
umania and some were children born in Transnistria to whose
emigration was objedted to by Soviet authorities. Finally
all difficulties were solved and today they are due in Palestine.
PINKERTON
DC/L:MLG
1-13-45
Note: (#) Apparent omission correction to follow.
Miss Chauncey (for the Sec'y) Ackermann, Akzin, Cohn, Drury, DuBois,
Gaston, Hodel, Marks, McCormack, Puhle, Files
58
CORRECTION OF
PARAPHRASE OF TELEGRAM RECEIVED
FROM:
AMERICAN CONSULATE GENERAL, Jerusalem
TO:
Secretary of State, Washington
DATED:
January 11, 1945
NUMBER: 10
SECRET
In the second paragraph, line five, of the above message
delete autho(#) umania" and insert #authorities as they originated
in Rumania". The line should then read "with the Soviet authorities
as they originated in Rumania and some were children" etc.
PINKERTON
DC/L:EMB
1-24-45
O
59
CABLE TO AMERICAN LEGATION, LISBON, FROM WAR REFUGEE BOARD.
Please deliver following message to Robert Pilpel from M. A.
Leavitt of American Jewish Joint Distribution Committee:
QUOTE ADVISE SCHWARTZ REMITTED $500,000 SALY MAYER JANUARY
AND EXPECT REMIT BALANCE $500,000 ABOUT JANUARY 18. ALSO REMITTED
DECEMBER TOTAL $700,000 INCLUDING ONETIME GRANT $400,000. ADVISE
SCHWARTZ HE MUST CONSIDER SUBSTANTIAL BUDGETARY REDUCTION AFTER
FEBRUARY VIEW EXTRAORDINARY REQUIREMENTS WHICH HAVE ARISEN. WE
PARTICIPATING LARGE NATIONWIDE USED CLOTHING DRIVE WHICH WILL
TAKE PLACE CONJUNCTION WITH UNRRA AND EXPECT JDC WILL RECEIVE
SUPPLIES FOR AREAS NOT COVERED BY UNRRA DISTRIBUTION. ALL
AGENCIES COOPERATING THIS LARGE ACTIVITY AND NO SECTARIAN EFFORTS
POSSIBLE AT LEAST DURING FIRST SIX MONTHS THIS YEAR. UNQUOTE
THIS IS WRB LISBON BABLE NO. 125.
11:30 a.m.
January 11, 1945
60
CABLE TO AMERICAN LEGATION, LISBON, FROM MAR REFUGEE BOARD
Please deliver following message to Robert Pilpel from M. A. Leavitt
of American Jewish Joint Distribution Committee:
QUOTE YOUR 144 APPROVE EXPENDITURE $10,000 FOR MEDICINES PURCHASABLE
SWEDEN TO INCLUDE FOLLOWING: SULFADIAZINE STERILIZED POWDER IN AMPULES,
DIGITAN 1-CAT UNIT, MORPHINE HYDROCHLORIDE ONEQUARTER GRAIN, ANTI-
DYSENTERY SERUM 20,000 SHIGA PER VIALS, ASPIRIN 5 GRAIN, ZINC OXIDE,
PETROLATUM, SODIUM SALICYLATE 5 GRAIN, BELLADONNA, NUX VOMICA, CASTOR
OIL, GLYCERIN, LYSOL, BISMUTH SUENITRATE, BORIC ACID, POTASSIUM
PERMANGANATE, SODIUM BROMIDE, MAGNESIUM SULPHATE, ANTI-SCABIES OINTMENT,
GREENSOAP, BICHLORIDE OF MERCURY 5 GRAIN AMPULES, TINCTURE IODINE SOLUTION,
HYDROGEN PEROXIDE, CAMPHOR 20.3% GRAIN PER cc, COTTON GAUZE BANDAGES.
QUANTITIES DEPEND ON COST AND AMOUNT PURCHASABLE WITH ABOVE SUM SUGGEST
LAURA DISCUSS THIS WITH PHYSICIANS STOCKHOLM. UNQUOTE
THIS IS WRB LISBON CABLE NO. 126.
11:30 a.m.
January 11, 1945
61
CABLE TO AMERICAN LEGATION LISBON FROM WAR REFUGEE BOARD.
Please deliver following message to Robert Pilpel from M. A. Leavitt
of American Jewish Joint Distribution Committee:
QUOTE BALTIC JEWISH RELIEF COMMITTEE, SVEAVAEGEN 32, STOCKHOLM
CONSISTING LEO DAPIDUS, MARCUS KAPLAN, HILEL STORCH AND OTHERS
CABLED WORLD JEWISH CONGRESS THAT THEY HAVE POSSIBILITIES RESCUE
JEWS FROM LATVIA AND REQUIRE $10,000. PLEASE ASK MARGOLIS DISCUSS
THEIR PLANS PROJECTS AND IF FEASIBLE WE PREPARED PARTICIPATE AND
COOPERATE. FROM OUR INFORMATION SUCH RESCUE ACTIVITIES NOW ALMOST
IMPOSSIBLE AND WE MUST BE ASSURED THAT ALL PLANS CAREFULLY WORKED
OUT AND PRACTICAL. YOUR 260 COST PER PARCEL SEEMS VERY HIGH FOR
CONTENTS AND WONDER WHETHER SWITZERLAND PARCEL SERVICE NOT MORE
DESIRABLE. UNQUOTE
THIS IS WRB LISBON CABLE NO. 127.
11:30 a.m.
January 11, 1945
62
EJO-1747
PLAIN
Lisbon
Dated January 11, 1945
Rec'd 2 p.m.
Secretary of State
Washington
65, Eleventh
WRB 290 JDC 151 FOR LEAVITT FROM PILPEL
Further our 150 Resnik expects authorisation
payment balance due Palestine refugees amounting
approximately 4 million lire thus making total
approximately 12-1/2 million lire available Italy
this connection. Pursuant request Allied Commission
Reanik agreed send Magnes unimportant amount miscel-
laneous currency excepting sterling dollars lire
which Palestine refugees deposited Italy.
NORWED
WJS
63
EK-1917
Stockholm
reading only by special
Dated January 11, 1945
Distribution of true
arrangement. (SECRET v)
Rec'd 10:34 p.m.
Secretary of State,
Washington.
128, January 11, 7 p.m.
FROM MISS MARGOLIS TO MOSES LEAVITT.
Rabbis Wolb (#) acobson called to see me this p.m.
regarding Jewish Rabbi Nical group in Shanghai.
Information they gave is somewhat at variance with
that in my 100 January 9, 3 p.m. They claim they
have talked with Japanese Minister here who said
Japanese interpose no objection to Rabbi Nical group
leaving Shanghai provided they can be guaranteed
reception in some neutral country. Only practicable
way for them to got out is via Russianand Rabbis want
help of USA to induce Moscow to give transit visas.
They also wish my intervention with Swodish Government
to grant entry permits into Swedon and for me to
certify to Swodish Government that Vaadhahazalah
Emergency Committee is office officially acknowledged
by United States Government.
I informed Rabbis that I sympathized with their
desires but that I could not take action in this
matter toward Swedish Government without instructions.
I said I would report their request both with respect
to Swedon and Russia.
I questioned Rabbis closely as to their reasons
for desiring special efforts made for this particular
group of peoplo. From their admissions it is quite
clear Rabbi Nical group is under no greater difficultios
nor in greator jeopardy than any other group of
foreigners in Japanese territory. What Rabbis desperately
want to do is save this group because they are Rabbi
Nical teachers and scholars, claiming it is only
intellectual group existing capable of carrying on
traditions of Judaism. They want to save group as
such because it can not carry on its work in Shanghai,
not because it is in special poril.
Department
64
-2- #128, January 11, 7 p.m., from Stockholm.
Department doubtless has much fuller infomration
re the situation of this Rabbi Nical group than I and
I would appreciate Department's comments and
instructions as to attitude to be taken by Logation
in this matter.
JOHNSON
JMS
(*) apparent omission. Repotition requested.
Miss Chauncey (for the Sec'y) Ackermann, Akzin, Cohn, Drury,
DuBois, Gaston, Hodel, Marks, McCormack, Pehle, Files
o
65
CABLE TO AMERICAN LEGATION, BERN, FOR MC CLELLAND, FROM WAR REFUGEE BOARD.
Please deliver following message to Isaac Sternbuch, 3 Teufener Strasse,
St. Gall, from Rabbi Abraham Kalmanowitz of Vaad Hahatgala Emergency Committee:
QUOTE REPORTED RABBI NAFTOLI WEISS OF BILKI RENOWNED SPINKER
REBI DEPORTED TO LABOR CAMP NEAR BERLIN. ENDEAVOR CONTACT DO
EVERYTHING RESCUE. REPORT DEVELOPMENTS. UNQUOTE
THIS IS WRB BERN CABLE NO. 357.
11:00 a.m.
January 11, 1945
O
68
MS-1916
This telegram must be
paraphrased before being
communicated to anyone
other than a Government
Ankara
agency. (RESTRICTED)
Red'd 11:15 p.m.
Dated January 11, 1945
Secretary of State,
Washington.
51, January 11, 11 p.m.
FROM KATZKI TO PEHLE, WRB.
Ankara's number 5 (confidential reference is made
to the Embassy's telegram number 2323 and 31 Ankara's
202 and 2). At the present time it appears that the
activities of the War Refugee Board in Turkey during
the immediate future will become more limited in scope.
Pending receipt of information regarding the Board's
plans it is my opinion that our office will not require
the services of two secretaries. Miss Bixler will be in
a position to accept offers of employment which have been
made to her by other official American agencies in Turkey
upon receipt from us of a certificate of availability in
accordance with War Manpower Commission regulations.
Under these circumstances provided no complications arise
in the future with the Comptroller of the Currency re-
sulting from a possible extended stay in Europe by Mrs.
Henderson in connection with Board matters and dependent
upon the Board's plans and programs you might wish to
consider whether or not Miss Bixler shall be released.
As an alternative Mrs. Henderson or Miss Bixler both of
whom are of value to the Board in its overseas service
might be transferred to another station in Europe. On
the other hand the Board might desire to have someone in
Turkey to handle details connected with Board affairs
which might arise should I proceed to Bulgaria or
Rumania with secretarial assistance. I would then
recommend stationing Mrs. Henderson in Turkey and I would
take Miss Rixler with me.
Please advise telegraphically.
HTM
STEINHARDT
67
NOT TO BE RE-TRANSMITTED
COPY NO.
SECRET
OPTEL No. 13
Information received up to 10 a.m., 11th January,
1945.
MILITARY
WESTERN FRONT. In the South, North of Colmar, regent
1.
enemy penetration has caused further slight withdrawals by French
forces. Enemy salient Bitche area still contained and slightly
reduced. Southern Flank Ardennes salient: four-divisional attack
east of Bastogne made limited progress against heavy opposition.
Northern Flank Salient: enemy holding from Tailles
to Bovigny (N. of Houffalize) very strongly and little progress
made this area. Further West enemy resistance less severe and
U.S. troops have captured Laroche in heavy fighting. Stil
further west of this enemy resistance very slight and chief
obstacles, snow mines and booby traps. In this latter Area
British troops have reached Hallbux, Harsin, Nassogne and Awenne.
BURMA In Kaladan Valley Japanese strongly resisting
southward advance of our troops while S.E. of Chin Hills enemy
active in area Tilin. East of Chindwin enemy reported still
active in area Budalin.
2.
Road Ye-U-Shwebo now clear of enemy and village
eight miles west of latter town captured but further advance
contested.
SOUTHERN CHINA. Along railway N.W. of Liuchow
Japanese have given up Hochih and Szeen.
3.
AIR
WESTERN FRONT. 10th. Adverse weather continued.
912 escorted U.S. heavy bombers out of 1119 despatched dropped
1962 tons on communication targets and airfields between Cologne
4.
0
and Karlsruhe, mainly with unobserved results. 51 heavy bombers
and 11 fighters outstanding though fighter opposition very small.
332 fighters (1 missing) operated central sector while 334 (5
missing) operating Southern sector destroyed 2 enemy aircraft
and 200 M.T. Beaufighters, Coastal Command, set fire 750 ton
vessel and minesweeper off Aalesund,
Night 10th/11th. 55 Mosquitoes despatched, 50
attacking Hanover.
MEDITERRANEAN. 9th, Mitchells 81 and Baltimores
60 successfully attacked bridges Pc Valley and barracks Bologna
respectively, 732 fighters and fighter bombers (3 missing)
operated battle area.
5.
6o
BURMA. 8th. Liberators 68 attacked rail targets
Burma/Siam railway.
HOME SECURITY
7.
ROCKETS. Up to 7 a.m. 11th. Incidents reported 4.
68
January 12, 1945
9:30 a.m.
GROUP
Present:
Mr. D. W. Bell
Mr. Gaston
Mr. White
Mr. Haas
Mr. Luxford
Mr. DuBois
Mr. C. S. Bell
Mr. Pehle
Mr. Coyne
Mr. Lynch
Mr. Viner
Mr. Blough
Mrs. Klotz
O
H.M.JR: What is it now? How much? What percentage
is revenue now?
MR. D. W. BELL: About forty-six, I think.
MR. HAAS: Fifty.
H.M. JR: Wonderful. I said forty. He made the
statement that our revenue was less than the French.
MR. D. W. BELL: I don't know what the French is.
H.M.JR: He said three-quarters.
Wasn't Kaltenborn very unfriendly during the campaign
to me?
MR. D. W. BELL: I don't recall. He CO ented on
the political--
MR. GASTON: Kaltenborn is in an eclipse; people
don't pay so much attention to him.
69
-2H.M.JR: He offered to do an interview with me, and
I told him no soap.
I recommend Raymond Moley to those people interested
in Germany. He says, "Hitler's main argument, however,
is that if Germany is reduced to an agricultural state,
as suggested by the ansittart-Morgenthau idea, it will
starve. This is patently ridiculous, since Germany could
feed herself and do so with greater ease if the present
slave laborers are permitted to leave and other millions
of Germans are deported."
MR. PENLE: Is that Moley?
MR. GASTON: That's Moley who runs the barber college.
(Laughter)
H.M.JR: Barber college!
MR. D.W. BELL: Barber college!
O
H.K.JR: I thought we had a good break on the statement
that I think people of my generation should realize that
for the rest of their lives they will be paying high taxes.
I think we should. I don't know if you saw that, but it
was given very good play.
Now, there is a lot of stuff that is accumulating. I
hope not to bore you too much today, but at least you will
get the flavor of the Treasury.
MR. VINER: I don't get bored easily any more.
H.M.JR: Oh, I wanted War Bonds. I met Vice Admiral
Wilson Brown personally. He said the President went very
carefully through war bond citations, and liked them. He
thought they were good. Leave them alone. And in the
case of the Navy, similar citations--civilians and everybody must come to him for his personal O.K. So we are in
the clear, but in the case of the Navy doing similar stuff,
he said no citations shall be given to civilians in the
form of a letter unless he personally O.K.'s it. And it
was presented to him by the Navy, which I think is rather
nice.
70
-3MR. COYNE: That is very good.
H.M.JR: I thought so, because it was quite difficult
for us.
Now, I haven't got this in the right order here. The
multiple thing is the thing that will take the longest, I
am afraid, so I will do first this thing of this proposal
of the State Department to set up a committee of State,
Budget, and Treasury to pass on legislation.
Supposing I read O'Connell's memo to me. Is he
quite sick now?
MR. LYNCH: Yes, yes, he is.
H.M.JR: A cold?
O
MR. LYNCH: Cold in his throat, and yesterday his
ear bothered him, too.
H.M.JR: I will read this (Memorandum from Mr.
O'Connell to the Secretary dated January 11, 1945).p.350
"I have talked with Messrs. White, Luxford, and DuBois
about the proposed memorandum for the President, sent
you this morning by Dean Acheson, and it is the concensus
that you should not sign it, at least at this time.
"The people with whom I have discussed it are concerned
about the proposal on several grounds:
"(a) The creation of a 'Cabinet Legislative Committee'
which would 'consider initiating early in the session the
necessary action on the food and agricultural organization
and on the Bretton Woods proposals and the closely related
matters concerning the Export-Import Bank and the repeal of
the Johnson Act' would commit us to have the Bretton Woods
proposals considered along with these other matters, and
might make it much more difficult to get our legislation
through. Also, it would hardly seem practical or desirable
to have the Bretton Woods legislation handled by a Cabinet
committee. The Treasury has carried the ball this far and
can probably go it better alone from here on."
71
-4I wholly disagree with this.
"(B) The memorandum for the President proposes that
a message on 'Foreign Economic Policy' will be submitted
to the President sometime in January. with Mr. Acheson's
letter is enclosed a draft of message on this subject, and
the theory of it is also incompatible with our thinking
as to how the Bretton Woods proposal should be handled.
The proposed message also ties the Bretton Woods proposal
with the repeal of the Johnson Act and the Export-Import
Bank legislation, and also separates the Bank from the
Fund."
That, I didn't know.
"It had been our thought, and you will recall the
people from the Hill who attended your luncheon last
Monday were of the same mind, that a special message on
Bretton Woods should go down to the Hill as soon as our
O
legislation is ready. Whether we are successful in having
the President send a special message or not, we should
not be foreclosed at this stage in the game from attempting it (as we would be were you to sign the proposed
memorandum to the President).
"Under the circunstances, I think you should do no
more than acknowledge Acheson's letter and indicate that
pending further study you are unwilling to sign the memo
for the President.
"Attached is a letter to him along these lines."
Now I will tell you why I wholly disagree with you.
Acheson--not Acheson, but Stettinius is really trying to
do a job of coordination. And if we try to ride this
thing alone and say, "Kill this thing, " he will go ahead,
anyway. We will get boxed off, and I would rather take
my chance of sitting across the table from Stettinius and
the Director of the Budget, who is supposed to be the
control on this, anyway.
MR. D. W. BELL: Is this a separate committee from
the one you talked about the other day?
72
-5-
H.M.JR: Yes, this is just legislation affecting
State and Treasury.
MR. D. W. BELL: Well, I didn't see anything in it
which you need to be afraid of as the memo indicates, and
I don't see anything in it that hooked them.
Bretton Woods with all these other things, other
than Committee discussions--] thought it would still be
separate when it got on the Hill, and you could handle
it just as you contemplated handling it.
H.M.JR: I have to take the position--I am going to
take the position that I have confidence in him, he is
going to treat me fairly and squarely, and this thing of
everybody cutting everybody else's throat and the devil
get the hindmost--I am just not going to be a part of it.
Stettinius wants to play ball; be wants to coordinate
this thing. You take it right within the Treasury, the
O
Federal Reserve--one of the things I want to speak--
MR.D.W.BELL:The Federal Reserve wants to run this
bill on the Federal Reserve ratio ahead of Bretton Woods.
H.M.JR: We will come to that afterwards, but I
just feel very, very strongly that I am going to give
Stettinius an opportunity to cooperate up to the time I
find he doesn't. And this thing of playing a lone hand-and in the room it is very difficult to get to see the
President. Stettinius has five excuses to see him to
my one, but I don't want to bother the President. I can
run my own shop. If the President wants to run the State
Department-- he sees Stettinius almost every day. If
Stettinius wants to, he can get five appointments to my
one.
I haven't read this message; I don't know what is
in the message, but as to the committee, I am very sorry,
but T am in total disagreement with this memo, and with
whoever a grees with it.
o
MR. WHITE: Luxford and DuBois. The memo and the
statement are two separate things. They can be evaluated
73
6-
separately. Our thought was you would have to go along
with the committee in any case, but that it is desirable
to postpone it until you get it clear, which it has been
up to now, that the Bretton Woods thing would go forward,
plus the further fact, Mr. Secretary-- am not sure that
there is thorough appreciation of the necessity for pushing
through Bretton Woods and being able to, shall I say, maneuver
or to have complete charge of the way the arrangements are
there, because there isn't a complete identity of interest,
and the amount of difficulties that occur and that have
to be settled more quickly will be great, and if you can't
take a step without the committee functioning, you are
going to be handicapped. That may not be possible. It
may be the committee will confine itself to very large
issues which is all to the good. But we felt stronger
about the committee than the message.
H.M.JR: You feel more strongly about what?
MR. WHITE: About the message than the committee.
H.M.JR: I am not going to argue about the message
today, because I haven't read it. Just the committee.
MR. LUXFORD: You can say that the message and the
committee are separate. I don't believe that that is
true, in fact, that you would have to examine the message
and the proposal State was making for saying that the ExportImport Bank, the Johnson Act, the Trade Agreements Act,
and the Bretton Woods proposal were all integral parts of
a program which they were presenting in one message to
Congress. If you examine the legislation State has pre-
pared to take to the Hill, you will find their conception of
strategy is to lump the Export-Import Bank, the Johnson
Act, and Bretton Woods all in one bill.
Now, the point we are getting at is that that is their
evaluation of the priority of Bretton Woods, and it means
they are willing to go up there and sink or swim on the
whole lot, and to us that is wrong.
o
H.M.JR: I am very sorry, but I am not going to argue
much this morning. I am in total disagreement with you
74
7-
people, and I am not going to follow this cut-throat
business. I am very sorry, but I am going to make my
own decision. You fellows are going to have to learn
to cooperate with the State Department and take Stettinius'
offer of cooperation at face value until he proves differently.
MR. WHITE: I think you are putting this on the wrong
foot. Mr. Secretary, this is not Stettinius; it is Acheson
who is desirous of drafting that message and presenting
it in that way. They have been telling us that for many
months, and the degree of cooperation which is possible
which we are perfectly willing to--not only perfectly
willing, but desirous of doing-makes your comment with
respect to our desire to undertake cut-throat methods
quite aside from the point. We want to cooperate fully,
but we don't want to be jockeyed into that position, and
I think it would be unwise to be jockeyed into a position
where you have to follow a position which is very difficult
and will jeopardize operations on the Hill with respect
to Bretton Woods.
H.M.JR: You are willing to cooperate as long as you
can have your own way, is what you are saying.
MR. WHITE: We are willing to cooperate as long as
we think what they are doing is in the best interest of
what we are trying to do.
H.M.JR: They have four or five things, and when they
want legislation on the Hill affecting foreign affairs,
they should wrap it in a package and say that is what they
want, and they don't want something on Monday, Tuesday,
or Thursday.
MR. WHITE: It is possible to do that in another way
so you won't have to take on all the enemies of the five
bills in order to. get legislation. It has never been
done before, and J question whether it is good strategy.
That is something you will want to consider.
H.M.JR: Let me hear from two other people, Bell and
Gaston, before I make up my mind.
75
-8MR. D. W. BELL: I read over that proposal.
MR. GASTON: I haven't read it.
MR. D. W. BELL: I read that and also the message
last night. I feel that being strictly a legislative
committee and not interfering with the other committee--
if you had that, you ought to go along with it. I thought
the message was pretty good. There are some things you
might want to argue about, but I thought that could be
done in the committee. You could decide what you wanted
to put in the message by committee action, and you ought
to go along with the committee idea and decide in the
committee how this matter ought to be handled.
I agree with Harry that Bretton Woods should not be
put in the same bill with the Export-Import Bank and the
Johnson Act if you want to get it through, but I don't
see that this does that. It merely ties it up in the
O
message. You are not going to get the President to send
five or six messages to Congress on this; you will have
a hard time getting him to send one and I think it is
the proper--
H.M.JR: Excuse me. They go to the President and
say--Stettinius sees him five times to my once because
the President runs the State Department, and he goes and
says, "Mr. President, let me make this thing easy for
you. I sent him a draft of the message on Bretton Woods
and he sent it to Stettinius and said, what shall I do?"
And Stettinius im ediately, being sore, says, "We'll fix
that; wrap it up in a parcel. " This way I will sit across
a table myself with Stettinius and Harold Smith, and I
will have my day in court, which I don't have now. I
don't know how they make up the agenda from that legislation that goes to the Hill from over in Harold Smith's
shop--I have never been asked in my life; nobody in State
has ever asked me which legislation of theirs should
go now. He said, "I want to sit down and talk the
thing over with you," " and instead of being over here
in the corner--they will just outdo us. If I don't
do anything, they will do what is in this message.
76
-9-
If I have a chance to sit with Stettinius and Harold
Smith, I have my day in court to argue with those two
men. I don't now, and if I do this thing alone and
say I want a message either Harold Smith will kill it
or Stettinius, ten to one. He will kill it and you
will find yourselves in exactly the position you are
in in this message which I don't like, don't want,
and I will resist, but I will have a place to resist
it officially. Now I have no position. Stettinius'
argument with me on the other thing--he said, "Henry,
do you know Harold Ickes is making a fifty million
dollar loan to Mexico? Do you know what he is doing?"
I had to answer no. He sai d, "Well, you should."
MR. LUXFORD: And you would under either committee
that was set up. That's not a real argument on the
question.
O
H.M.JH: All I am saying is the committee, and I
will say this on the telephone when I send it over,
"I am for the ittee but before anything is set,
what is in the agenda, what goes in the message?"
I want to sit down with.the people over there, because
I am not in agreement and by agreeing to the committee
I don't agree to what is in the message, to make it
perfectly clear.
MR.
WHITE: I think your position is right. Our
position with respect to the committee had not been
that you shouldn't join. We merely wanted to stall.
If we have another week, the thing can be put in the
hopper, and we can get it. Not in the hopper but
the Senators can--
H.M.JR: But Harry, I am as guilty as you are up
to now because I had to work that way. I had no
other way, and you trained with me. That's how we
have had to work, and we had to fight and take our
chances and do it and we have done pretty well.
o
77
-10-
Now, this fellow seems to want to work, not as my
superior, not like Hull and have himself placed ahead
of the Speaker of the House as "Prime Minister of this
Administration" -he is willing to be sean to men Let's
give the fellow 8 break. That's all I am pleading for.
I don't agree with what is in the message but up to the
time the fellow doublecrosses me--and I don't want to
stail because he is smart--and the man is going away.
I spoke to Grew and Grew said that he wanted this--
I
will call Grew yself and say I don't agree to this.
Mr. Stettinius asked me to work with Grew and I want
to work with you people.
MR. LUXFORD: Mr. Secretary, the line you are
suggesting--I don't know whether you want to go this
far, but might it not he possi le to discuss 8 little
bit of the strategy of Bretton Woods legislation
before you go into it?
H.M.JR: You can't stall these people. These
people are operating the way I like to operate.
They are moving, the world is moving. You can't
sit still for a week.
MR. LUXFORD: I didn't think you even had to
sit still for a week.
H.M.JR: Let me handle it.
MR. LUXFORD: I want to hear from Herbert.
H.M.JR: You can't stall these people.
MR. LUXFORD: I didn't propose that, Mr. Secretary.
I an not proposing that, that's what I want to mak e
clear.
78
- 11 -
H.M.JR: You can't do it and you can't drop the bill
in the House and you can't outsmart them. Suppose we
drop the thing?
MR. WHITE: I didn't mean to drop it in, I meant to
get to make some progress before--
H.M.JR: In order to keep the Treasury's place in
the sun. Now this fellow is offering to cooperate, not
as my superior, not as Prime Minister of the Government,
but as an equal, and I will take my chances on that.
MR. WHITE: I think you are right on that.
MR. LUXFORD: But you rejected what I was proposing.
I would like you to see what I was proposing.
H.M.JR: You fellows can't wear me down. Try it on
someone else.
O
MR. GASTON: As I understand your position, I agree
with you entirely. We went over this a week ago and one
of the things on the agenda was a unified program on these
international matters, and my recollection is that you
agreed or we agreed to that and some suggestion was made
bring the Budget into it. I thought it was a very
logical thing.
to
H.M.JR: When was this, Herbert? You say I did this?
MR. GASTON: We went over and had lunch at the Blair
House a week ago Thursday and this was one of the items
on their agenda, and I thought it was a very reasonable and
logical proposition, and my recollection was there was
implicit agreement on our part and I think we should go
through in good faith with it, and discuss it on that basis
on the presumption we are going to try to get together on
a unified plan on legislation in these foreign matters and
to discuss it candidly with the State Department, and if
they want it in the Budget, I think it's a good idea.
2
79
- 12 -
H.M.JR: I am sorry to shut you off, Luxford, but I
just don't have the time.
MR. WHITE: Those are the right tactics with him
because if you don't, he will wear you out. That's what
I have to do. He will wear you out.
MR. LUXFORD: I am in a good position to be
vindicated.
MR. WHITE: He's near the door.
H.M.JR: You don't want that either. Anyway, I
know what you have in mind but I don't want to be worn
out.
MRS. KLOTZ: That's one of his qualities.
H.M.JR: Keep the quality and maintain it and keep
on just as you have but on this thing I would like to do
what I am suggesting.
MR. WHITE: If you are going to sign that memorandum,
Mr. Secretary--
H.M.JR: It has to be rewritten.
MR. LUXFORD: That's what I was getting at.
MR. WHITE: There are one or two paragraphs and if
you can get them rewritten, I would like to do so.
MR. LUXFORD: That's the point I wanted to make.
H.M.JR: I wouldn't sign this.
MR. WHITE: The one which contains Stettinius'
signature.
MR. D.W. BELL: You couldn't sign the letter because
the letter turns it down.
H.M.JR: Joe, do you want to say anything?
3
80
- 13 MR. DuBOIS: I would like two minutes.
H.M.JR: O. K. I'll give you three.
MR. DuBOIS: I don't think the question is whether
you agree to the committee, but when you agree to it, let
it be understood you are not prejudicing Bretton Woods
cooperation. I don't think cooperation with State means
we have our own way or let them have their own way. There
is room for sitting down here and discussing this thing.
We can agree to the committee without at all affecting
Bretton Woods.
The document, as they have it drawn, Mr. Secretary,
on the committee has a couple of paragraphs which are
designed to prejudice the Bretton Woods situation, as I
read them, and there is no reason why they can't be
changed.
O
H.M.JR: I just want the thing drawn, Tom, saying
that I agree to the committee. But before the agenda
for the legislation is drawn up and the procedure as to
how to handle it, I want to sit down with Mr. Stettinius
and Mr. Acheson and Mr. Harold Smith.
Does anybody want to volunteer something? I owe you
a minute.
MR. DuBOIS: The issue, Mr. Secretary, is whether you
want to sign the memorandum to Mr. Stettinius. It is
already signed on the legislation. Now, the memorandum
as drawn, that Mr. Stettinius has signed, has a couple of
paragraphs in it which I think would be desirable, if
possible, to have changed.
H.M.JR: I am going to tell him this morning that
I am simply telling him as to the committee--you hear
what I say but I think we will get it. Where is the
rest of the stuff?
MRS. KLOTZ: I sent it in to you.
H.M.JR: Did I give you more than what was there?
4
81
- 14 MRS. KLOTZ: I think not.
H.M.JR: No. Here it is, I have it here.
(Secretary reading letter from James E. Markham,
dated January 10, 1945)
"At a recent conference between representatives
of your Department, the Department of State and my Office,
discussion was had of the pending problems surrounding
the unblocking of frozen French assets. At that conference I understand it was indicated that the Foreign
Funds Control representatives did not believe that the
appropriate time had as yet arrived for discussion of
the action to be taken with respect to the frozen assets
of enemy nationals.
"As a result of studies by this Office, including
attention to the historical phases of the treatment of
enemy property and to the current problems of American
O
and friendly alien creditors against enemy nationals, as
well as other claims of non-enemies, it is my considered
judgment that the national interest may best be served
by the vesting of all strictly enemy assets by the Alien
Property Custodian.
11
That's an old subject that is under you. Do you
care to speak for that?
MR. WHITE: We will have a meeting and draft a reply
in a day or two for your consideration.
H.M.JR: Will you consult with those interested?
MR. WHITE: Yes, the Legal Division of Foreign Funds
and possibly some others.
H.M.JR: You are not ready yet?
MR. WHITE: No, we just received this last night.
MRS. KLOTZ: It came last night.
5
82
- 15 H.M.JR: Did we send Mr. Markham an interim letter
saying that?
MR. WHITE: I think we can draft something for
tomorrow to avoid that. It would make it appear we
are giving too much consideration if we do the other.
H.M.JR: By Monday?
MR. WHITE: Definitely by Monday.
MR. PEHLE: I wouldn't worry too much about
Mr. Markham. He is just Crowley's stooge. He's not
very much on top of these issues anyway.
H.M.JR: He may not have drafted that letter.
Now, this other thing--I will go to an easy one
I think.
O
(Secretary reading from letter drafted to Senator
Truman, dated January 9, 1945)
"Referring to your letter of January 4, I am having
inquiry made about the activities of Thomas C. Stephens,
Regional Director of the Procurement Division office at
Kansas City, I shall be happy to write you again when
I get something more definite.
I thought you were going to have a survey made?
MR. GASTON: I wrote that letter. We have to get
some field information. I talked to John about that.
You might have it even today or tomorrow, I suppose.
MRS. KLOTZ: Did you read the incoming letter?
MR. PEHLE: It is a rather snotty letter Mr. Truman
wrote you on that. It's all right, I agree with the reply,
but you ought to know he wrote you a pretty tough letter.
H.M.JR: We should worry.
o
This is on Dale Johnson. (Picks up letter from Mr.
Hannegan to the Secretary dated January 5, 1945.)
6
83
- 16 MR. GASTON: That's by Hannegan.
MR. PEHLE: I can give you a final reply on that today
if you want to hold it up.
MR. GASTON: They relate to the same office situation.
(The Secretary has a telephone conversation with
Mr. Acheson)
January 12, 1945
9:53 a.m.
HMJr:
Hello.
Operator:
Mr. Acheson is in a staff meeting but she can
call him out if you want her to.
HMJr:
I think he'd be interested; I'd call him out.
Operator:
You would call him out?
HMJr:
Yes.
Operator:
Right.
10:01 a.m.
HMJr:
Hello.
Operator:
Dean Acheson. Go ahead.
HMJr:
Dean.
Dean
Acheson:
Yes, Henry.
HMJr:
The reason I bothered you to come out was because
I thought you might want to report what I said at
staff. I'11 be very brief.
A:
Yes.
HMJr:
Hello?
A:
Yes, sir.
HMJr:
In regard to the Cabinet Committee of State and
Budget and ourselves -- in regard to legislation
of mutual interest, I am preparing a letter to
say that I will go along. As to the treatment of
some of the legislation and as to the President's
budget -- as to this message in regard to the
treatment of this pending legislation, I am not
in agreement, see? So what I'd like to do is
let's act as though the Committee was in existence
and have an early meeting and sit down and discuss
how we should proceed. See?
A:
All right. Fine. I understand that you would like
me to come over this morning.
84
-2HMJr:
A:
No, I didn't say that.
Oh, I thought Joe -- Joe Grew told me last night
that you wanted me to come over to the Treasury
this morning.
HMJr:
Well, what -- no -- what I'd like to do, if it
would be agreeable to you, is: I'd like you to
sit down with White and some of his cohorts at
a time mutually agreeable to you, and discuss
the thing first.
A:
I see.
HMJr:
About just where Bretton Woods fits into the
pattern. See?
A:
Yes.
HMJr:
And then see if -- if White and his cohorts and
you and yours can come to some kind of an under-
standing in advance of my meeting with Stettinius
and Harold Smith.
A:
All right. Fine. Then that memorandum has not
gone to the President?
HMJr:
No, because I was bothered about it and we will
A:
Yes. All right.
HMJr:
fix something up and -- and try to get it over
to you and -- and this being Stettinius' baby
I'd like him to carry it with the President.
But just as long as we understand each other,
that agreeing to the Committee does not on my
part agree to the program or the contents of
the suggested message. And I'd like White to
sit down with you and go into it fully because -well, you -- I know how much interested you are
in Bretton Woods and -- and I'd like to thrash
it out because Bretton Woods, Export-Import Bank,
the Johnson Act -- all of that business -- do we
want to tie it up in a parcel or don't we? See?
A:
Yes. All right, I'll try and get in touch with
him today.
HMJr:
Thank you so much.
A:
All right, Henry.
85
-16a86
H.M.JR: Satisfied Mr. Luxford?
MR. LUXFORD: Yes, I am.
neck.
H.M.JR: You are still hoping I slip and break my
MR. LUXFORD: I never hope that, Mr. Secretary.
MR. GASTON: Not your neck. (Laughter)
MR. LUXFORD: That was Herbert speaking for me as
he did for you yesterday.
MR. GASTON: I will help you out any time.
MR. PEHLE: I will give you a final answer on Johnson
today if you want to hold that up.
H.M.JR: You could? Then, why write him twice?
MR. GASTON: Hold them both up. If John may have
some information today, we could revise it.
MR. PEHLE: I will try to revise that today.
MRS. KLOTZ: That would be wonderful! They have
been kicking around.
MR. GASTON: Here is something you haven't seen.
(Hands Secretary letter from Mr. G. B. Parker of
Scripps-Howard Newspapers to the Secretary dated
January 9, 1945)
87
- 17 H.M.JR: Oh, yes.
MR. GASTON: had you seen that?
H.M.JR: I had. I congratulate you. Herbert Gaston
wrote for my signature the dirtiest, snottiest letter I
have ever written to a newspaper man in my life and I
signed it. This is the answer to it. (Reading)
"G. B. Parker, Editor-in-Chief, Scripps-Howard
Newspapers"--
Herbert wrote a three page letter and called him
everything. He threw stuff at him.
MR. LUXFORD: Sounds like a curmudgeon.
H.M.JR: He outdid it, and after this he comes back
with (Reading) "Far be it from me to argue with you in
behalf of editorial flippancy--this in reply to yours
O
of January 5.
"But-- and I hope"--now, this is Herbert, "you
won't think I'm being smart-alecky when I say--it has
been my observation over many years that cheapness,
irresponsibility, loose talk and flippancy are usually
attributed to the thing a reader doesn't like;"--this
is not Herbert and that sanity, sincerity and deep
wisdom are the characterizations of the same article by
the reader who agrees.
"That is just human nature working, in a world
where controversy plays so large a part.
"However, I appreciate your very frank though
friendly reaction, and am passing it on to the author
of the piece to which you object; also the enclosure
from the Washington Post.
"Thanks for your invitation to come and see you
and for saying you enjoy talking with me. I say the
same as to talking with you. Sincerely, G. B. Parker."
8
88
- 18 MR. GASTON: He feels just a little chastened, I
think.
H.M.JR: I thought what we would do is ask him who
the guy is and let him bring him over for lunch too.
MR. GASTON: Oh, I don't know. Maybe SO. You have a--
MR. VINER: He has to protect his staff.
MR. GASTON: He probably doesn't want to bring Walker
over. I don't know.
H.M.JR: What would you advise me?
MR. GASTON: I would certainly invite Deacon over.
H.M.JR: I have.
MR. GASTON: You have?
H.M.J.: For lunch Thursday.
MR. GASTON: Yes, tell him to bring Walker.
H.M.JR: I will call him on the phone. I will take
it up with him myself.
If anybody wants to read a really good letter, get
Gaston to show you the letter he wrote this fellow. . He
called him everything under the sun.
MRS. KLOTZ: He did it very nicely, though.
H.M.JR: Not too nicely.
MRS. KLOTZ: Yes he did.
H.M.JR: This is the last thing I have and then you
people can have a crack at me. This is a thing which I
am not up on. Is this the same Jay Gould, or is it my
peculiar pronunciation?
Bernstein is fighting for changes in the financial
directive.
F-9
89
- 19 Mr. White, I got your memorandum from Mrs. Shanahan
when you were out for a day or so. She wrote me this.
(Indicates memorandum to Secretary from Mrs. Shanahan, Jan. 5,1945)
MR. WHITE: I dictated it.
H.M.JR: Are you familiar with it?
MR. WHITE: I dictated it.
H.M.JR: You didn't answer my question. Are you
familiar with it?
MR. WHITE: She transmitted the inquiry you made, or
you asked me over the phone, I don't know which.
H.M.JR: They did.
MR. WHITE: I was in the office at the time and told her
what the facts were.
MRS. KLOTZ: You got a little mixed up, but that is all
right.
H.M.JR: Anyway, McCloy went along one hundred percent
on our suggested 1067. You remember? He didn't want to be
pushed too much, and I said, "Let's go all out," so he took
them.
Now, I don't know--frankly, what are Bernstein and
Glasser pushing?
MR. WHITE: Some of the provisisions which had been
discussed in London indicated that they are willing to go
further along the direction that we would have liked to
have gone, but didn't think we could. And when Bernstein
came back and told us that--he said he thought if we tried
again we could get it, and we said by all means, provided
that McCloy doesn't think we are holding it up, because
he already accepted these four suggestions, and he had taken
all our suggestions on the financial draft except a few, so
we didn't feel we wanted to re-open it again at this point.
F-10
- 20 -
90
I said that if he could make some kind of arrangements
with them--say to them either to submit material separately
or submit material after London was considered, it would be
entirely satisfactory to us, but under no circumstances make
a fight on it now and hold it back, because we had already
agreed. There were a couple of other provisions which
Bernstein said were being interpreted quite differently in
the field than we thought they should be because the thing
wasn't drafted with sufficient directness, and that they
were going to wilfully misinterpret it. They had boasted
that they would misinterpret it; they brought that back to
us, and we wanted to tie it up, and we put that in the same
class and asked McCloy to get that altered, and it would be
satisfactory to us, but not fight for it at this time.
Apparently they had success in convincing McCloy of the
desirability of including those. You were present at the
first meeting, Joe.
MR. DuBOIS: The latest development, Mr. Secretary,
is that the directive will be sent out with all these
situations in it, except financial, which will be held
up for a few days, pending agreement to arrive at. an
agreement.
Now, I went over it with Colonel Bernstein at the
first meeting, and throughout i talked to McCloy's
assistant as well as Riddleberger of State. I made the
point clear to Colonel Cutter, McCloy's assistant that
if it was agreeable with Mr. McCloy, we would be agreeable
to handling the things in this way.
If Mr. McCloy felt it should not be handled in that
way, we also would have no objection. Mr. McCloy is
agreeable to handling it this way, and so is State, and
I think in the long run it will be beneficial.
H.M.JR: Then I can row my oars in that direction.
MR. DuBOIS: Yes.
MR. WHITE: McCloy has been fully cooperative on
this and we have taken advantage of that. He has been
extra nice in acquiescing to our modification after we
ourselves had agreed on the earlier draft.
F-11
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- 21 -
H.M.JR: All right.
Now, the last thing is, I have had a message on a
very brief conversation from "de boys" " who are worried
about the Refugee Board, and I didn't know whether it
was triumphant or too wet.
MR. PEHLE: We don't see eye to eye on every point,
Mr. Secretary, but this I would like to have you know,
that if it can be changed, I don't feel I can do both
jobs adequately the way the war is going. Along with
the public reactions, I have had three groups come to
me in the last week complaining that I ain spending too
much time on Procurement and not enough on War Refugee
matters. Congressman Celler came down to see me, and
somebody asked him to write some letters to the three
members of the Mar Refugee Board complaining about it;
he wouldn't do it, but he is getting a little mail now
saying this thing deserves a full-time director, and I
think it does, too.
H.M.JR: Did you fellows who are interested in the
War Refugee Board get together on a couple of candidates.
MR. PEHLE: We have been trying to do that.
H.M.JR: Are you together on Fowler Harper?
MR. PEHLE: Yes.
MR. LUXFORD: Mr. Secretary, all of us agree on
this point, too, that we are not asking you to carry the
ball for Fowler Harper like you did for John Pehle.
H.M.JR: That is damned sweet of you. (Laughter)
MR. LUXFORD: I want you to be sure, because on the
record you could very well feel you were asking for more,
because we have in the past, but this thought of letting
Fowler Harper row his own boat with Stimson and Stettinius-we can't go along with it.
F-12
92
- 22 -
MR. PEHLE: Mr. Secretary, we are in this position;
none of the alternatives--
H.M.JR: I am only one of three, but you are certainly
going to have a tough job selling Fowler Harper to me.
MR. PEHLE: Can I say something on that, Mr. Secretary?
None of the alternatives are ideal. One way is to worry
along the way we are. I don't like that at all from my
own personal point of view; it is too much. I spent one
hour and a half last night at the close of a very onerous
day at Procurement dealing with a group of Rabbis, who are
at best not easy to deal with.
H.M.JR: Who is tougher, Luxford, DuBois, or the
group of Rabbis?
MR. PEHLE: They are about the same. In fact, their
tactics at t imes are very comparable.
H.M.JR: Especially when the Rabbis have beards.
MR. PEBLE: That is right.
else.
Well, Luxford doesn't cry, but he does everything
H.M.JR: Who?
MR. PEHLE: Luxford. He doesn't cry, but d oes everything else.
One of the Rabbis said last night that there is a
saying among them that you cannot compare the effect of
a request made one hundred times with a request made
one hundred and one times.
T-1
93
- 23 MRS. KLOTZ: There is good logic behind that one.
MR. PEHLE: Which is entirely true, and which is
entirely the tactics we are following. None of the alternatives are ideal. You are not going to find an ideal
candidate for the job, but weighing--
H.M.JR: I won't subscribe to this defeatist attitude.
MR. PEHLE: If we can, that's wonderful.
MR. DUBOIS: On Fowler Harper--I talked to Bernice
Bernstein last night and her recommendation was that he
was very good.
H.M.JR: I haven't mentioned this to Herbert Gaston,
but my .impression was that he was in on the thing. Have you
any impression on Fowler Harper?
MR. GASTON: We have had a few contacts with him. I
don't think there is anything that reflects seriously on
Fowler Harper. He is a friend of McNutt's.
MR. WHITE: He was. I know him well, and what I know
of him is quite favorable.
H.M.JR: Well, Herbert-MRS. KLOTZ: You will find them all against you.
H.M.JR: That doesn't bother me.
MR. VINER: He is standing with his back to the fire.
mind.
H.M.JR: You don't carry that McNutt fight in your
MR. GASTON: I never did know whether Fowler Harper
was at all connected or what his connection was. I think
he came over here. I have an indistinct recollection that
he came over here to plead Paul's case on one or two OC-
casions. That is all I can remember.
T-2
94
- 24 MR. LUXFORD: I looked into that, yesterday, and
I can report to you exactly what happened. You would be
interested to know-H.M.JR: Well, between now and tomorrow noon some-
time, but I want Pehle present, and I want this man whatever his name is who made the McNutt investigation.
MRS. KLOTZ: I think he happens to be in Washington.
H.M.JR: He is in the building. We shall see. In
the meantime, if you want to save time, dig up another
candidate.
MR. LUXFORD: Mr. Secretary, one point there--the
most difficult part of this job--
MR. PEHLE: You are not pre-judging this?
H.M.JR: I don't like Fowler Harper.
MR. PEHLE: If that is for an inadequate reason,
I am sure you will be willing to change your mind.
H.M.JR: I don't like the Indiana political gang, and
I don't like anybody who defended it, and Fowler Harper
tried to defend McNutt to me, and the thing I know about
McNutt and his conduct in his office in the Philipines, and
his conduct as a politician, and this man here was pleading
to have me call off the dogs.
MR. WHITE: He was very loyal.
MRS. KLOTZ: He was General Counsel, and he just had
to go over. There may be something in that.
H.M.JR: Anyway--
MR. D.W.BELL: You can't question his loyalty to his
organization.
O
H.M.JR: But I don't want that kind of a fellow around
me, see? I mean I an going to listen to you fellows. You
fellows aren't going to get anywhere. I went through all
T-3,
95
0
- 25 -
that McNutt fight. I give you all three minutes, but
I'm going to see Elmer Irey and this other fellow first
to refresh my memory.
Fowler Harper went around and sicked all the columnists
on me. He did a regular job.
MR. PEHLE: He is a good fighter.
MR. LUXFORD: He sounds like the kind of man we
need.
H.M.JR: I would rather pick fellows who fight like
Ray Moley on my side. (Laughter)
MR. PEHLE: If you haven't lost your sense of humor,
I think we've got a chance yet.
H.M.JR: We've settled Fowler Harper. Dig up some-
body else. I am going to see this fellow Sullivan.
MR. GASTON: Jim Sullivan?
H.M.JR: Yes. In order to get you off the spot,
see if you don't have the rabbis weeping on your shoulder
and wiping their beards on your coat, if you are smart,
and no one has ever accused you of not being, you will
have several alternatives.
MR. PEHLE: We'll do our best.
H.M.JR: The fellow whose name I want to give you,
I don't know much about him, but I want you to look him
up--he wrote me this letter. He belongs to the most
important law firm in Rochester, New York, and I met him
at Pattersons. He's a classmate of Patterson. He comes
from Charlestown, South Carolina. He is a great New
Dealer. He is a man about my age. I met him at Bob
Patterson's home. He wrote me a letter when he got back.
He sent me that thing in the New Yorker about Dewey.
MRS. KLOTZ: Oh, yes.
T-4
96
- 26 -
H.M.JR: He's a great little guy. I was asking
Eddie Greenbaum how it happened that they never took
him in the War Department. I just want--I'll give
you his name. He certainly--I said something about the
OPA and apples, and my God he jumped right down my
throat because he thought I was criticizing the OPA. You
fellows can inquire about him. He comes from Rochester.
But there must be people we could start fresh, who
haven't got McNutt's two percent club kids to stand on
them.
MR. VINER: Has anybody suggested Stevenson?
H.M.JR: You don't know what I went through on that
McNutt job. The job they did was unbelievable. I'll never
forget it. It's like the people that came to my aid, one
or two newspapers that came to my aid when we had the Huey
Long machine. You come to me and say about somebody, "He
was loyal to Huey Long. He had to fight for Huey Long,
because he was his General Counsel.
MRS. KLOTZ: He was over here in the Federal Security
Administration. He wasn't--
H.M.JR: There wasn't very much difference.
This is in the room here. Anybody like McNutt who would
win seventy-five thousand dollars from native Milipinos in
poker and make a business of it, and there is no doubt about
it, and let these fellows regularly lose to him, see? That
is the kind of thing he did when he was Governor General,
and I can go on and on and on. And this fellow coming
over here!
MR. PEHLE: Mr. Secretary, I wouldn't--
H.M.JR: But this fellow Harper pleading with me
to lead off.
MR. PEHLE: Once you get in that situation, it isn't
the guy under him you are criticizing, but the guy above
him.
T-5
37
- 27 MR. LUXFORD: And the fellow leaves him in that job.
H.M.JR: Excuse me, Mrs. Klotz, if a man can be
General Counsel to that kind of a fellow-MR. PEHLE: I don't see how he is in any worse a
position than the President in appointing him. Wouldn't
you say that?
MR. WHITE: There is no use in evaluating in a vacuum.
Wait until you have someone to compare him with.
MR. GASTON: How about Adlai Stevenson?
MR. VINER: He's a grand person.
MR. PEHLE: Would he want to take on this kind of
a dirty job?
MR. VINER: He went back to a routine law firm, and
I have a hunch he wants to get into something else. He
tried to buy the Chicago Daily News on the rebound. He
is looking for something to do. don't think he's a high
powered brain, but he's a grand person, and he is well
known. You can investigate him, of course.
H.M.JR: John, I know Adlai Stevenson. His reputation is very high, but why these boys just get one man-you are going to waste so much time.
MR. LUXFORD: We are looking at the War Refugee Board
as a cornerstone for a post-war agency in this field. You
are not going to find a great many people who are going to
follow this thing through.
H.M.JR: I am surprised Harry White hasn't recommended
Latimer.
MR. WHITE: Just because he is a good man should I
keep recommending him for everything? The thing he belongs
in and I wish you would use your influence to get him in,
is Civil Service. It is the 'lousiest organization in
Washington--"
T-6
98
- 28 MR. GASTON: Remove the quotes.
MRS. KLOTZ: Better make that off the record.
MR. WHITE: Leave it in the record, and underline it.
MR. VINER: You mean, off the record.
MRS. KLOTZ: It ought to be off the record, absolutely.
They have their faults, but they are not as lousy as he is.
They have other departments just as lousy as the Civil
Service Commission. (Laughter)
H.M.JR: All right. We have about... five minutes.
Who has an emergency matter?
MR. C. S. BELL: On the pass situation, we would
like to have the passes is layed after nine-thirty if
you will agree to that. Everybody else has been taken
care of.
H.M.JR: On the passes?
MR. C. S. BELL: The reason is, it gives us a control
over the cafeteria. Otherwise Garfinckel's will be eating
in our cafeteria.
H.M.JR: And why not? (Laughter)
MR. C. S. BELL: Do you want to go into blood donations
now, or a little later? We are getting fifty percent--
sixty percent has been reached, which is a good figure, but
Mr. Evans of the Federal Reserve has ideas on building it up.
H.M.JR: I will tell you what my situation is. I
don't know what the rest of you--I would have a very good
time if I could have my own way, but this thing may take
half an hour, and I would be ready a gain at eleven o'clock
for anybody who wants to see me and clear something. Is
that fair enough? If anybody has anything, he can come
back at eleven o'clock and I will be available. But
did have that accumulation. I wanted to see Pehle for
I
two or three minutes.
99
- 29 MR. GASTON : I just wanted to mention--
H.M.JR: I will be available.
MR. GASTON: Tom Connally's candidate for Collector
went up on the Hill. I don't know what to make of that.
H.M.JR: I don't, either. It would most likely be
yesterday. Did it happen yesterday?
MR. GASTON: Yes, it happened yesterday.
H.M.JR: What I want to do--I have Viner here for a
special purpose, and we ought to make the best use of his
services.
MR. D. W. BELL: He spent a good deal of time with
Haas yesterday afternoon, and I talked to him last night.
I think that Harry, Luxford, and DuBois ought to
talk to him about that one problem, and he ought to get
their views. And I think he ought to talk to Herbert,
also.
MR. WHITE: What problem?
B.R.D.W.BELL:The currency problem.
H.M. JR: And the question of the Federal Reserve.
mind.
MR. D.W.BELL: I think he has that pretty well in
H.M.JR: Round up those two problems. I am going to
change this other thing.
Let's do this at ten o'clock tomorrow in order to
get the benefit of the thing, and if you want to go over
and talk to Eccles this afternoon-
T-1
100
- 30 MR. LYNCH: On the material they gave me there
is something else that I would like to talk about.
That is financing, because I read Eccles' memorandum
on the Treasury side, and I think he would like to
talk to somebody about that, because on the interest
rate structure--
H.M.JR: The point is I have got to hear Bell this
afternoon, so if you want to go over it and if you want
to talk with Lauchlin Currie, I've got Currie in on
this thing, too. He is working on it, but let's have a
meeting at ten o'clock tomorrow. I'll take care of
you boys. Currie is out of FEA and back with the President.
MR. VINER: I thought you didn't know that secret.
MR. GASTON: It was published yesterday.
O
H.M.JR: I read the papers every other day, but
get Lauch in on this thing at ten o'clock tomorrow. Let's
clean this thing up.
MR. D.W.BELL: Shall I c all him?
H.M.JR: I wish you would organize a meeting for
ten and don't you boys--I may have to work this Sunday,
but I've got to clean this thing up. I'll find out what
time, so as not to spoil your Sunday.
MR. WHITE: In the winter it's all right.
H.M.JR: When the wind blows.
MR. WHITE: I would rather have the evenings.
H.M.JR: Evenings?
MR. WHITE:
It doesn't matter.
H.M.JR: In the room here, the reason I've got time
and don't have to rush at the end of the week--I'm not
T-2
101
- 31 -
so good. I mean, I just can't stand up against you
boys. I get in on everything.
MR. PEHLE: Yes.
H.M.JR: So we may get at it Monday morning when
we are all fresh, but the President doesn't get back
until Tuesday, so I am not losing anything, you see,
by that.
So, Mr. Bell, if you organize it and see that Viner
gets in on the two things-- and I promised Ted Gamble
that when we got into this with Federal Reserve we might
change that and you fellows would have your day in Court.
So you better find out what is going on. You better be
here tomorrow, see? (To Mr. Coyne)
MR. COYNE: Yes.
H.M.JR: You may wake up and find you had your
throat cut and didn't know it.
They are pressing very hard on this question for
the change in the Federal Reserve legislation to go
ahead of Bretton Woods, SO you want to get in on that.
I think we better have this thing tomorrow morning,
and I have the problem very much in mind, and you
very much in mind.
MR. WHITE: We would like to take the Federal
Reserve Board in the drafting of the Bretton Woods
legislation. They have been in the earliest stages
and we would like to call them in at a later stage
unless you have any objection, because they ought to
be in on it.
H.M.JR: Anybody that has anything which I didn't
clear for you--I only cleared my own stuff--I will be
available at eleven and if Pehle would stay behind,
and if you would, please, Tom.
T-3
102
- 32 -
O
Have the letter to Mrs. Klotz by two o'clock;
and, strictly in the Committee, I personally think
that before that goes to the President, that we should put
in the letter to Stettinius that I want him to carry
the ball. Try to get him to carry it.
I think I should suggest to the President that
before you send this to Stettinius--before you send
it to the President--you certainly should talk to
Harold Smith, because it is chopping off a piece of
his territory, and I would like to be on record that
Harold Smith should be consulted, because then Harold
Smith couldn't say, "You went behind my back to the
President on a matter which is wholly my responsibility."
MR. D.W. BELL: Don't you think they did? It's
a good suggestion, but I assumed they had discussed it.
H.M.JR: Harold Smith is a sporting fellow. We
have to live with him as well as Stettinius. I would
like to put it up to Stettinius before it goes to the
President. Smith should be brought into this thing,
and Smith should sign it, if he is agreeable, because
what we are really doing is taking a piece of his
thing and saying, 'Segregate it.
MR. D.W. BELL: I agree. I assumed they discussed
it with him.
H.M.JR: It was my suggestion--they didn't bring
him in at all.
MR. LYNCH: I suppose you want a letter addressed
to Mr. Stettinius rather than Dean Acheson?
H.M.JR: Attention Mr. Stettinius.
MR. LYNCH: Attention Mr. Acheson.
H.M.JR: Yes. I don't know how long this thing is
going to last but those of you who want to come back
and see me, leave your names with Fitz. When this
appointment is over I will have Fitz phone you.
103
January 12, 1945
11:50 a.m.
GROUP (Continuation)
Present: Mr. White
Mr. Blough
Mr. C. S. Bell
Mrs. Klotz
MR. BLOUGH: You wanted to know about the Shamberg
case. I can write you a little note about that and save
your time here.
H.M.JR: What case?
MR. BLOUGH: The Shamberg case. Tax-exempt securities--
the New York Port of Authority case.
If you would like, I will write you a little note
about what happened so you can get started, and then I
will just drop out.
H.M.JR: Who was the man?
MR. BLOUGH: Mr. Foley. But it was a very wise thing
to do; everybody is in agreement.
H.M.JR: Did he get licked?
MR. BLOUGH: I will write you a little note on that.
(Mr. Blough leaves the conference.)
H.M. JR: How much have you got, Charlie?
MR. BELL: I think we can go right through, sir.
Are you satisfied on the order of coming in and out of the
building after nine-thirty? We are going to look at passes
O
103 -A
-2rather than have crowds in the cafeteria, outsiders
going in and out of the building.
MRS. KLOTZ: I think that is good.
H.M.JR: When is that going into effect?
MR. BELL: It went into effect yesterday morning
informally, and officially now.
Blood donations, Mr. Secretary, were fifty percent.
I have talked with Mrs. Bell and a number of persons who are
interested in this thing, but they don't want to see all the
names put up at the front door because some people can't
give blood. We don't want to focus on them, but they suggest two things. Mrs. Bell feels when a person gives
blood three times that he should have some recognition. We
have suggested placing a little sign in the office the
person works in, and then when a person reaches a gallon,
we will put it on a bulletin board in the front. That
is eight times. Will that be satisfactory to you?
H.M.JR: Yes.
MR. BELL: I found this at the Red Cross, and we
might break that down by bureaus (hands Secretary chart).
H.M.JR: May I keep this?
MR. BELL: Yes, sir.
We are up to fifty percent now, and I hope we can
get to sixty, and that is what the Red Cross would like to
see. I think they are a little heavier on the quotas.
And I think they say so.
H.M.JR: What is this?
MR. BELL: That is Byrnes' letter you said to bring
in at nine-thirty. That is something that has been done
over and over many times by Johnson. It is repetition of
o
103-B
-3the same thing. There is no way of getting at a comparison.
Let that go along.
When would you like to see Saxon? He is back in town.
H.M.JR: Not this morning. . Tell Fitz I will see him
next week. How are they?
MR. BELL: Both have bad colds.
H.M.JR: Oh, for God's sake! As long as they both
have colds, that is all right.
MR. BELL: I am going ahead with a little committee
on meritorious promotions. Suppose we hold that up for a
while. I have two good members, and I am lining up a third.
You might be interested to know that our office, under
Ed Berney, blocked a deal which contemplated Procurement
moving into the Empire State Building at an annual rate
of $4.00 per square foot, by digging up space costing
$1.75 per square foot, thus saving us about a quarter of
million dollars. This was a grand job done by Berney
and will result in concentrating all of Procurement in
one building in New York, which makes for good organization. They are nov in two buildings.
8
H.M.JR: They are going to be in the Empire
State Building?
MR. BELL: No, sir, they are getting away from
the Empire State Building. They want four dollars a square
foot, and they can't break them down. They don't want us
in there--no Government activity. We are looking at a
building now at 299 Broadway at one dollar and seventyfive.
H.M.JR: Just like DuPont.
MR. BELL: It is awfully tough.
o
H.M.JR: Rascob--
103 - C
-4MR. BELL: Rascob has taken over where Al Smith left
off. He is tough to do business with.
Pehle is appointing an eight-thousand-dollar man,
Colonel Seymour, from the Army to be one of his principal
deputies, and he is going to shoot him around the field
as 8 regional director at large.
H.M.JR: Let Pehle come in and see me himself.
MR. BELL: I am going to clear all eight thousand
dollar appointments with you.
H.M.JR: That is an eight thousand-dollar appointment?
MRS. KLOTZ: What classification?
MR. BELL: The highest, CAF-15.
H.M.JR: Stop at sixty-five hundred.
MR. BELL: Then I will have another one to bring in.
I
They want to defer Hoffman again. In view of this
morning's paper, I don't know whether you want to go into
it or not. I don't know if he is doing more where he is
than he would in a uniform. He is in Paris. His being
abroad is practically the whole thing.
H.M.JR: That is all right. How old is he?
MR. BELL: Twenty-nine.
H.M.JR: No, the President yesterday said that even
the thirty-year olds would fight.
MR. WHITE: Is he only twenty-nine? I thought he
was in his early thirties.
H.M.JR: Anybody thirty years old will fight.
o
MR. BELL: He is twenty-nine years old, married, and
has no children, but he is all-out valuable, of the Saxon
variety.
103-] - D
-5 able.
H.M.JR: I bet he will have t 0 fight if he is physically
MR. WHITE: They were going to send him to Switzerland.
H.M.JR: I think the President is right.
MRS. KLOTZ: If you think it is right, you will have
no people then.
MR. WHITE: He is the only one, I think, who is that
young.
H.M.JR: The only difference between him and a
mechanic--
MR. BELL: You just can't get those mechanics. You
can't get women--
H.M.JR: Bring it to me again Monday; I am tired now.
MRS. KLOTZ: Take a fellow like Saxon. Look what
he was able to accomplish.
MR. WHITE: He is older.
MRS. KLOTZ: But I mean, whether it is a year or two-MR. BELL: This isn't being brought out.
MR. WHITE: If he got in the Army, after he goes
through basic training- if he has to go through we could
get him back on almost the same thing, but not quite.
H.M.JR: They don't say-- it has nothing to do with
it any more. Everybody thirty years or under really is
going to have to fight.
MR. WHITE: If he is the only one that the Treasury
has, then you might consider not having any exception, but-MR. BELL: That's all ortside of the Mint, and the Bureau
of Engraving.
103-E
-6 H.M.JR: I am tired, so let's let that rest. I want
to give this--I have to set a precedent. And on this thing
the Attorney General brought up about people getting
releases from the Govern ent to go to work in essential
industries--there was the case of the lawyer who wanted to
get a release from the Government and get into a strategic
place so he wouldn't get drafted.
MR. BELL: We didn't have 8 case like that.
H.M.JR: He didn't think the Government was safe
enough.
MR. BELL: We turned these down under thirty years.
H.M.JR: What was 'in the paper this morning?
MR. BELL: Stimson came up with the same statement
the President--
H.M.JR: Is it under thirty, or thirty?
MR. BELL: Up to thirty.
H.M.JR: If you are thirty years old-MR. BELL: If you are thirty, then you are over the
line, as we understand it. Saxon goes over the line. He
is thirty, and will be thirty-one in April.
H.M.JR: Let's have another look at Hoffman Monday.
MR. BELL: All right, sir.
H.M.JR: Mike Hoffman, isn't it?
MR. WHITE: Mike Hoffman is a very good man.
MR. BELL: Here is an Executive Order that Cy Upham
would like to see go over, and Danny Bell, exempting bank
examiners from Civil Service.
H.M.JR: Let it go until Monday.
103 F
7-
MR. BELL: Yes, sir. That's the crop.
H.M.JR: The Hoffman thing will keep until Monday?
MR. BELL: It is kind of hot, sir.
H.M.JR: I will be here tomorrow. Will you be in
tomorrow?
MR. BELL: Yes, sir.
H.M.JR: And this afternoon, too.
O.K. You didn't do too well, Charlie, but Harry is
going to do worse.
(Mr. Bell leaves the conference.)
MR. WHITE: I think I can boil this down to probably
two very simple things if you want to go into anything.
One is to take some position on the French Lend-Lease.
H.M.JR: No.
MR. WHITE: Either we say we--
H.M.JR: I am waiting for Ed Stettinius' letter to
be answered. You can call up Mr. Will Clayton and say
that when we get an answer on that we will move. But I
want an answer first. If Stettinius is away, let Joe
Grew answer it.
MR. WHITE: All right.
H.M.JR: He is only up in New York.
MR. WHITE Oscar Cox called me again and said he ran
in to you last night, and you stated you were afraid you
weren 't going to be of any help to him, and he said that
under those circumstances that, You provide me with a very
complete alibi," and I said under those circumstances I
didn't think I could give him anything. He said he wasn't
O
sure; he didn't have much time to talk to you. I said I
103. G
8-
would check. What he wants is that order which is no
longer in point, but it is the one the President sends
him now. We can send him that order.
H.M.JR: I thought they had it.
MR. WHITE: He says he hasn't got it. The President
sent him a letter asking for comments, but never sent him
the memo which he said the Treasury Department sent to him
with the order.
H.M.JR: Tell him to call up Arthur Krock and get it
from him.
MR. WHITE: He has been made deputy.
H.M.JR: He didn't tell you the truth. I told him
that I told--this was the conversation, see? I wanted to
tell you that Crowley greeted me at Cabinet, see? He said,
"Henry, I called up Stettinius on this thing, and Stettinius
told me that this was strictly a State Department matter. He said
he spoke to Stettinius on the phone, which isn't--Stettinius
told me that Crowley called up and said, "For God's sake,
block this thing," and I believe Stettinius.
Crowley turned to me and said, "Henry, whatever you
want, just tell me. I am for you. This is ninety percent
your business, five percent ours, and two percent State's S.
You tell me what you want; I am in your corner, and I will
give you anything you want."
So I said, "That isn't the way I understand the
story."
He said, "What do you want me to do?"
I said, "You tell Oscar Cox to rest his horses.' "
So Crowley said, "What's Oscar doing?" He said, "He
is calling up Harry every five minutes."
I said, "See, I don't know anything about it."
103- - H
-9-
O
MRS. KLOTZ: They are an awful bunch of liars.
H.M. JR: Last night I said, "You just tell Oscar--"
I don't know who brought it up first, but I said, "Did
Crowley tell you to rest your horses?" He told me of his
conversation with you, and I said he should tell you to
rest your horses. So you rest.
MR. WHITE: Under those circumstances, yes.
H.M.JR: We can't tell him that this order--we will
tell him, Harry, you see, that this order is no longer
valid, and then say, "Well, what is the next move?" I
spent a lot of time on this thing, so I just want to stall
with them, and they will say, "What is Morgenthau up to
now?"
MR. WHITE: I told them that apparently there were
changes from time to time of which I am not cognizant.
MRS. KLOTZ: If ever you wanted a log to burn, you
do now.
MR. WHITE: I was in your corner. I am sure it would
never start to burn.
H.M.JR: I am an expert. Just listen, White, "I don't
know what is going on. He calls back and says, "Oscar,
are you resting?" If
MR. WHITE: I have enough now to--
H.M.JR: And I am waiting for that other answer from
the State Department.
MR. WHITE: Jimmy Landis is in. I think you ought to
see him. He is going back to Harvard. Among other things,
he said he felt the Treasury was at fault for not taking
the leadership in helping to solve the acute monetary and
financial problems that are all over the world. I told
him you were cognizant of that and were trying to establish
an appropriate setup here which would be able to do something about it.
103-I
- 10 -
H.M.JR: Tell him I am sorry, but I can't see him,
will you?
MR. WHITE: There is a cable request for a speech on
February 19.
H.M.JR: This is the fifth thing he has brought up,
and he said he only had two.
MR. WHITE: This about Jim Landis wasn't one of those;
it was just an aside. It dian't matter if I didn't take
that up; it could wait, but do you want to make a speech
to the Chicago World Trade Conference on February 19? I
have been holding up their cable.
H.M.JR: What is the date of the one at Detroit?
MR. WHITE: Within a week or two.
H.M.JR: Within a day or SO.
MR. WHITE: I don't think so. They were asking for
me, but I-H.M.JR: Oh!
MR. WHITE: This is important.
H.M.JR: Let me have it so I can check with the
Detroit date.
MR. WHITE: We thought there were three speeches,
Detroit, Chicago, and one before the AF of L and CIO
labor meeting at, I think, Cleveland.
MRS. KLOTZ: Do you know how old this is?
MR. WHITE: January 3.
MRS. KLOTZ: That is right. Do you know what date
today is?
MR. WHITE: I never have a chance to raise these unimportant matters.
103-J
-
- 11 MRS. KLOTZ: Our man!
H.M.JR: I will be seeing you again.
MR.
WHITE: And you say the Argentine thing can wait?
H.M.JR:
No move on our part.
MR. WHITE: The only move you might want to suggest is
what you suggested before, if they want to move in on
England they should have a--
H.M.JR: We will sit down and talk this thing out
very quietly.
Thank you.
104
January 12, 1945
2:31 p.m.
HMJr:
George
How are you?
Parker:
Not so good. I've got a cold.
HMJr:
Gosh!
P:
I've been in bed for a couple of days, but I'm
getting better today.
HMJr:
Oh, the trouble is you're getting old.
Well,
that's the hell of it, you know, you can't
beat the calendar.
P:
HMJr:
I wondered -- I just thought I'd put it up to you --
I appreciated the tone of your letter and I wondered
if you would care to bring whoever the gentleman was
who wrote the editorial or would you rather just see
Gaston and me alone at lunch?
P:
Well,
I'd -- if he's in town, I'll be very glad to
bring him along.
HMJr:
Because I imagine it's Walker Stone.
P:
Walker, I think, had quite a lot to do with it,
although I'm not so sure that he was the author of
the piece because it was the New York World-Telegram.
But anyway
HMJr:
Well
P:
.... leave it up to me.
HMJr:
which -- I'll leave it up to you -- whichever
way you think that it would be the most constructive.
P:
That's fine and I certainly will be delighted to see
you again, although probably we'll get in an argument.
HMJr:
That's all right.
P:
Okay.
HMJr:
Thank you.
P:
All right.
-2HMJr:
Take care of yourself.
P:
I will and I told my secretary to call back to
explain that I was laid up but it looks as -- I
I think I'll be perfectly all right.
HMJr:
Well, if not
P:
If not, give me a rain check.
HMJr:
I certainly will. And will you let me know on
that morning whether the
P:
Whether you'll have -- whether I'11 have one or
just two.
HMJr:
That's right.
P:
Okey-doke.
HMJr:
Thank you.
P:
Will do, and I hope you're well physically -- are
you?
HMJr:
Yes, I'm all right.
P:
Itrouble.
read the other day that you were having housing
HMJr:
Still am.
P:
Still are.
HMJr:
They ran a little piece in the paper -- I didn't
P:
see it in your paper -- that we had taken the
Bullitt house, which was incorrect.
Oh, well, that's up on Kalorama.
HMJr:
Yes.
P:
Oh, you -- well, no, I don't think it was our
paper, but I thought you were living up on
Kalorama.
HMJr:
P:
No, we live on the street below -- on Belmont.
Oh, on Belmont. Well, that's not the -- that's
not the one where -- I was up at your house for
dinner one time -- that -- that's not the place
that you were living in then.
105
-3HMJr:
I don't think so.
P:
Yes.
HMJr:
No, I -- I think that was on R Street.
Yeah. Well, I think that's correct.
P:
HMJr:
Yes.
P:
Well, I hope you have good luck and pray for me.
HMJr:
I'll do that.
P:
Okay.
HMJr:
Thank you.
P:
Thank you.
HMJr:
Bye.
106
107
January 12, 1945
4:11 p.m.
Operator:
There you are.
Carl
Hamilton:
Hello.
HMJr:
Mr. Hamilton.
H:
Yes.
HMJr:
Morgenthau speaking.
H:
Yes, Mr. Secretary.
HMJr:
A couple of weeks ago I was out in Arizona and
there is, or was, a Farmer's Community there --
cooperative community -- I think it's a place
called Florence if I remember the name correctly.
H:
Yes.
HMJr:
Where they had a central dairy and I don't know
whether you are familiar
H:
No, not off hand, I'm not, Mr. Secretary.
HMJr:
Well, it's the only -- it's not very far from
Phoenix.
H:
I see.
HMJr:
I think it's a place called Florence.
H:
Uh huh.
HMJr:
You're in the process of liquidating it now.
It's a Farm Security project.
That's right.
That's right.
H:
HMJr:
H:
HMJr:
Now, the Farm Security man -- I asked for him -he took me down there and the thing that -- the
suggestion that I was going to make, in all of
the work that's been done, there's no history
that's been kept of the good and the bad points
in that community.
H:
Yes.
-2HMJr:
H:
108
And looking for the returning soldier, that kind
of thing, I think, is going to be very useful,
because I personally think it's that kind of thing
that Farm Security has set up that we'll have to
do for the returning soldier.
Well, there are a lot of people over here that
agree with you, Mr. Secretary.
HMJr:
Who do or don't?
H:
Who do agree with you.
HMJr:
Now, there's no history been written but the
people are still on your payroll
H:
Yes.
who know all about it.
HMJr:
H:
Uh huh.
HMJr:
And there's one man there who supervises that
H:
Yes.
HMJr:
I can't remember his name.
H:
Well, we could undoubtedly
HMJr:
But who knows the history of that whole group
in the Arizona -- these various cooperative
District -- lives in Phoenix and used to live
in Florence, and still does, I think.
communities.
H:
Uh huh.
HMJr:
And my suggestion is that you have somebody write
the thing up -- just how it was organized and where
it was successful, where it failed and all that, and
not lose the thousands of dollars we've spent in
experimenting.
H:
Well, I think that's a very interesting suggestion.
I don't know that it had ever occurred to our people
who have been so close to it.
-3HMJr:
H:
109
You plant a new variety of wheat and from the
day you plant it you keep writing the history.
Now here's an experiment in human beings and
nobody writes anything.
No, when Congress liquidates it we forget the
whole thing.
HMJr:
H:
Yes.
I think that's very interesting and I know that
Secretary Wickard would appreciate your thoughts
on the matter. I don't know
HMJr:
Will you?
H:
.... that it had ever occurred to him.
HMJr:
No, it's an experiment in human beings and nobody
H:
That's exactly the case.
HMJr:
H:
takes the trouble to write it up.
And
if it's written up, I -- I would like a copy
sent to me.
All right. You had an opportunity to talk with
the people?
HMJr:
I talked to some of the people and, you know, it's
it's a tragedy -- here you're renting that plant, I
think, for $65,000 a year cash rental.
H:
Yes.
HMJr:
The people are there, still in the houses.
That's right.
The things this particular one did, I can make out,
was a success. It was going beautifully.
That's right.
H:
HMJr:
H:
HMJr:
And now it's gotten into all kinds of local politics
H:
Well
and, of course
-4HMJr:
H:
HMJr:
In this sense: they're fighting over their --
the water rights. They are very valuable.
That's right. Those are extremely valuable.
And the way the thing is being handled, the
Judge, the local attorney and the family and
all are getting into the water rights -- didn't
smell very good.
H:
Well, I expect there is local flavor all right.
HMJr:
But the main thing I was interested in was to
have a history written up of that and similar
projects.
H:
It's very excellent. Let me pass it on and
as soon as we get something, I'll see that you
have a copy.
HMJr:
Thank you very much.
H:
Thank you.
HMJr:
Good bye.
110
111
Copy of letters sent to Presidents
of Federal Reserve Banks.
Mr. Alan Sproul, New York, N.Y.
Mr. Ralph E. Flanders, Boston, Mass.
Mr. A. H. Williams, Philadelphia, Penna.
Mr. R. M. Gidney, Cleveland, Ohio
Mr. Hugh Leach, Richmond, Virginia
Mr. W. S. McLarin, Jr., Atlanta, Ga.
Mr. C. S. Young, Chicago, Ill.
Mr. Chester C. Davis, St. Louis, Missouri
Mr. J. N. Peyton, Minneapolis, Minn.
Mr. H. G. Leedy, Kansas City, Missouri
Mr. R. R. Gilbert, Dallas, Texas
Mr. William A. Day, San Francisco, Calif.
January 12, 1945.
Dear Mr. Gilbert:
The Federal Reserve Banks, as usual, played a
major part in the success of the Sixth War Loan Drive,
the quota for which WAS exceeded by more than fifty
per cent. I want to thank you for the great help you
and your organization contributed to this success,
and I particularly would like for you to thank, on my
behalf, the employees of your bank who processed the
subscriptions and payment for the bonds sold in the
Drive. The work they did enabled us here in the Treasury
to keep currently informed of the Drive in each district
and was responsible for bringing to our attention any
weak spots that needed to be corrected.
We appreciate your having made these facilities
available to us and I know we can continue to count
upon your interest and assistance in future drives, as
in the past.
Sincerely yours,
(Signed) H. Morgenthau, Jr.
Secretary of the Treasury.
Mr. R. R. Gilbert
President
Federal Reserve Bank
Dellas, Texas.
DWB:ew
January 12, 1945.
Dear Mr. Bartelt:
I want to thank you and the members of the
Interdepartmental Committee for the important help
you gave the Treasury in the Sixth War Loan Drive,
the quota for which was exceeded by more than fifty
per cent. I understand that Government employees
as a whole, including both departmental and field,
subscribed about $198-1/2 million of the securities
in the Drive, which exceeded their quota by more
than twenty-five per cent. The success of this
loan would not have been possible without the assistance
of individuals and organisations like you and your
Committee,
I appreciate very much all the hard work you
put in during the two months' period covered by the
Drive and I am looking forward to your continued
interest and assistance in future drives as in the
past.
Sincerely yours,
(Signat) H. Morgenthau, Jr.
Secretary of the Treasury.
Mr. E. F. Bartelt
Chairman
Interdepartmental War Savings Bond Committee
DWB:ew
January 12, 1945.
Dear Mr. Broughton
The Sixth War Loan, as you know, was a
great success, the subscriptions for which exceeded our quota by more than fifty per cent.
Your organisation was responsible for getting out
some of the preliminary announcements, all of the
official circulars covering the securities in the
Drive, the day to day reports of subscription totals,
and seeing that sufficient volume of securities
offered in the Drive were available in every part
of the country.
I appreciate greatly the assistance you
have rendered us in this connection and I an certain
that future drives will be handled in the same officient manner as past drives.
Sincerely yours,
(Signed H. Morgenthau, Jr.
Secretary of the Treasury.
Mr. William S. Broughton
Commissioner of the Public Debt
DWB:ew
January 12, 1945.
Dear Mr. Hall:
The success of any sales campaign depends
in no small measure upon the ability of the sales
organisation to deliver to the purchaser the commodity that is being sold. The Bureau of Engraving
and Printing is responsible for printing and delivering
to the Bureau of the Public Debt the securities that we
estimated we would sell during the Sixth War Loan Drive.
I have been advised that there was at no time during
the Drive period any shortage of the securities offered.
I just wanted to thank you for this great
assistance given us in the Sixth War Loan Drive. I
appreciate very much the effort you and your organiza-
tion put forth to have these securities available and
I know that I can count upon the Bureau to see that
the securities to be sold will always be available in
sufficient volume to meet the demands of future drives,
as in the past.
Sincerely yours,
(Signed) H. Morgenthau, Jr.
Secretary of the Treasury.
Mr. A. W. Hall
Director
Bureau of Engraving & Printing.
DWB: ew
January 12, 1945
Dear Randolph:
Thank you very much for all the help you
and the individual members of your committees gave
the Treasury before and during the Sixth War Loan.
You, of course, know by now that we exceeded our
quota by more than fifty per cent. This success
would not have been possible without the help of
thousands of individuals and organizations throughout the country. You and your committees played a
very prominent part in the success of this campaign.
I do appreciate your having made these
facilities available to us and trust that we may
continue to count upon your interest and assistance
in future drives as in the past.
Sincerely yours,
(Signed) Henry
Secretary of the Treasury.
Mr. W. R. Burgess
Vice-Chairman of the Board
National City Bank
New York, N. Y.
DWB: ew
JAN 12 1945
Dear Mr. Byrnes:
I have your letter of January 8, 1945, calling
attention to measures which you have recently taken
to curtail further civilian travel and want to assure
you that your efforts have my whole-hearted support.
Since the beginning of the war this Department
has repeatedly emphasized through instructions to
bureau heads the necessity for surveying travel
requirements and effecting reductions wherever pos-
sible. I feel that as a result of our efforts in
cooperation with the Office of Defense Transportation
travel by Treasury personnel is now at a minimum consistent with our essential requirements.
I shall be pleased, however, to issue further
instructions based on your letter and to report
within sixty days percentage reductions in so far
as these data can be identified and assembled.
Sincerely yours,
(Signed) H. Morgenthau, Jr.
Honorable James F. Byrnes,
Director,
Office of War Mobilisation
and Reconversion,
Washington, D. C.
Ann
CSB:em
1-11-45
OFFICE OF WAR MOBILIZATION AND RECONVERSION
WASHINGTON, D.C.
January 8, 1945
Dear Mr. Morgenthaus
Increases in passenger traffic over the past several months have
resulted in an overload of our railway system with a corresponding demand
for additional manpower. A substantial portion of this increase may be
charged to the large number of conventions now being held. These conven-
tions have also overtaxed our hotel facilities in crowded war centers.
Therefore, I have issued an appeal for the cancellation of all group
meetings involving the attendance of over 50 persons and trade shows not
essential to the war, and for the elimination of other than essential travel.
With the approval of the President, I have asked Director J. M. Johnson
of the Office of Defense Transportation to head a committee to be composed
of representatives of the War and Navy Departments, War Production Board and
the War Manpower Commission to receive and pass upon applications for the
holding of group meetings.to be attended by more than 50 persons, to deter-
mine if the holding of these meetings is warranted in the war interest. This
committee is not only to act on requests from the public, but also on requests
from the civilian government agencies sponsoring or holding group meetings.
In addition to these measures, I believe that it would be most helpful
if you would establish a procedure which would insure that the personnel
under your jurisdiction are permitted to travel only when absolutely essential
and that all possible measures are taken to consolidate travel to reduce the
number of trips to a minimum. I would appreciate it very much if you would
cooperate with me in this endeavor and if you would advise me within sixty
days of the-percentage reduction which you have been able to effect.
I also believe that the presence of government personnel at group meetings frequently serves as an excuse for the meeting to be considered as in
the war interest. Therefore, I would like to suggest also that you give
careful consideration to the attendance of the personnel under your jurisdiction at such group meetings to determine if their presence is really essential
to our war effort.
I know that you will agree with me that a good example set by government
agencies will do much to encourage the general public to defer non-essential
trips.
Sincerely yours,
Director
Honorable Henry Morgenthau, Jr.
Secretary of the Treasury
Washington, D. C.
BUY
TREASURY DEPARTMENT
-
WASHINGTON 25
OFFICE
COMMISSIONER OF INTERNAL REVENUE
ADDRESS REPLY TO
INTERNAL REVENUE
JAN 12 1945
AND REFER TO
MEMORANDUM FOR THE SECRETARY:
During the past few weeks the Bureau has been giving
serious consideration to the status of the refunding operation involving 1943 income tax returns. The Bureau and the
several Collectors of Internal Revenue have been receiving
many letters of inquiry from taxpayers regarding their
refunds. The records show that as the number of completed
refunds increases, the number of inquiries or complaints
becomes greater in a larger proportion from those taxpayers
who have not received their refunds.
It was realized in the beginning that the refunding
operation would experience many difficulties in its first
year of operation. The problem was an entirely new one and
it was necessary to obtain space and equipment and to train
personnel to accomplish the task. Complications resulting
from the transition from the former method of collecting to
the pay-as-you-go plan in mid-year of 1943 have also affected
the refunding program adversely. Unanticipated difficulties
in the recruitment of commetent personnel have also been
encountered.
Despite these difficulties, the program progressed in
its early stages more or less according to plan and the
initial phase was completed only slightly behind schedule.
The second phase of the operation, which commenced a few
days prior to November 1st, has in some respects been a
disappointment. In this second phase it was expected that
the Processing Division would dispose of approximately
500,000 cases per week by scheduling thirty to thirty-five
per cent and returning the balance to Collectors for final
action. Notwithstanding the fact- that the Processing Division
has bent every effort to do so, this schedule has not been
maintained. Even if it were possible to make up the present
deficiency in the remaining weeks it would throw upon
Collectors offices a greater volume than they are equipped
to handle.
-2ORANDU FOR THE SECRETARY.
It was originally hoped that the major part of the
program would be completed by January 31, 1945. Subsequently, this date was moved up to February 20th and then
to February 28th. It now appears that it will be impossible
to complete the task until a considerable time after the
close of this year's filing period.
Taxpayers are now faced with the necessity of filing
their income tax returns for 1944. Many of them who have
not received a settlement of their overpayment for 1943 will
owe a tax for 1944. It is anticipated that this fact will
greatly increase the pressure on the Treasury, on the Bureau,
and on members of Congress to expedite the 1943 refunds.
Furthermore, many of them will wish to take a credit for their
overpayment. This will present serious administrative
difficulties to the Accounts and Collections Unit and to
Collectors' offices.
In its consideration of the problem, the Bureau has
already taken action within administrative limits designed to
accelerate the preparation of refund schedules. However, it
seems certain that these measures are not sufficient in themselves to provide the degree of acceleration needed to complete
the refunding operation for 1943 before the 1944 returns become
due on March 15, 1945. This has brought the Bureau to con-
sideration of the possibility of a broader modification of
policy.
The treatment of the refunding problem, thus far, has
been predicated upon the proposition that the amount of
withholding or prepayment credit claimed by a taxpayer on his
annual return should be substantiated by comparison with the
amount of withholding reported by his employer, or a verification of payments on the 1942 tax, or the estimated tax for
1943 by comparison with Collector's records. The change in
policy herein presented contemplates that refunds be made on
the basis of the taxpayers' statements on their returns. The
statement on the return, with respect to withholding or pre-
payment credits, like all other items on the return, is
verified by the taxpayer under penalties of perjury.
-3MEMORANDUM FOR THE SECRETARY.
In the beginning the Processing Division received
19,373,191 income tax returns for 1943 and approximately
150,000,000 duplicate withholding receipts and other
vouchers representing advance payments applicable to the
1943 tax. Its task is to verify the credits claimed on
returns by matching and comparing the documents representing advance payments and to prepare schedules of
refundable amounts for certification by Collectors. Of
the 19,373,191 returns, it is estimated that about
16,000,000 will require the payment of refunds. As of the
present time, about 10,500,000 refunds have been scheduled
and there remain approximately 6,500,000 returns to be
examined.
The remaining returns are the ones presenting the
greatest difficulty and in about one-half of these cases
it will be necessary, under the present plan of operations,
to correspond with or interview the individuals concerned.
Based upon the experience of the past ten weeks when the
more difficult cases were first taken up, it will require
about five months to bring the 1943 refunding operation to
a conclusion, assuming adherence to established practice.
The Bureau feels, in order to avoid the increasing
criticism, that it would be justified, as an emergency
measure, in making payment of the remaining refunds on
the basis of the amount claimed by taxpayers on their
returns, subject to a post-review of the cases involving
substantial amounts or containing any elements of doubt.
If this plan is approved, the scheduling of refunds in
the remaining cases could be greatly expedited and the
Bureau would expect that the work would be substantially
completed in approximately six weeks. Inasmuch as interest
at the rate of six per centum per annum is paid on these
refunds, some monetary benefit would accrue from this
acceleration, in addition to the avoidance of criticism.
You will understand, of course, that a few errors would
4
-
MEMORANDUM FOR THE SECRETARY.
be unavoidable but it is believed that no erroneous
refund of any substantial amount would be made which
would not be discovered and rectified as the result of
post-review.
Commissioner.
Approved:
Humathank
Secretary. Jun12,1945
123
MEMORANDUM FOR THE SECRETARY.
January 12, 1945
Mail Report
Though there were no new subjects discussed in the
mail received this week, the intake was heavy, and the
letters had more urgency than they have had for many
weeks. A great deal of pressure came from families of
Service men whose bonds purchased by deductions were
overdue. In almost every case, the soldier is stationed
overseas, and his bonds, which used to come regularly,
have not been received since August or September. The
date of the last bond received is almost always given
as July.
The second trouble spot was, of course, overdue
tax refunds. While requests sent the Secretary of the
Treasury remained about the same, those addressed to
the President have steadily increased. During the first
11 days of January, 36, of the 85 pieces of mail forwarded
from the White House demanded payment of tax refunds.
Other mail remained much as usual, with an occasional
shift in emphasis. There was some opposition to increases
in taxes withheld, or to new tax forms. Objection to
cancellation of ration stamps decreased greatly by the
end of this week, as had letters dealing with a Federal
lottery. Both of these were live topics last week, but
now seem to be on the way out. Some 20 inquiries concerned Adjusted Service Bonds, and countless others
related to Series E holdings.
Recent war reverses prompted 3 unfavorable communi-
cations regarding the so-called Morgenthau Plan.
o
Gibnee E Forbush
124
General Comments
Nancy Lyke, Bronxville, New York. I just heard over
the radio that you have been put in charge of disposing of several thousand old-style WAVE hats, and
that you are having quite a time getting rid of them.
I agree that it would be foolish to throw them away,
and I think it would be very difficult for a group
of men to decide about what to do with women's hats.
I am a high school girl, and I know several other
girls who agree with me that those old-style WAVE hats
are darling. Why not put them on sale in stores all
over the country for purchase by high school girls. I
am sure it would start a new fad. I know that I would
love to wear one of those darling WAVE hats. I would
appreciate it very much if you would consider this.
R. G. Bostwick, Thorp, Bostwick, Reed & Armstrong
(Lawyers), Pittsburgh, Pennsylvania. -- Letter for-
warded by Senator Joseph F. Guffey (Pa.) -- We have
for many years represented the Marquise Josephine de
Amodio, who was Josephine Wainwright of Pittsburgh
before her marriage to a Spanish citizen. When the
Germans took Paris, she escaped to Switzerland. She
was too ill to be brought by airplane, or otherwise,
to the United States, and has ever since been confined
to her hotel in Geneva, where she now is. She is
continuously under the care of physicians, and has
very heavy expenses. In addition to taking care of
herself, she has to support her daughter. # They
are held by the Swiss Government pending the deposit
of funds with the Swiss Government, to insure the
fact that neither of them would become public charges
in Switzerland. # # From time to time the Treasury
has issued some special licenses under which money has
been sent to the Marquise, and $500.00 is sent to her
monthly under General License No. 33 in such cases
provided. In September of 1944, the Guaranty Trust
Company of New York, at the request of the Fidelity
Trust Company of Pittsburgh, applied for a license to
pay $20,000.00 to the Swiss Bank Corporation of New
I
York, for account of its Geneva office.
125
-2-
made a trip to Washington and had a conference with
Mr. Bennett of the Foreign Funds Control Division, for
which your Mr. Bailey made the arrangements, but no
action upon this application for special license has
yet been granted. * The Marquise has repeatedly
cabled that her situation is very bad. One cable read,
"Have sent already four affidavits this year to Legation
at their request Last one amounting Seventy Thousand
Eight Hundred Francs for nineteen months debts You
must find your way settlement before December 30 to
Swiss Bank or Legation." If We wrote Mr. Bennett personally
on November 8th, 1944, asking that he give the matter
his personal attention. That letter was not acknowledged.
We wrote him again on November 17th, 1944, making the
same request, but still have not heard. You can see
that the Marquise has filed affidavits with the Legation
in Geneva, and done everything requested of her by the
Treasury through the Legation, so we think this application
should have attention. The Fidelity Trust Company and
ourselves would greatly appreciate your contact with
Mr. Bennett, to see whether we can get some action to
enable us to send money to the Marquise which belongs to
her, and which could well be protected so that no part
of it can possibly,
German
citizen. #in* any way, be of any benefit to any
126
-3Favorable Comments on Bonds
Iris Daniel, Westwood, New Jersey. I have no doubt
you are surprised to hear from me, as we have not had
the pleasure of meeting. I'm a girl singer 20 years
old, and would like very much to have you hear my war
bond song. # # # It really draws a crowd, and war
bonds go like mad. I will be glad to send you the
record of "Come and Get It - Your War Bond Today. *
*
If you are interested, please let me know. After all,
I consider this very little compared to what our boys
are going through.
*
127
- 3aUnfavorable Comments on Bonds
F. O. Johnson, Atlanta, Georgia. It occurred to me
to call your attention to a situation here in Georgia
which may vitally effect the sale of War Bonds and
other Treasury issues. This state has an intangible
tax law, and although they cannot tax Federal securities they have ordered that ALL U.S. BONDS MUST BE
REPORTED or severe penalties may be imposed. Can you
see the result? Hundreds of thousands of people have
U.S. WAR BONDS and no other intangibles. So, to
comply with this directive, there must be hundreds of
thousands of returns made in duplicate on which the
state cannot collect one cent. A FINE WASTE OF EFFORT,
MAN POWER AND PAPER. I believe that, when this is
found out, any number of people will sell their bonds
to avoid this nuisance. WHY NOT? A list of Federal
bond holders would make a fine "sucker" list for sale
to swindlers or even legitimate business - wouldn't
it? Of course, the information is supposed to be kept
confidential, and it may be. However, confidential
matters have a peculiar way of becoming public on OCcasion, even in war.
Mrs. John Smith, Alexandria, Virginia. (Copy of letter
addressed to the Editor, Washington Post, Washington,
D. c.). I am just one of the many wives whose husbands
are fighting overseas and living on the small salary
that a Captain earns, saving, skimping, to make both
ends meet. I have been saving my "red points" for
months, trying to save enough to get a rib roast, and
as a Christmas present from Uncle Sam, my ration points
were all cancelled, after repeated statements that
they were to be good indefinitely. So one cannot believe their own Government -- what next to be cancelled shoe stamps or Government bonds. I took no chances but
cancelled all of my "E" bonds by turning them in and
getting the cash, and believe me I am going to keep the
cash and buy no more war bonds. I am not the only one
who is doing it either, so do not feel that I am being
unpatriotic in any sense of the word.
O
128
4-
Mrs. Edward E. Thate, Three Forks, Montana. My husband
and I have bought as many bonds, Series E, as we can.
We buy them every pay day, and we have kept them. But
a number of people have told us, that if we both die,
our children will not be able to inherit them and the
money will go to the government. Is that so? Being
Americans we want to support our war effort as much as
we can. We have bought about $3,000 worth of bonds so
far. We do not want to cash any. But I have a son, a
Jap prisoner or dead. He has been in the Philippine
Islands since April 41. And I have a daughter in the
WAVES. My other son works in the smelter at Anaconda,
Montana. If anything happened to us, we would like
for the children to inherit the bonds. Some people try
to tell us our bonds won't be any good, but we tell
them, if the bonds aren't good, their money won't be
either.
Anonymous, San Antonio, Texas. - (Letter addressed to
Senator Tom Connally (Texas) and referred by his office
to the Treasury Department) - I have been spending my
days issuing bonds for one of the local banks. Every
day someone asks me whether or not the United States
might freeze the War Bonds and refuse payment before
maturity. People are really worried about this. It has
been my honest opinion that our country would not do
such a thing, and I have argued myself blue in the face
trying to establish absolute confidence in the integrity
of our government. * * BUT NOW they tell me, "Well,
the government asked me not to buy more than I needed,
and they have canceled my reserve stamps for canned goods
and sugar; I am going to use my spare money to purchase
canned goods and to hoard all I can instead of buying
bonds. Can I honestly tell all my customers that
Uncle Sam will keep his word and cash the bonds as stated
in writing on the face? You will see from this letter
that my trouble is not points or sugar or canned goods
it is a need to be reassured myself that Uncle Sam will
not again break faith so that I can argue with CONVICTION
when I tell people, "Your bond is the best buy on earth;
it is better than money in the bank."
o
-
129
-5-
Mrs. Wirt Leake, Dallas, Texas. In accordance with my
personal desire and against the opinion of friends,
I have put my entire savings in U. S. War Bonds. Since
the withdrawal of food stamps, which makes no difference
to me personally, I have wondered if the same thing
might happen to our War Bonds. After all we only have
small papers and the government's word. We had the
same thing in ration stamps. This makes a feeling of
anxiety and distrust which will not easily be overcome,
and harasses those like myself. How can we be assured
that Bonds will not have the same treatment that ration
stamps did?
R. G. Trosper, Executive Vice President, Greensboro
Merchant's Association, Greensboro, North Carolina. -Letter forwarded by Congressman Carl T. Durham (N.C.) --
I don't know whether you have run up against this thing
of getting a lost bond replaced or not. If you haven't,
believe me, you've got something to learn. You have to
fill out a four-page questionnaire, take an oath before
a notary public, make yourself liable for a penalty of
$10,000 or 10 years in jail and finally even if you bought
the bonds for a minor, get that minor to sign up that it
is OK. With millions of these bonds out, there is bound
to be a tremendous loss to the buyers. The average
person needs a lawyer now to fill out correctly one of
these forms. Couldn't there be some simplification and
as much eagerness on the part of the government to re-
place a bond as there was to sell it in the first place?
Mrs. Edna F. Simpson, Denver, Colorado. -- Letter forwarded
by Senator Edwin C. Johnson (Colo.) -- Since the cancel-
lation of the ration stamps, there has been a persistent
rumor that the Government may freeze or cancel the War
Savings Bonds. We have tried to be patriotic and purchase
all of the bonds we could, in fact, more than we could
actually afford, and should they cancel them and tell us
it was our share of taxes or some other excuse, it would
ruin us financially since we are too far along in years
130
-6-
to start over. You may think this is silly, but it
means a lot to us, and since they had promised the
ration stamps would be good indefinitely, and broke
faith with the public, giving them the It jolt" they
did right at Christmas Time when a promise means more
than at any other time, we have no more faith in what
anyone tells us from Washington. That's a terrible
thing to say, but it is a fact, so would like your
assurance that you think the Bonds are a safe invest-
ment.
131
-7Unfavorable Comments on Taxation
Marvin H. Carter, Carter and Company (Cotton), Troy,
Alabama. I have just finished a three-day bout with
my income tax blank. I had to pay over four thousand
dollars, but I am not kicking about that with my
country in the fix it is. It is a mystery to me how
you could find lawyers to get up such an involved
blank. I have been reading in the papers that you
had a simplified form this year. A bigger lie was
never printed. This one is the worst yet. For God's
sake go back to the old one. We had learned it to
a certain extent and could wade through it. But this
one is much worse instead of better. Suppose you fire
all the lawyers, go out on the street and get the
first man you meet to draw up a form. It would have
to be an improvement written in language people could
understand. When it gets to the pass where making
returns is more onerous than paying the money, it is
time to change.
Ralph V. Villasuso, New York, New York. (Copy of letter
addressed to the Collector of Internal Revenue, New
York, New York). On May 8, 1944, I wrote you regarding
the Claim for a refund that I made, when on January 31,
1944 I filed my 1943 Tax Return. Answering my letter,
you stated that in due time my claim would be refunded,
but it was seven months ago and I have not heard from
you. May I have an idea of when the Treasury Department
will pay me the money I really need?
George McCarthy, Bridgeboro, New Jersey. I am at a loss
to know why a refund of about $96.00 has not been re-
turned to me. The writer is an old man working
every day in a defense plant, doing the hardest, dirtiest
and most discouraging type of manual labor because of
the WAR. Ever since last March, I have been looking for
a return of that 96. It means a lot to me. Please
o
write me a letter or send in a G man to investigate or
something, but don't forget to return the 96. I've been
It's your next move.
jipped enough.
132
-8-
Earl Quickle, Vinton, Ohio. I am writing you in
regard to 1943 income taxes that were withheld on
the pay checks. We had over $100 to be paid back
to us, and as yet we've never heard from it at all.
We are desperately in need of it, and if you could
inform us as to why it isn't being sent, would sincerely appreciate it.
TREASURY DEPARTMENT
133
INTER OFFICE COMMUNICATION
DATE
TO
Secretary Morgenthau
FROM
Messrs. White, Luxford and DuBois
January 12, 1945
Personal and Confidential
We have reluctantly come to the conclusion that it
would be unwise for you to embark upon any currency program
at this time which had as its objectives the trapping of
blackmarket profiteers and tax evaders.
It is not easy for us to take this position since we
have always believed - and we still believe - that a program
of the type you have in mind could be made effective and is
certainly justified on its merits.
Our reasons for urging you to postpone consideration
of a program which would trap the black market operations
and tax evaders are:
(1) Any program of this character must be really
successful in its ob jective of actually
trapping these groups or you will be the
object of ridicule and personal attack.
(2) Those interests affected adversely by the
program (including farmers, professional
men and certain labor leaders) would foment
a hue and cry about gestapo tactics,
threatened repudiation and confiscation of
our currency and savings bonds, communism,
and every other conceivable angle of attack
on both you and the program. The outcry
might well become a chorus with opponents
of the Morgenthau Plan, Bretton Woods and
full employment joining in for a field day
of ideological propaganda.
134
-2(3) We do not think you could count on genuine
support within the Administration. We suspect
that some of your "friends" would like nothing
better than to seize upon the outcry on this
issue as a basis for an attack on you.
(4) We even doubt whether the President would give
you the support you would need. It seems all too
clear that he is prepared to make almost any
sacrifice to achieve unity on the domestic
front in order to procure unity on the foreign
front.
We would like to make it clear, however, that we do
not believe that such a program would really have any effect
on the soundness of the U. S. money or credit system in the
eyes of the public. In our opinion, the arguments which
have been advanced to this effect are not valid.
What really troubles us is that this criticism which
would be levied at you would tend to undermine your effectiveness in fighting much more important and fundamental
issues on which so many of us are depending on you to carry
the ball--for example, the German issue, Bretton Woods and
full employment--in fact the whole cause of liberalism. In
addition to the tremendous amount of your time and that of
many able men in the Treasury which such a program would
undoubtedly consume if it were made really effective, there
is the more important problem of how many issues you feel
that you can take the heat on. If this issue was of
tremendous significance that would be one thing. However,
we are sure you will agree with us that this issue as
compared with others in its relationship to making a better
way of life is truly insignificant.
ADL
o
HDW
paragh
good
135
January 12, 1945
Dear Ar. Bowles:
This will acknowledge receipt of
your letter of January 8, 1945.
Please accept my thanks for your
prompt response to my inquiry on the
question of bills of large denominations
in black market operations.
Yours sincerely,
(Signed) H. Morgenthau, Jr.
Mr. Chester bowles, Administrator
Office of Price Administration,
Washington 25, D. C.
o
136
OFFICE OF PRICE ADMINISTRATION
WASHINGTON 25. D. C.
Finished
OFFICE OF THE ADMINISTRATOR
Personal and Confidential
January 8, 1945
The Honorable
Henry Morgenthau, Jr.
Secretary
Department of the Treasury
Washington, D. C.
Dear Mr. Secretary:
I have checked rather thoroughly with our enforcement
people on this whole question of bills of large denominations
in black market operations. We do not, of course, have any
accurate information on the volume of currency employed in such
transactions or the volume stored away which may represent profits
from black market operations.
We do know that a high proportion of transactions occurr-
ing in violation of our regulations take the form of illegal pay-
ments in cash. This is especially true of black market deals in
gasoline, meat, poultry, fresh fruits and vegetables, liquor,
textiles, and certain other commodities. Our experience has been,
also, that where large amounts of cash are paid illegally the payment is likely to be in bills of higher denominations.
As to hoarded cash representing profits on black market
sales, we have heard many rumors that the amount is high. We have
no concrete evidence in our possession on this. Again we know,
however, that black market transactions involving payments of
cash are not recorded in the books of the violator. The profit
represented by such deals must largely remain in the form of cash.
Likewise, profits from illegal transactions not involving cash on the side, but upgrading or other forms of violations,
are undoubtedly frequently withdrawn in cash to avoid detection as
well as to avoid payment of taxes. There is undoubtedly considerable foundation to the rumors of hoarding of cash resulting from
black market profits.
The plan which you suggested over the telephone would
help us substantially in our fight against the black markets. In
the first place, it would make cash transactions and the hoarding
of black market profits more difficult. More important, it would
reveal sources of illegal transactions which could be checked
further and violations prosecuted. In addition, any measure which
would assist the enforcement of the tax laws would aid materially
our own enforcement efforts. For these reasons the steps which
137
-2you outlined would be welcomed by us as a distinct aid in enforcing
price and rationing regulations.
I understand that this move was made in Britain and proved
highly effective, both from the standpoint of tax collection and as
a curb on black marketeers.
Please let me know if I can be of any further assistance.
My best regards.
Sincerely,
Alut Brules
Chester Bowles
Administrator
P.S.
I am attaching a copy of last week's United States News (Jan. 5, 1945)
with an article covering this subject.
UNITED STATES NEWS
The National Week
January 5, 1945
-
OVERSUPPLY OF CURRENCY:
SYMPTOM OF LAWBREAKING
Use of Huge Cash Excess for Tax Evasion and Black Market Deals
pay rolls But this is not the part that is
growing. and is not the cause of concern
The Pictogram on pages 20 and 21
shows the size of the currency expansion
The chart on this page reveals where. by
bill denominations, that increase is occurring. Big bills-those of 850, 8100 8500
BILLIONS
BILLIONS
OF DOLLARS
OF DOLLARS
14
14
RRENCY
13
13
DENO
12
ION
12
11
11
10
10
8
6
market operations, tax evasions and other
illegalities, as well as a boom in hoarding
The growth of the currency demand is
causing other worries as well. It is working
printing presses overtime It is forcing the
Federal Reserve Board to consider a request that the gold cover for the currency
dollar be reduced from its present 40 per
to some lower figure (See page 53.)
Most concern. however, relates to the
dishonesty that probably is represented in
important part by the increase of almost
818,000,000,000 in currency Part of that
increase, of course, relates to increases in
dealer offers to "forget" the excise tax that
7
growth of illegal transactions, of black
income to in he premiums include reports these for for cash illegal taxation receipts gas Or Then in a the fur
profit on the sale of the coat.
All such transactions build up demands
for currency and contribute to the curreney expansion. The effect is magnified
7
300.000,000 and rising at the rate of
$5,000,000,000 a year. The Government
now fears that these figures cover a huge
fails
to include in his income tax return his
8
The amount of cash that the American
public is using today is beginning to be a
major concern to the Government
Currency in circulation five years ago
was $7,600,000,000 Now, it is above 825,
cash he
mands related to tax evasions
For example, a garage owner collects
his customer should pay on a 8500 fur
coat. if the customer will pay for the coat
in currency Then the dealer can "forget"
9
of money in circulation.
Hoarding of many big bills
services in currency, rather than by check.
although by no means are all such de-
9
Rapid increase in amount
6
and higher-have risen by more than
85,000,000,000, largely in the last two
years. Bills of that size are not used extensively in legitimate transactions Offi-
5
5
cials are inclined to think that at least this
85,000,000,000 and as much as $2,000,000.
000 more in smaller bills may now reflect
illegal transactions and hoarding.
4
4
$1.2.5811
How the illegitimate activities and
hoarding are affecting the currency supply
is indicated in the following:
2
BILLS
AND
2
OVER
1
now are 40,000,000 8100 bills circulating
or in hiding, or more than twice as many
were in use only two years ago. Other
signs of tax evasion are numerous, too.
especially in the wide-spread pleas and
demands for buyers to pay for goods and
3
COIN.
1
Tax evasions. Tax rates at their wartime levels offer a great incentive to evasion. In this evasion, currency is a big
help. Transactions in cash are difficult to
trace. That is one big reason why there
3
0
0
DEC. 31
DEC. 31
DEC. 31
DEC. 31
DEC. 31
OCT. 31
1939
1940
1941
1942
1943
1944
Copyright 1945 By The United States News Publishing Corporation
JANUARY 5, 1945
19
The National Week
Salary Pinch for Top Officials:
Problem of Keeping Best Men
Squeeze on U.S Leaders' Income by High Taxes and Living Costs
tion, frugal Calvin Coolidge, during the
unruffled and easy tax days of the '20s is
Private funds needed by the
holders of many Government
posts. Proposal to raise pay
commonly supposed to have saved a large
share of his salary as President. Now, in
spite of the quadrennial seramble for the
job, for which there is never any lack
of applicants, a man without private
Washington's upper-deck officials are
finding themselves caught between wartime taxes and high living costs. Govern-
means would have trouble handling it.
The Vinson proposal would raise the
presidential salary to $100,000 a year. But,
with 10 per cent of allowable deductions,
the tax on this amount would be $60,465.
He would have $39,535 left-or less than
$6,000 out of the $25,000 raise that Congress may give him. State taxes would
take still more of this.
This would put the presidential salary
at the edge of the range enjoyed by movie
stars and big business executives. Scores
of these salaries run above the $100,000
ment clerks have gotten raises in one way
or another. New pay scales have been set
up for the officials of war agencies to lure
more capable men into Government serv-
ice. But the top officials who run the
Government and shape its policies still
are trying to get along on salaries of a
bygone era when neither taxes nor rents
were what they now are.
The problem is reaching an acute stage.
Congress is taking it up gingerly, talking
about a raise for itself and for the President, the Vice President, the Speaker of
the House of Representatives and for
members of the President's Cabinet. Rep-
resentative Vinson (Dem.) of Georgia,
-Harris & Ewing
REPRESENTATIVE VINSON
bonus for brains?
has introduced a bill to accomplish this.
But the bill does not reach under secretaries, assistant secretaries and the heads
of bureaus, all experts in their fields. They
mold the policies for their agencies. And
where they were in 1925, when their own
salaries were raised from $7,500 to 810,
they are being drained steadily out of
But Congress has the job of fixing the
pay of its own members. It always is uncertain of the reaction of constituents. It
hesitates to raise its own pay. And members of Congress are slow to acknowledge
that any Government official of lesser rank
than a Cabinet officer should get a larger
salary than a member of Congress. To the
heads of some Government agencies, such
as members of the Social Security Board,
Congress is willing to pay a sum equal to
that of a Senator or Representative. But,
in the main, the pay of bureau chiefs runs
below 810,000 a year. An overtime pay
act builds this up by about 8625 a year.
Government service by business concerns
that will pay them more money than a
Cabinet officer can get.
Their plight. Like the Cabinet officers,
these officials are shut off from earnings
outside the salaries from their Government posts. Those with private fortunes
must draw upon them. Those who are
not wealthy find themselves pinched to
live on Government pay. If they do not
quit the Government for jobs with private
industry, they find themselves compelled
to make personal sacrifices. It is getting
harder to attract men with brains into
public service, either in the executive departments or in Congress.
Even for the President after taxes have
been deducted, the salary now is only
about two thirds of the 830,000 that was
paid for that office in 1909, when the present salary of $75,000 was fixed. The Vice
President, Speaker of the House of Representatives and members of the Cabinet
now get $1,000 a year less, after taxes are
paid, than the $12,000 their predecessors
received in 1925, when the pay for their
posts was raised to 815,000 a year. And
members of Congress are just about back
22
000 a year.
The pay of the President is cut by
federal taxes to around 833,600. New
York State taxes carve still more out of
it. The President gets another $25,000
yearly as an allowance for travel and en-
tertainment But the expenses of maintaining his office is so great, what with
foreign visitors brought in by the war,
that the President may have to dig into
his private income to maintain the establishment. A rent-free White House does
not wholly compensate for the other expenses of the office.
By comparison with the present situa-
mark. The tax take on these works the
same as on the presidential salary. A
movie star making $150,000. as did Paulette Goddard in 1942. given a 10 per er
deduction, would pay $101,615 in feder.
taxes. One making $200,000. as did Don
Ameche in the same year, and with the
same deductions, would pay $143,305 in
federal taxes. But a President, unlike a
businessman or a movie star, is shut off
from many kinds of other earnings.
Supreme Court salaries are set at 820,000, but, after taxes, the Justices have less
than the $15,000 set for Cabinet officers.
Members of the Court are not affected by
the Vinson proposal. But they receive lers
in yearly salary than many a high-priced
corporation lawyer gets from one big case.
Yet, such is the prestige that goes with
the Supreme Court bench that there always are more applicants, or hopefuls, than
there are vacancies. The cream of the nation's lawyers always are available.
The Vinson plan would raise the pay
of the Vice President. the Speaker and
members of the President's Cabinet to
the $20,000 level now enjoyed by the
Justices.
Cabinet officers, just as the Vice President and the Speaker, now get $15,000.
But, aside from the 10 members of the
Cabinet, only a handful of men in the
Government are paid such salaries, Three
of them are the heads of new war agenci-
James F. Byrnes, Director of War Me
lization and Reconversion: Julius A. Krug.
Chairman of the War Production Board,
and Fred M. Vinson, Director of Economic
THE UNITED STATES NEWS
1-8-45
140
TO:
SECRETARY MORGENTHAU:
COPIES SENT TO ALL MEMBERS
OF THE 9:30 GROUP.
P.B. Mannen
THE
141
SUN
JAN 7 1945
The Great
Game of
Politics
By FRANK R. KENT
Tax Evaders And
Hoarding
WASHINGTON, JAN. 6
the war began; fourth, much more
idle-eash in the pockets of workers:
Afth. the many shortages which
create a demand for more cash
with which to shop and, particu-
larly, with which to trade in the
black market; sixth., individuals
and businesses which have gone
on a "cash" basis in order to hide
income and evade taxes; seventh,
hoarding.
THERE WILL be slight dissent
from this statement of causes for
the expansion of the currency: but,
as Mr. Robey points out. quite
clearly they do not explain the
enormous increase of four billion
in the last eight months. Because,
the first four reasons were all
operating last April and there
NOT THE least of the problems has been no jump since then in
for which the Treasury is not too factory pay rolls, not much in millwell equipped to handle are those tary pay rolls, only a slight rise in
created by the almost incredible prices and no great increase in
amount of money which has come pocket cash. How then can the
to be in circulation. It is so vastly four billion in eight months be acin excess of anything heretoforecounted for? There seems but one
dreamed of that it is rather ap answer-hoarding
tax evasion and
black market. If there is any other
palling to contemplate.
explanation it has not been adCERTAINLY, there are no concrete
vanced.
ideas of how to control it and no THIS IS not a pleasant theory. but
definite notion of the consequences has to be accepted- and it is
of not controlling it. This is not an accepted by those here whose busiindictment of the Treasury on the ness it is to "hold the line" against
ground of inexcusable ignorance. inflation, concerning which there is
The truth seems to be that nobody more
now
than justified apprehension
since
the
knows. In fact, it is pretty gen- began. at Partly, any time this is due to war the
erally agreed that, in or out of the manner in which the Administra
Treasury, there is no clear under- tion has yielded to CIO political
standing of what the immense in pressure for more money for steel
crease means and how it is to be workers and, partly, to the utter
accounted for. All anyone seems failure to evolve a firm, compredefinitely sure about is that in hensive and nonpolitical tax proare the
News, there to some
April of last year the total amount United gram. As States of today. according
of money in circulation was a little 40,000,000 more $50 and $100 bills
more than $21,000,000,000. or in circulation or in hiding. which
$154.65 for every man. woman and is 100 per cent more than a year
child in the country. Since April, ago. There also has been a great
according to the latest available increase in the number of $500
figures-December 15-the total and $1,000 bills.
was $25,163,000,000 or $182.21 for
every individual In brief, the in-
NOR is there any end to the
expansion. Month by month the
000,000 in eight months-and it is money continues to roll out. It is
crease has been more than $4,000.
a situation without precedent and
not without danger. It is causing
IN
THEbeen
wholesuch
of history
there has concern
every
official
never
an
whose to
jobpractically
touches the
fiscal
facts
increase
money. No previous increase even in and who is capable of understand
compares with it. No one so far ing them-which does not include
has adequately explained it. Mr. all of them by a long shot. NeverRalph Robey, one of the most emi- theless, many are convinced that
growing every week.
those
three factors-t evasion,
nent authorities in the country,
hoarding
and black marketsasserts that so far as the general
expansion is concerned there is al.
most unanimous agreement among
students of finance on the reasons:
the real explanation and that they
have reached menacing propor-
tions. Ways of discouraging all
First, the increase in factory pay three are being studied and there
rolls, which are more than double
is a prospect that Congress will act
those of 1939; second, the great along these -particularly on
lines to catch the quasion
growth in military pay rolls: third
the 33 per cent rise in prices since practitioners.
THERE IS. in fact, a very strong
determination to prove to these
that they are not nearly as clever
as they that, in reality, they
are exceedingly stupid and have
laid themselves open to pretty
heavy penalties, to say nothing of
extremely unpleasant publicity.
One thing which is pointed out is
that no tax evader who has been
hiding income by the "cash" system
can feel safe from investigation and
prosecution for six years. That is
under the present law. But. it is
declared, Congress will be askedand assuredly will respond-to ex
tend still further this time limit
Also. there are other ways by which
the cash hoarders and the tax
evaders can be exposed and pun
ished. At the moment the intention
is to use them all.
NEWSWEEK - DECEMBER 25, 1945
BUSINESS TIDES
NEWSWEEK
12/25/44
How the Money Rolls Out
by RALPH ROBEY
This column under the date of
last April 24 was devoted to the question of the incredible amount of money
in circulation in this country. At that
time the total was a little over $21,000,000,000, or $154.65 for every
man, woman, and child in the country.
Since then, or in a period of only eight
months, the total has risen another
$4,000,000,000 and on Dec. 13, the
last day for which figures are available, stood at the amazing total of
$25,163,000,000, or $182.21 for each
person in the country.
Never before in the history of this
nation has there been an increase of
money in circulation comparable to
this. And the end of the expansion
clearly is not in sight. Week by week
and month by month it continues with
never a let up. What does it all mean
and how is it to be accounted for?
No one knows the answer to those
questions in any definitive, qualitative
sense. 'All anyone knows are some of
the general factors which it seems
quite, reasonable to suppose are contributing to the increase. And it now
appears that even in these broad
terms we know less than we thought
we did.
Thus in this column last April, it
was said that the general factors accounting for the expansion were:
1-An increase in factory payrolls of
about 2% times over 1939.
2-The growth of the military payroll.
3-The rise of prices of approximately one-third over 1939.
4-More idle pocket cash as a result
of higher weekly wages.
5-More professional people and individually operated business concerns
going on a "cash" basis in order to
hide their real income and thus evade
taxes without danger of being caught
by the tax collector.
6-The growing shortage of goods
with a consequent demand for more
cash with which to shop around from
store to store, and especially for trading in the black market.
7-Hoarding.
Now at the time this appeared to
be a perfectly sensible list and one
could go from one student of this
problem to another and the chances
were that he would get this particular
listing almost item for item. And that
till in turgely true.
But now consider this: Of these
seven factors, the first five quite obviously can have had little or nothing
to do with the increase of more than
$4,000,000,000 of money in circulation
during the past eight months. During
this period factory payrolls have declined, the size of the military has increased only slightly so the demand
for the military payroll presumably
has remained approximately the same.
the general price level has not changed
to any appreciable degree, the increase in the weekly wage rate has
been insignificant from the point of
view of causing people to change their
habits as to the amount of money they
carry in their pockets, and those who
are willing to try to evade their just
share of the present tax burden by
going on a "cash" basis almost certain-
ly would have started on this path
long before last April.
So where does this leave us in
seeking for an explanation for the
continued enormous expansion of
money in circulation? Have any new
factors come onto the scene?
In so far as anyone can determine
there are no such new factors. From
casual observation and the endless
stories that one hears, it is evident
that people constantly are spending
more and more freely in night clubs
and for other forms of entertainment
and for all kinds of luxury items in the
stores. In the aggregate ,this spending
unquestionably comes to a huge sum,
but even so it does not appear prob-
able that the increase in this field
during the past eight months could
account for more than a minor pro-
portion of the $4,000,000,000 expansion of currency within this period.
We have no choice, therefore, but
to assign the major proportion of the
currency expansion to the growth of
black markets and hoarding-hoarding, not in the sense that people are
frightened and thus hold cash as a
matter of safety, but hoarding simply
as the most convenient way to aocumulate and hold their savings.
On the whole this is not a pretty
picture. And, even more important,
the expansion of the currency is now
getting to the point where, because
of the demand it is making on our gold
reserves, it shortly will begin to create
a really serious problem which will
have to be faced.
January 12, 1945.
My dear Senator Truman:
Since receiving your letter of January 4,
I have made some inquiries about the situation in
the Kansas City and St. Louis offices of the Procurement Division concerning which you wrote.
Mr. Thomas C. Stephens, who was assigned to
the position of Regional Director at St. Louis on
December 1 last, is originally from Kentucky and
is a graduate of the University of Kentucky. When
the Treasury first employed him in 1936 he had been
working for the Missouri Relief Commission in
Jefferson City and St. Louis and he continued to
work in Missouri for the Procurement Division until
1940, when he returned to Kentucky. He was in San
Francisco only from March, 1943, to October of last
year. Since his assignment to our Kansas City office
there have been but two employees transferred there
from California, both with our approval. I have not
been able to find that he has employed any relatives.
I shall be very happy to pursue the inquiry
further if you can give me any definite leads or
suggestions. Perhaps it would be a good idea for
Mr. John Pehle, Assistant to the Secretary in charge
of the Procurement Division, to call on you and give
you what information he has available as to Stephens
and the situation in the St. Louis and Kansas City
offices. He would be delighted to do so at any time.
Sincerely,
(Signed) H. Morgenthau, Jr.
Secretary of the Treasury.
The Honorable Harry S. Truman
United States Senate
HEG/mah
144
THE SECRETARY OF THE TREASURY
O
WASHINGTON
January 9, 1945.
My dear Senator:
Referring to your letter of January 4,
I am having inquiry made about the activities
of Thomas C. Stephens, Regional Director of
the Procurement Division office at Kansas
City. I shall be happy to write you again
when I get something more definite.
I
have learned, however, that Mr. Stephens
is not a Pacific Coast man as you apparently
were led to believe but is originally from
Kentucky and went out to the Pacific Coast in
March of 1943, after several years spent in
the Treasury service in Kentucky and Missouri.
Sincerely,
M mithauh
Secretary of the Treasury.
The Honorable Harry S. Truman
United States Senate
ORVICTORY
BUY
WAR
BONDS
STAMPS
19-3
United States Senate
COMMITTEE ON MILITARY AFFAIRS
Washington, D. C.
January 4, 1945
Dear Mr. Secretary:
While I was out in Kansas City I had a series of
complaints about the assignment of Mr. Thomas C. Stephens,
who has been made Regional Director of Property Disposals
in Kansas City, Missouri.
Mr. Stephens is replacing capable and efficient men in the
office, both in St. Louis and Kansas City, with his sisters,
his cousins, and his aunts, and favorites from the West Coast.
This fellow has completely upset the apple cart, and I
suggest you send him back to the West Coast and let him
exercise his talent out there.
Sincerely rouns,
HST:MLD
Harry Truman, U.S.S.
Honorable Henry Morgenthau, Jr.
Secretary of the Treasury
Washington, D.C.
unk ashul we 1930
40-31- 31/3"
policious
missing and
33
40
KI Pec
STANDARD FORM NO. 84
Office Memorandum . UNITED STATES
FROM
:
TO
Mr. J. W. Pehle
: W. W. Parsons
GOVERNMENT
DATE: January 12, 1945
wwl
SUBJECT: Appointments and Separations in Kansas City Regional Office
An analysis has been made of all separations and appointments
in the Kansas City Regional Office occurring since October 5, 1944,
the approximate date upon which Mr. Stephens reported for duty in
Kansas City. Only two employees appointed were from California,
namely, F. Gerald Moyer, Acting Deputy Director for the Office of
Surplus Property, and Joseph Gardner, a Sales Officer (CAF-7, $2600).
You are familiar with the Moyer case and the file on Gardner gives
no indication of anything unusual or that should in any way be
questioned. None of the employees appointed since October 5, 1944
are relatives of the Regional Director.
The analysis excluded four appointments which are now in process
of approval for which the files were not immediately available.
The appointments made since October 5 total 70 and the separa-
tions total 15.
W.W.P.
January 12, 1945.
Dear Bob:
I am a little late in replying to your
letter of January 5 because I had to look up the
situation with respect to Dale Johnson, a Procurement Division employee at St. Louis, about whom
Father Johnston of St. Patrick's Church had
written to you.
I find fortunately that Father Johnston's
fears are needless. Instead of planning to
dismiss Dale Johnson, Mr. Stephens, the Regional
Director, is in fact considering promoting him
and placing him in charge of the St. Louis
district office.
The work.
report we get is that Dale Johnson is doing
excellent
Sincerely,
(Signed) H. Morgenthau, Jr.
Secretary of the Treasury.
Mr. Robert E. Hannegan
Chairman, Democratic National Committee
Mayflower Hotel
Washington, D. C.
HEG/mah
DEMOCRATIC NATIONAL COMMITTEE
MAYFLOWER HOTEL
WASHINGTON 6, D. C.
January 5, 1945
ROBERT E HANNEGAN
CHAIRMAN
PERSONAL
Honorable Henry Morgenthau, Jr.,
Secretary of The Treasury
15th Street & Pennsylvania Avenue
Washington, D. C.
Dear Mr. Secretary:
Reverend James P. Johnston, Pastor of
St. Patrick's Church in St. Louis, is also director
of a number of Catholic charitable institutions.
Among these are homes for working men and working
women. Father Johnston is an old pal of mine and
in the precincts where his homes are located the vote
is always 100% Democratic.
And now Father Johnston has written me for
his first political favor. He advises me that Dale
Johnson (no relation) is the present Manager of the
Property Division and Distribution Procurement
Division of the United States Treasury Department.
Father Johnston says that a Mr. Stephens of the
Treasury Department wants to remove Dale Johnson from
his present position and Father Johnston wants Dale
Johnson retained.
If it is possible and consistent to do so
I shall appreciate your kindness in having Dale
Johnson retained in his present position.
With kind personal regards and best wishes,
Very sincerely yours,
Pink
Office Memorandum
:
TO
.
UNITED STATES GOVERNMENT
Mr. J. W. Pehle
FROM : W. W. Parsons
DATE: January 11, 1945
wwP
SUBJECT: Dale H. Johnson, Field Property Officer, St. Louis, Missouri
Mr. Tom Stephens informs me that Mr. Dale H. Johnson, about
whom Assistant Secretary Gaston inquired relative to the inquiry
from Mr. Hannegan, is now doing an excellent job as our Field
Property Officer in St. Louis (at CAF-9, $3200 per year). .
Mr. Stephens is now seriously considering recommending Mr.
Johnson for promotion to CAF-11 ($3800), P to be in charge of the
District Office at St. Louis. There appears to be no ground for
the fear expressed in Mr. Hannegan's letter that Mr. Johnson was
being dismissed.
W.N.P.
149
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE
TO
FROM
Secretary Morgenthau
Messrs. DuBois and Luxford
January 12, 1945.
How about Gen. O'Dwyer for the War Refugee
Board?
We understand he is not committed elsewhere
at this moment and may be interested--but we will
have to act fast.
John Pehle and Harry White think he is a
"natural."
RIL
go
House
150
POLICTORY
BUY
EXECUTIVE OFFICE OF THE PRESIDENT
WAR
WAR REFUGEE BOARD
WASHINGTON 25, D.C.
OFFICE OF THE
EXECUTIVE DIRECTOR
JAN 12 1945
My dear Mr. Secretary:
I am pleased to send you herewith a
copy of the report of the War Refugee Board for
the week of December 25 to December 30, 1944.
Very truly yours,
Josen
J. W. Pehle
Executive Director
The Honorable,
The Secretary of the Treasury.
Enclosure.
151
Report of the War Refugee Board
for the Week of December 25 to 30, 1944
SITUATION IN HUNGARY
According to a report dated December 8 which the Swedish Foreign
Office received from Mr. Wallenburg, the Special Attache to the
Swedish Legation in Budapest, the position of Hungarian Jews has
become very serious. About 40,000 persons -- 15,000 men from labor
service and 25,000 men and women taken from their homes -- have been
forced to march the distance of 240 kilometers to Germany on foot.
Cold and rainy weather has prevailed ever since these marches started,
and since the deportees have had to sleep under rain covers and in
the open, many of them have died. When Mr. Wallenberg was in Moson
Magyarovar, he saw seven persons who had died that day and seven who
had died the day before. The Secretary of the Portuguese Legation
reported having seen forty-two dead persons along the line of march
and others reported similar figures. When any of the marchers could
no longer manage to walk, they were shot. At the border, the deportees were taken over by an SS officer and those who survived the
march and the beatings which they received were put at hard labor on
border fortifications. Twenty thousand military labor men who were
taken to the border by railroad were working mainly on Hungarian
territory.
The Jews in Budapest are being assembled in a central ghetto with a
capacity for 69,000 persons, but which it is indicated will probably
house considerably more than that number. An aliens' ghetto for
17,000 persons is already housing 35,000 Jews, of whom 7,000 are in
Swedish houses, 2,000 in Red Cross houses, and 23,000 in Swiss
houses. A thousand Swiss and Vatican wards are removed every day
for deportation or transfer to the central ghetto. Jews live four
to twelve persons per room in these ghettos, and an epidemic of
"Ruhr" sickness has broken out among them but is not yet widespread.
Since in the process of transferring the Jews from their homes they
were allowed to take with them only what they could themselves carry,
they are generally destitute, and it is expected that the supply
situation will soon be disastrous.
It was reported that the Arrow Cross men, who take numbers of Jews
in their localities, mistreat and torment them before taking them
to the points from which they are deported. Rumors being circulated
that a death brigade closely affiliated with Minister Kovacs will
conduct an anti-Jewish program were discounted by Mr. Wallenberg on
the strength of reports that SS organs have received orders not to
arrange any systematic Jewish slaughters.
The best conditions were reported to prevail in the Swedish houses,
where health conditions are still good and only five persons have
died 80 far. Ward Jews are now being vaccinated against typhus,
paratyphus, and cholera, as are the staff members of the Legation
section conducting activities for the protection of Jews. Since
152
-2-
the events of October, the activities of the section have been further expanded and employees now total 335 in addition to about 40
physicians, house governors, etc. They all live in places under the
protection of the section together with an equal number of members
of their families. The section has about ten offices and dwellings,
one of which is in the aliens' ghetto. Two hospitals with about
150 beds have been established and a soup kitchen has been set up.
Jews in the Swedish ward houses leave their ration cards with the
section where supplies are brought in and distributed. About
2,000,000 pengo worth of supplies have been purchased.
The achievements of the section reported by Mr. Wallenberg included
the procurement of a command from the Honved minister that all Jews
in the labor service with foreign documents should be returned to
Budapest. About 15,000 Jews have returned since orders were given
by a military person sent out in one of the section's cars. For a
short time, until it was forbidden, deportees in the columns marching to the border were given certain food and medicines. About 200
sick persons were rescued from deportation points. Intervention in
one form or another resulted in the return of some 2,000 persons
from places where Jews were loaded for deportation, about 500 from
Hegyeshalom alone, but forcible measures threatened by the Germans
in the Eichmann commando have interrupted this traffic. It was
indicated that as of the date of this report Jews with protective
passports had fared best of all of the wards of foreign powers, only
8 or 10 having been shot in Budapest and vicinity. The forced labor
service mentioned in a previous report was said to have ceased.
EVACUEES FROM BERGEN BELSEN
After a visit was made to the temporary quarters of the group of Jews
who recently arrived in Switzerland from Bergen Belsen, we received
a report from our Legation in Bern indicating that all ages and
social classes are represented in the group, with a relatively high
percentage of intellectuals and professional men. A few of these
refugees are Poles, Slovaks, and Yugoslavs, but the majority are
Hungarians, including some from Transylvania who acquired Rumanian
nationality as a result of Vienna arbitration, and all of them
originally intended to go to Palestine. Although none of them is
actually in possession of a Palestine certificate or its equivalent,
they all hold documents issued by the Hungarian Red Cross or an
international Jewish organization, for the most part shortly before
the German occupation of Hungary, stating that Palestine certificates
in their names are available at Istanbul, and they expected to pick
up their certificates in Istanbul and proceed to Haifa. Most of
them have relatives in Palestine. McClelland reported that, in view
of the nature of the temporary accommodations arranged for these
refugees, the Swiss authorities have urged that their early removal
from Switzerland be facilitated.
153
-3EVACUATIONS THROUGH TURKEY
Representative Katzki reported that authorization has been obtained
for the onward movement of 608 refugees and emigrants of Hungarian,
Polish, and Rumanian nationality who were detained in Bulgaria en
route from Rumania to Palestine.
SITUATION IN YUGOSLAVIA
According to reports reaching us from private sources through our
missions in Lisbon and Rome, groups of 1,200 refugees at Topuska
and 140 at Split are receiving food parcels and relief supplies.
Efforts are being made to arrange to evacuate the Topuska group,
evacuation of which was formerly delayed because of military considerations.
UNITED STATES VISAS FOR PERSONS IN ENEMY TERRITORY
In connection with the question of the transmission to the German
Government of the names of persons eligible for inclusion in the
special visa programs developed for the benefit of persons in enemy
territory and the issuance of collective or individual Swiss entry
visas for them, McClelland advised us that the Swiss Federal Police,
while entirely willing to admit any or all of these persons, share
the views of the Division of Foreign Interests that classification
of the individuals in question as exchangeable would afford the
Swiss a better possibility of protecting them while they are still
in the hands of the Germans than further representations such as
have already been made in their behalf. The agreement of the Board
and the Department of State in the suggestions presented was cabled
to our Legation and it was requested to advise Swiss officials that
the persons named in the lists which we have forwarded may be included
in a category of persons whose eligibility for exchange against German civilians is established.
Minister Johnson advised us that, in accordance with our request,
it has been suggested to the Swedish Foreign Office that submission
of the names of persons in Germany and German-occupied countries
other than Hungary could perhaps be considered as a follow up of
the original Swedish step in informing the German Government that
the entry of such persons into Sweden would be permitted. The
Foreign Office indicated its desire to consult the Swedish Legation
in Berlin before making a definite reply.
REPORT ON THE USE OF BOARD FUNDS IN SWITZERLAND
A report which Representative McClelland sent to us concerning projects to which War Refugee Board funds placed at his disposal have
154
been applied reflects the wide interest and invaluable cooperation
which have been given to refugee relief and rescue measures by
varied groups. In addition to the collaboration of Jewish organizations and other private relief agencies, rescue activities were
undertaken by groups composed of Dutch Jews, German political refugees, and Hungarian students, and by French, Italian, Czech, and
Spanish resistance organizations.
Costs of temporary maintenance, concealment, transportation, and
false papers in small-scale border-passing operations by which Jews
and political refugees were enabled to reach Switzerland from Germany and occupied areas were met with Board funds. In some instances, it was necessary to use money to obtain the cooperation of
border officials. Substantial contributions went to finance the
flight of Jewish refugees from Hungary into Rumania. Expenditures
for objectives collateral to rescue activities included fees for
courier services, costs incident to a series of reports concerning
Jewish persecutions in Hungary issued in English, French, and Ger-
man, and reports on the political situation in Hungary emphasizing
the anti-Jewish and Fascist tendencies of the various Hungarian
governments since March 19, 1944, and contributions for relief to
French, Italian, and Yugoslav resistance people, whose own need was
80 great that they could give us little cooperation without themselves receiving some assistance.
It is of especial interest to note the following accomplishments
reported. A sum placed at the disposal of the director of Catholic
relief work in Lyon was largely instrumental in organizing the release of some 200 wounded prisoners whom the Germans were keeping
at a Lyon hospital awaiting their sufficient recovery so that they
could be executed. In Northern Italy, relief parcels have been
smuggled to Jewish internees in the ill-famed prison of San Vittore
in Milano, and in the camps of San Martino di Rosignano Monferrato
near Alessandria and Fossoli di Carpi near Modena, The release of
thirty-five political prisoners, eight of whom had been condemned
to death, from four prisons was effected in whole or in part with
Board funds. With contributions from the Board and a private or-
ganization, Czech partisans accomplished the capture of the camps
of Sered and Novaky in Slovakia, and an estimated 1,500 persons
were saved, although it is not known how many of them later fell
into the hands of the Germans when the situation in Slovakia deteriorated. Approximately 2,000 persons were enabled to escape
from Hungary to Rumania, 250 to Slovakia, and about 500 to or thern
Yugoslavia. To the group which conducted the latter operations a
further contribution is being made to be used mostly for Budapest
but in part for Berlin, where there are still upwards of 300 Jews
in hiding who are in contact with this organization. Their situation is extremely precarious, and it is hoped that a small group of
155
-5-
young people may be brought to Switzerland within the next few weeks,
the Swiss having already declared their willingness to admit them.
With the help of Spanish partisan groups operating along the chain
of the Pyrenees, close to 700 persons were successfully passed over
the mountains into Spain. Board funds have been depobited to provide
a guarantee in connection with a proposal involving the transportation
of Jews from Bergen Belsen to Switzerland under a plan developed by
a Swiss individual.
Representative McClelland's report, which covers the six-months'
period from May 1 to October 31, 1944, describes the channels which
have been found for making important contacts and for pursuing
rescue possibilities. The funds placed at his disposal have made
possible a variety of approaches to rescue and relief problems, and
the energy with which the many avenues of approach have been developed and followed through is evident in the concrete results
reported.
W. Pehle
Executive Director
156
PLAIN
DOG-83
London
Dated January 12, 1945
Rec'd 1:30 p.m.
Secretary of State,
Washington.
415, Twelfth
TO PEHLE FROM MANN
Please deliver the following message from
Joseph Schwarts to Moses Leavitt of the JDC.
"Please request Plauts passport be validated
for France and Belgium. Glad advise Laura Margolia
arrived and hope have her process Paris and then
Brussels at early date. Jacob Trube has left for
Cairo on route to Balkans and Passman expects
leave tomorrow. I hape return to Paris tomorrow
and after completing work there and visiting Brussels
hope be back London in three to four weeks."
WINANT
NFB
157
MR-408
London
reading only by special
Dated January 12, 1945
Distribution of true
arrangement (SECRET W)
Rec'd 12:08 p.m.
Socretary of State,
Washington.
437, January 12, 9 p.m.
FOR PEHLE FROM MANN
Dr. Loon Kubowitzki requests that a paraphrase
of the following message be delivered to Dr. Nahum
Goldman 1834 Broadway, New York: "Emerson in con-
foronce with Lady Reading and me stated ten million
dollars fund never existed. British Government
never pledged contribute four million dollars InterRed Cross relief. Schirmer Inter-Red Cross delegate
assured Reigner 18,000 Jews around Vienna could possibly
be supplied with clothing and food if funds available.
I urge you consult the appropriate authorities concerning this matter."
WINANT
WSB
Miss Chauncey (for the Secity) Ackermann, Akzin, Drury, DuBois,
Gasbon, Hodel, Marks, McCormack, Pehle, Files
158
CABLE TO MINISTER, GRAY, DUBLIN, IRELAND
War Refugee Board informed that Robert Briscoe, member of Dail,
stated on the authority of the Irish Department of External Affairs that
German authorities stated that the rumor that they intend to exterminate
Jews in Oswiecim and Birkenau campe is a pure invention devoid of all
foundation and that if camps should be abandoned, inmates will be
evacuated.
Please investigate truth of this information and report results.
12:45 p.m.
January 12, 1945
159
CABLE TO AMLEGATION, BERN, SWITZERLAND, FOR MCCLELLAND
Information said to originate with Irish Department of External
Relations reached the Board to the effect that German authorities stated
that the rumor that they intend to exterminate Jews in Ozwiecim and
Birkenau camps is a pure invention devoid of all foundation and that if
camps should be abandoned, inmates will be evacuated.
Please investigate truth of this information and report results.
THIS IS WRB BERN CABLE NO. 360.
12:45 p.m.
January 12, 1945
160
CABLE TO HUDDLE, BERN, FOR MCCLELLAND FROM WAR REFUGEE BOARD
Please deliver the following message to Theodore Fischer, World Jewish
Congress Relief Committee, 1 Rue du Rhone, Geneva, from Dr. Abraham
Silberschein of World Jewish Congress, New York:
QUOTE CABLE FROM KLEE RECEIVED. PLEASE DISCUSS PROJECT WITH
MCCLELLAND UNQUOTE
Following for McClelland from War Refugee Board:
Cable referred to above reads as follows: QUOTEE FCR SILBERSCHEIN
NEGOTIATIONS RE GEORG GUGGENHEIM WITHOUT RESULT THEREFORE DEPOT LIBERATED
STOP AUTHOR OF HERE ARRIVED BERGENBELSEN TRANSPORT DURING SHORT VISIT HERE
GAVE FISCHER HOPE ANOTHER PROMISING WAY SAME MATTER IF NECESSARY MEANS PRE-
VIOUSLY SECURED STOP TRY UTMOST PROCURE HALFMILLION SHISSFRANCS WHILST
CORRESPONDING SUM PROCURED HERE BY INDIVIDUALS UNQUOTE.
Please discuss his plans with Fischer at once and send us your views.
THIS IS WRB BERN CABLE NO. 362.
3:30 p.m.
January 12, 1945
161
EAK-35
Distribution of true
reading only by special
arrangement (SECRET W)
Bern
Dated January 12, 1945
Rec'd 11:14 a.m.
Secretary of State,
Washington.
213, January 12, 9 a.m.
FOR WRB FROM MCCLELLAND
Substance your 49 communicated to Swiss
authorities. (Department's 49, January 3 WRB 34)
who expressed appreciation promptness Board's efforts
organize evacuation this group from Bergen-Belsen
from Switzerland. Swiss also expressed hope that
pending reply from London regarding permission
enter Palestine for majority these refugees arrange-
ments could be started for transit this group France,
a trip which they will have to undertake in any
event whether they proceed to Palestine or North
Africa. In this connection Swiss federal railways
prepared if necessary furnish trains for transport these people to French port of embarkation.
Federal police wish rectify oversight in their
recent communication concerning size group stating
they wish include first Hungarian convoy from
Bergen-Belsen (Legation's 5517, August 23) numbering
group n(#)ly 320 persons. This would bring total
group in question up to some 1672 rather than 1352.
HUDDLE
RB
(1) Apparent omission
Miss Chauncey (for the Sec'y) Ackormann, Akzin, Cohn, Drury,
DuBois, Gaston, Hodel, Marks, McCormack, Pehle, Files
162
EJO-65
Distribution of true
Barn
reading only by special
arrangement. (SECRET W)
Dated January 12, 1945
Rec'd 12:58 p.m.
Secretary of State
Washington
216, January 12, Noon
FOR WRB FROM MCCLELLAND
Legation's 8415, December 29
According recent information from their delegation
in Germany ICRC states retention our first load 15,002
WRB parcels at Harnettends is part of general standstill
all parcels including those for POWS transshipped during
last two months from Gosteborg via Luebeck. German POW
apparently establish closed east west transport corridor
to bring up supplies for their recent western offensive.
No non-military freight traffic in north south direction
was allowed traverse this corridor.
ICRC has been negotiating for some weeks get such
stocks held up moving and received January 10 uncon-
firmed report that three cars containing our parcels
had gone forward on January 4.
News of shipment remaining 60672 WRB parcels to
Toulon contained your 4401, December 30 most welcome
assue may have more luck getting them into Germany from
south.
In packing future parcillis plessecineludessces
individual receipt cards in about 60% of all "y"
parcels as exact addresses for more than about 8000
individual Jewish detainses in German camps are not
available to us here so that many will have to go
forward as collective shipments.
HUDDLE
WID
163
Distribution of true
Born
reading only by special
arrangement. (SECRET w)
Dated January 12, 1945
Rec'd. 6:24 p.m.
Secretary of State,
Washington.
223, January 12, 3 p.m.
FOR WRB FROM MCCLELLAND.
Responsible members of Hungarian group recently
arrived in Switserland from Bargen Belsen (BB) have
furnished me with following figures concerning number
of Jewish deportees in this camp as of end November,
1944. Last figures reported in Legation's 7593, November
17, were as of September 1, 1944.
4500 Jews from Holland (of whom a fairly accurate
list of some 1700 is available in Switserland) and
Belgium. Several hundreds hold Latin American documents
or are registered for Palestine immigration; 3500 Slovak
and Hungarian women and girls including a few children
transferred to BB from Auschwits during September, 1944.
They are housed mostly in tents at BB and very badly
off especially as regards clothing. It is expected they
will be gradually shifted to work campe within Germany;
349 Poles bearing Latin American documents about 30
claiming US nationality (list to be forwarded to you
shortly) and larger part classified as Palestine subjects. We have an exact and accurate list of this group
which includes some Jews who escaped from Poland into
Hungary after having taken part in defense of Warsaw
ghetto in April 1943; 300 Jews of unspecified nation-
ality in a punitive blook; 300 Jews in so called
"Spanish" blook having various nationalities such as
Portugase, Argentine, Brasilian, et catera; 150 Greeks;
89 Hungarians mostly craftsmen recently transferred to
BB from Vienna. A nominative list of them is available.
WTD
HUDDLE
164
DEPARTMENT OF STATE
OUTGOING
DIVISION OF
TELEGRAM
COMMUNICATIONS
AND RECORDS
The telegram must be
paraphrased before being
communicated to anyone
other than a Government
Agency. (SECRET-0)
January 12, 1945
5 p.m.
AMEMBASSY
CHUNCKING
65
Matter of gold shipments has been referred to Treasury
Department whose decision and action will govern. (CONFIDENTIAL.
FROM CROWLEY AND MILLER FEA FOR STANTON. Your 23, January 9)
GREW
(Acting)
(RLH)
DC:RLH:EBH
Miller
Liaison:
SU-984-CEPeterson:mb
1/11/45
CC: alMolpaw
gsa:copy
1/17/45
165
NOT TO BE RE-TRANSMITTED
COPY NO.
4
SECRET
OPTEL No. 14
Information received up to 10 a.m., 12th January, 1945.
NAVAL
1.
HOME WATERS. 11th. One Midget U-Boat sunk by shore
defences north of S. Beveland Canal and another probably sunk by
M.L. off Flushing.
12th, Two of H.M. Cruisers with three destroyers attacked
convoy of 8 ships off Egersund and left 3 on fire.
EAST INDICS. One of H.M. Submarines during recent patrol
probably sank one 1,000 ton ship off Andamans and severely damaged
another. The Submarine was damaged by gun fire and repeated air-
2.
craft attacks (one shot down), but was taken in tow and has now
reached port. Another of H.M. Submarines sank 7 large schooners
loaded with explosives or petrol off Burma Coast.
3.
ENEMY ATTACKS ON SHIPPING. Two ships (2606 and 1428 tons)
sunk by mine or torpedo W. of Holyhead yesterday. A ship in eastbound convoy was torpedoed 60 miles W. of Gibraltar on 10th.
MILITARY
4.
WESTERN FRONT. Northern flank of Ardennes salient:
heavily mined roads and tracks which difficult to clear in deep
snow have delayed our advance. Nevertheless we have occupied St.
Hubert, reached a point on the St. Hubert/Laroche Road, and established bridgehead over R. Salm at Grand Halleux,
GREECE. Athens and Piraeus quiet. Our mobile columns
5.
continue to increase hold on country N. of city. Martial law
as result ultimatum. Situation Salonika uneasy. ELAS casualties,
has been proclaimed in Patras where ELAS have withdrawn from town
majority sustained in Athens area, estimated to date at 50 percent
their total strength.
6.
EASTERN FRONT. Russians continue to report repulse of
attacks N.W. and N. of Budapest, and further gains in city itself.
BURMA. In Arakan our troops in contact with enemy 8
7.
miles N. Pennagyun. In Kaladan Valley West African troops have
captured feature 13 miles S.E. of Kyauk Taw against stiff opposition. In Central Burma Japanese resistance reported to have
been strong to our final occupation of Shwebo, but this town now
completely in our hands and our troops advancing southward down
R. Irrawaddy have reached town 20 miles E. of Shwebo.
AIR
8.
WESTERN FRONT. 11th. Escorted Lancasters 145 dropped
670 tons Krefeld-Uerdingen railway centre through cloud with
unobserved results. SHAEF (Air) - bombers 118 attacked communications central sector dropping 179 tons with varied results,
while 37 fighters and fighter bombers operated central and
southern sectors.
MEDITERRANEAN FRONT. 10th. 661 fighters and fighter
bombers attacked communications Po Valley and shipping off Venice
and Genca cutting railways in 68 places, destroying or damaging
9.
11 bridges, 268 road and rail vehicles, 1 medium sized ship and
6 small ships.
HOME SECURITY
Up to 7 a.m. 12th, 11th. One incident reported.
166
January 13, 1945
10:10 a.m.
CURRENCY - FEDERAL RESERVE LEGISLATION
Present: Mr. D. W. Bell
Mr. Gaston
Mr. O'Connell
Mr. White
Mr. Luxford
Mr. DuBois
Mr. Haas
Mr. Lindow
Mr. Coyne
Mr. Currie
Mr. Viner
Mrs. Klotz
H.M.JR: How is your cold, Harry?
MR. WHITE: It is better, thank you.
H.M.JR: If that medicine didn't work, I have another
treatment that is a little more powerful.
MR. WHITE: More powerful?
H.M.JR: The base of it is vodka. How do you feel?
MR. WHITE: Better yet. (Laughter) It takes an
awfully long time to get rid of the thing.
H.M.JR: Is that story in the Times true about the
Russians delivering this Vodka and you gave it-MR. WHITE: I never got the stuff, either.
MR. VINER: You haven't got it?
MR. WHITE: No.
O
107
-2H.M.JR: Who got it in the first place?
MR. WHITE: I told Paul to keep half and give me half.
H.M.JR: Well, Mr. Dan Bell--Washington Bell of
Illinois--
MR. GASTON: Kinderhook.
MR. BELL: Kinderhook, that is right.
H.M.JR: It took twelve years for you to find out.
MRS. KLOTZ: I didn't know. Is Washington your
middle name?
MR. BELL: That is bad enough.
H.M.JR: Come on, Georgie.
MR. BELL: Well, the currency is, whether you know-just in the room--maybe you know Jake--
H.M.JR: Well, I haven't the courage to ask Lauch
first. He looks so wistful this morning. He has a story
here about Crowley calling me. (Laughter)
MRS. KLOTZ: He could answer that one, too.
H.M.JR: We will start with Doctor Viner, who comes
from the Windy City.
DR. VINER: I don't think it is necessary. I haven't
found any disagreement yet in the Treasury. Everybody
seems to be agreed.
H.M.JR: Which way?
MR. BELL: Jake saw everybody yesterday afternoon.
He had a conference.
108
-3H.M.JR: I will put it this way: I have had a little
whispering from different people. Does anybody think I
should go forward on the currency matter--the big bills--
and want to talk a bout it? If so, how? Let's put it
that way.
MR. LUXFORD: Mr. Secretary, I didn't think you
should go through with the big program you are talking
about. We were discussing last night from the foreign
angle whether it wouldn't be all right to quietly withdraw the large bills without any regulations or anything
else so that if several months from now you find that
you have a good part of them out of circulation you may
want to then take a measure directed only at the foreign
picture and not get into the domestic features of it.
That could be done on just a quiet basis, withdrawing
them whenever they came into the banks. At some point
we do have to resolve what we are going to do about the
problem on the foreign currency side.
MR. DuBOIS: We might want to consider going even
one step further in this sense, that you might want to
issue some sort of an order maybe without even going to
the President now, asking that they be called in, say,
within the next sixty or ninety days, and after that
anybody who brings them in would be investigated, but
no questions will be asked during sixty or ninety days.
I think such a program could be put over and at the same
time accomplish purposes in the foreign field, not just in the
domestic.
MR. LUXFORD: If one of our goals was to get large
bills out of circulation here at home, I suspect the only
thing you have to do is send Mr. Irey's investigators
around and ask questions at the right places, and the
underworld would be upset. They would begin to come in,
and you wouldn't have to worry about forcing them to come
in.
H.M.JR: Who was it that told me one-thousand-dollar
bills were selling at a five percent discount?
O
MR. WHITE: Schmidt heard that rumor; we don't know.
159
4-
MR. BELL: Mr. Avis told you that the racketeers
had quit using five thousand and five hundred-dollar
bills; they are down to one-hundred-dollar bills and
twenties, and there wouldn't be any problem there with
them. A lot of them have already switched.
MR. DuBOIS: What you said wouldn't be satisfactory
if you really wanted to do something in the foreign
field because you should combine with giving a sixty or
ninety day period here in the United States combine it
with an order calling them in in foreign areas and
designating depositaries, as a similar procedure that
we now have. It could be a rather simple program, but
yet effective.
H.M.JR: George, could you come out behind there?
I can hardly see you.
MR. BELL: Don't you have a pretty effective control
now with foreign-O
MR. DuBOIS: That will only last as long as the war
lasts, and in particular, say, the war in Germany, but
after that your censorship and wartime controls are going
to break down. If you are not ready for that situation,
I am afraid you are going to lose control of it.
MR. WHITE: I don't think it is important enough
at this time to initiate that program. After all, your
chief reason for having a program of that character
rests in the field of economic warfare and in the field
of trying to prevent the use of American money by the
Axis powers for subversive purposes. The other reasons
are of secondary importance, and even that reason has
now become much less important, so I think you could
initiate a program after the war with effectiveness
enough to prevent the three objectives which will be
to let the Axis powers--Germany--utilize dollars which
they may have obtained in the past for purposes of their
own in the future. Even that isn't very important.
In other words, I think as time goes on, Mr. Secretary,
the whole question is becoming of diminishing importance
170
5-
and that there is not sufficient urgency or acuteness
to warrant any program at this stage of the game. There
might have been, and there was some justification a year
ago or two years ago, but now I am very skeptical.
H.M.JR: In the foreign field?
MR. WHITE: Foreign. I am speaking of doing some-
thing in the foreign field. Sure, it is not just subversive activity during the war. If the Germans had three
billion to fifty-six billion in American currency, they
could convert it very easily, individual Nazis. That is a
bad thing. We ought to do everything we can to prevent
that from happening. I think you can do that immediately
after the war as easily and with equal effectiveness.
MR. CURRIE: Or as you approach the end of the war.
MR. WHITE: I don't know whether that is important.
MR. LUXFORD: The point I had in mind, Mr. Secretary,
was that I am not saying you have to decide today whether
you will ever put in a program of the kind you are suggesting. What you can do today is say that we are going
to take steps to begin to suck large bills out of circulation by not re-issuing them, quietly telling the banks to
not re-issue them. As time goes on, at a later date you
may find your problem reduced to half or a quarter the size
it is today by gradually pulling the bills out; and later
on if you do want to take measures to take the rest out of
circulation, your problem would be much smaller and easier.
H.M.JR: Give me a minute, Luxford.
Do you want to say something?
MR. CURRIE: As you know, Mr. Secretary, my first
impression was favorable because I like the objectives.
But after talking with your people more and more, I became
impressed with the difficulties of enforcement and the
kickback, and one of the features of enforcement bothered
me, and that is the necessity of having bank officials
0
present when people open bank deposit boxes, and that
-6would create terrific resentment, but if you put it
entirely on an economic warfare basis with no question
of law enforcement here, but to prevent Nazis and Japs
from protecting themselves after the war, I think you
will be immune to criticism on any measures you may care
to take on those grounds.
H.M.JR: Well, where is Joe O'Connell? Hasn't he
been in on this?
MR. BELL: The last meeting you had Friedman was
here, and you said--
H.M.JR: Well, let me ask you this--we had this man
Avis, who is the enforcement man on alcohol tax, and he
told us this: They have a case in Cincinnati where a
man had made three million dollars through seiling liquor
at a premium. Now the expression he used--and I think I
have it correct--they called it side money purchase.
O
MR. GASTON: That is right. He goes to the distiller
and wholesaler and agrees to buy liquor. They invoice it
to him at the regular price, but he meets somebody in the
corner drugstore or cigar store and hands him a premium
of anywhere from five to twenty dollars a case.
(Mr. O'Connell enters the conference.)
H.M.JR: Did you know the meeting was going on?
MR. O'CONNELL: No.
H.M.JR: Nobody tells you nothing!
MR. O'CONNELL: No, nobody tells me nothing!
H.M.JR: As Herbert Gaston was saying, and this felow
on this case, the fact that he had thousand-dollar bills
made it easier to trace it, because they are more conspicuous,
so there is the other side to this thing. When they began
they took the numbers on seventeen bills or nineteen bills.
0
MR. GASTON: They began taking some numbers.
172
-7H.M.JR: That immediately threw the fellow into a
panic, and he sent a fellow to New York or New Orleans
to cash the bills and change them into twenties. So
after listening to him, I felt that in a sense it was
an advantage having the thousand-dollar bills, because
they were more conspicuous. When they began to throw
around thousand-dollar bills, the bank of its own accord
took the numbers.
MR. BELL: Encourage them to take thousands.
MR. GASTON: Detroit sent us word about these bills;
they thought it was black market and liquor, and it was.
MR. WHITE: Did they catch this fellow?
H.M.JR: Yes, they had the whole organization there
in the process of making a case; and if Avis would come
up and give us those names--
MR. O' ' CONNELL: I mentioned it to the Attorney General-who it was - but he didn't know the man who prosecutes liquor
cases. He said he would be glad to have us bring it to
his attention, and he would put a burr under his tail to
make him more active.
MR. GASTON: Tom Clark of the Criminal Division.
H.M.JR: This is the way my mind is working: After
listening to all of this thing, even if we withdraw all
bills above twenty dollars, it is going to be very helpful;
but on a public relations basis and toward the swivel chair
monetary economists, that is far removed.
MR. CURRIE: It must be you. (Laughter)
H.M.JR: They have a Phi Beta Kappa key on one end
of the chain, and no watch on the other. You have heard
that. The definition of an economist is a Phi Beta Kappa
key on one end, and no watch on the other.
MR. VINER: I hadn't heard that.
H.M.JR: You can use it then.
173
-8MR. VINER: I don't know when and where it has been
used before.
H.M.JR: It is not too old.
MR. BELL: He wouldn't use it on economists; he
would change the profession--lawyer.
MR. VINER: Phi Beta Kappa key, no.
H.M.JR: Anyway, what I was thinking of is to sort
of protect myself against the United States News and the
great monetary spirit, Mr. Robey, purely public relationswise. The way I feel this morning after some consultation
is, I would sort of tell the banks we are not going to
issue anything above twenty-dollar bills, and would they
please turn in anything they have above twenty-dollar
bills, just to keep them from criticizing the Treasury,
that is all.
MR. WHITE: You would have to make some special
arrangements, partly for the large number of bills you
would have to have to take care of it, and partly because
of the bills which the banks keep ordinarily.
H.M.JR: Just before we get into the mechanics of it,
I wonder what you people think. I would do it largely to
keep them from saying, Morgenthau isn't doing anything.
He doesn't know how to handle it."
MR. BELL: If you tell three commercial banks, it is
public. Announce it.
H.M.JR: Announce it on the basis of--well, we are
cooperating with Chester Bowles, fighting the black markets.
MR. GASTON: A lot of comment will come on the fifties
and hundreds, because they are not merely hoarding big
transaction bills, but a lot of free spenders carry fifties
and one-hundreds quite generally.
H.M.JR: All right, they shouldn't.
MR. WHITE: Could the Secret Service give us some
174
-9-
advice of that character to the effect that it would be
helpful in this instead of giving the reason of helping
Chester Bowles?
MR. GASTON: There isn't any counterfeiting.
MR. WHITE: I don't mean counterfeiting; I think
generally.
MR. LUXFORD: I think this is a public relations
matter, not to be tied into the foreign side, looking
toward the long haul where there are large bills circulating abroad. We think we ought to get them out of circulation
there. Public relationswise, no one can criticize that.
H.M.JR: To me that doesn't have the appeal. I think
we could do both.
MR. LUXFORD: I am worried. Bowles said that if
you get into that, you are saying that we are not d oing
anything about it, because you are just taking bills out
of circulation.
H.M.JR: You could do it this way: Start with the
five hundred and thousand-dollar bills, and see what kind
of effect that would have.
MR. BELL: That isn't much of a problem. There aren't
very many of them, a billion and a half dollars.
H.M.JR: Why not just start with it?
MR. BELL: I was wondering if you could.
H.M.JR: Start with five hundred and thousand-dollar
bills. If that works all right, do the one-hundred ones
next. How many twenty-dollar bills have you got on hand?
MR. BELL: I don't know, I haven't talked to them
down there. They have quite a lot of currency on hand,
about a six-months supply.
- 10 H.M.JR: Have Gaston write out some publicity just
doing one-thousand and five hundred-dollar bills.
MR. VINER: I would go down to one hundred dollars
if you do anything at all.
MR. GASTON: There is an immense volume of one-hundred-
dollar bills, forty million pieces, four billion dollars
face value, forty million pieces. There is the same number
of pieces on fifty's.
MR. VINER: Does anybody know how many?
MR. BELL: Not so much any more. Banks keep these.
They used to have five-thousand and ten-thousand-dollar
notes; they don't keep them any more. They used to keep
them for vault space instead of gold, but they don't do it
any more.
H.M.JR: They don't need them.
MR. O'CONNELL: The last figure I saw showed there
was less than two billion dollars in total currency in
the banks.
MR. BELL: One billion and a half--one billion, six,
in banks in cash.
H.M.JR: How far do you want to go? Jake wants to
go to one hundred.
MR. WHITE: I don't think you ought to go in successive
steps. I think you ought to take whatever you decide to
do in one lump.
H.M.JR: I want to go down to fifty.
MR. LUXFORD: I think so, too.
MR. VINSON: And also for the banks a single order
would be much more convenient than--
H.M.JR: All right, we will go down to fifty.
O
176
- 11 -
MR. WHITE: Including the hundreds and the fifties.
In other words, the only thing in circulation will be
ones, two's, fives, and tens, and twenties.
MR. BELL: That means about three hundred and fifty
million pieces from the twenties up. We have to take
those out of circulation, and that is a lot of pieces.
MR. GASTON: There are about forty million fifties;
that would cut it down to three, ten.
H.M.JR: I tell you what. Bill Stonier is a pretty
good man.
MR. BELL: Harold Stonier, you mean--banking.
H.M.JR: I would like to see the draft of the publi-
city and think about it a little more. I am still a
little jittery about fooling with the currency in wartime.
MR. HAAS: I feel that way, too.
MR. VINER: What fooling would there be? There would
be no announcement, and people wouldn't even be asked to
hand them in. Just banks will be asked not to re-issue
them. That is, I wouldn't go any further than that myself,
and, as a matter of fact, I would apply it only to the big
banks. It will get to them pretty soon, and that simplifies
it; you are not having fifty thousand bank clerks all
alert and on guard.
MR. BELL: You have to have some reason for it.
MR. VINER: I would put it on the foreign-MR. CURRIE: Point out that it will have an incidental
effect on the black market, but you are doing it for the
forei gn reason.
MR. VINER: Let people speculate, but have a good
foreign purpose well stated.
H.M.JR: What was that?
177
- 12 MR. VINER: We believe that there may be large
quantities of large denomination bills, and eventually
they are going to creep back here, and then we wouldn't
be able to effectively control it if there is a similar
supply not distinguishable in the country.
MR. WHITE: We know that a very large quantity of
fifty-dollar bills were officially sent out of the country
for various war purposes, so it can be said we know there
are a large number of big bills outstanding which we
would want to do something about. I think you can make
a pretty convincing kind of justification on foreign
grounds, but I agree with Danny, it better be tried first.
H.M.JR: Herbert, over the week end see what you can
do. These boys seem to think we should stress the foreign
field.
MR. VINER: Not only stress it, but don't say a
word from the Treasury about black markets or about income
tax evasion. In other words, if you are going to say anything about that, make out a good statement about that,
too; but I would say don't say a word about it, and if
they ask you if you have that in mind, the most I would
say is, "I don't see that it hurts there, but I wouldn't
claim it does any job there, because I don't believe it
does.
H.M.JR: Will you have a try at it, Herbert?
MR. GASTON: Yes.
H.M.JR: That's that.
MR. BELL: I would like to go on with the other pro-
gram, however, of submitting to you sometime soon a change
in design of all the currency so that right after the war
you could put out a new design and let all of the outstanding currency come in. Then your catching the foreign stuff
would be much simpler; even the counterfeits would be
much simpler.
o
MR. WHITE: Then you wouldn't need this program.
- 13 MR. BELL: You could stop at twenty, and nothing
higher than a twenty-dollar bill would be issued hereafter.
That would be the permanent policy of the Government.
Change the design and everything.
MR. WHITE: You could accomplish the same total purpose by changing the design.
MR. O'CONNELL: That would be later.
MR. BELL: That would be right after the war. I
would like to be ready and have a supply of the newly
designed currency on hand, and the minute the war stops,
say this is a new policy, and issue this new currency.
MR. WHITE: From an artistic point of view, if you
compare our currency with the currency of other countries,
there is much to be desired.
MR. BELL: It is much harder to counterfeit than any
currency in the world. Herbert will agree with that.
H.M.JR: Our currency is like the furniture of 1875,
it is now beginning to be stylish. Things go in waves now.
MR. GASTON: The British have a currency that can be
detected if it is counterfeited, but they can't tell anybody how to detect it. Only the Bank of England and some
of their advisers can tell you whether a piece is counter-
feit or not.
H.M.JR: Well, I will have a look at the currency
release next week--by Tuesday. I don't want you to work
over the week end.
MR. GASTON: Yes.
H.M.JR: Now, Mr. Bell, all these swivel chair experts
around here--see, my chair is fixed firm.
MR. GASTON: Oh, that is why all this talk about
swivel chairs.
O
- 14 -
H.M.JR: I removed it.
Where do we stand on this question of legislation?
I gathered from talks that the feeling is that they
should have legislation to change the Reserve requirements.
MR. BELL: Ratio. The Fed feels that way about it,
and that is all right with us; we have no objection to
that.
I think the question here in the Treasury is whether
we should try to get the ratio changed first, or whether
we should go up on Bretton Woods.
H.M.JR: Before we get to that, Viner thinks the
quicker we have the ratio changed, the better. I don't
know how Currie feels.
MR. CURRIE: I agree.
MR. BELL: We have no desire on the fiscal front to
get ahead of Bretton Woods, but we do have a desire, and
think it is very essential, that we have the ratio out of
the picture and all of the comment and criticism about it
over before April 1 when we start discussing the Seventh
War Loan.
H.M.JR: Bretton Woods is ably represented here. How
do they feel?
MR. WHITE: I think that if there is a sufficient
degree of assurance which might be obtained by talking
with the appropriate people on the Hill that this gold
reserve ratio question will not be made the center of a
whole investigation of the monetary system and be dragged
out a month or two--and that might be the case, because
there are so many people who are familiar with it who
will attempt to utilize any excess monetary legislation
as a base for that-- if it could be gotten over in a few
weeks, it really should, because it is a relatively simple
question.
180
- 15 -
MR. BELL: It is pretty well recognized by even
those people that something has to be done.
MR. WHITE: that is true.
MR. BELL: And I think they will prefer legislation
to any other action, although they will criticize. I
think that will be a very short period of criticism.
H.M.JR: May I make this suggestion. Let me call up
Eccles now if he is there, and if he isn't, get somebody
who is there and say, "What I would like to do is to have
Connell go up on the Hill and see the Democrats and
Republicans with somebody from the Federal Reserve, and
see whether the Republicans would be willing to join the
Democrats to make this thing a quicky."
MR. WHITE: If you could get that-MR. VINER: It would be a very short and simple
bill, wouldn't
it?
MR. BELL: There are two things, one, the ratio, and
the other, extending the time which expires June 30, 1945.
Put up Government securities as collateral for Federal
Reserve notes.
MR. VINER: Couldn't we have a redraft?
MR. BELL: I think they are working on that and will
have it ready the first of the week.
H.M.JR: What is the other thing?
MR. BELL: Authority to pledge Government securities
as collateral for Federal Reserve notes instead of commercial paper, and the Federal Reserve Act, which expires
on June 30. It is necessary to have it extended.
MR. WHITE: I am wondering whether that isn't a
little
different thing. About the first there is no
choice.
MR. BELL: There is no choice on either.
181
- 16 -
H.M.JR: Eccles insists on that.
MR. BELL: And they are both non-controversial, I
should think, so far as the Congress is concerned. They
are both necessary. There isn't any other alternative.
You have to take some action on both of those fronts.
MR. LUXFORD: Mr. Secretary, what worries me about
it is not at all the merits of these two bills, but that
the boys will take the opportunity for a field day for
monetary cranks, and not only that, but they will get
into Bretton Woods. If anybody from the Treasury goes
down there, he is going to have to explain Bretton Woods.
MR. WHITE: They have the thing in all gold, and
just say that that will help solve the problem.
H.M.JR: I know, but we can say no, and Eccles will
say "Go up on the Hill." It is a question of getting Eccles
to say he will not make this a field day.
MR. VINER: The Federal Reserve should carry the ball
on this.
MR. WHITE: It is Mr. White's baby.
MR. BELL: When this other question came up, we didn't
go up at all.
MR. VINER: It was a straight, routine, technical
thing.
H.M.JR: Take Luxford up there with you in case they
ask about Bretton Woods.
(Discussion off the record)
H.M.JR: I didn't get an opinion from O'Connell.
MR. O'CONNELL: I understood the immediate thing was
to go to the-Hill and sound out the leaders. One good way
of keeping Bretton Woods out of the preliminary discussion
o
would be to have nobody go down who knows too much about it.
182
- 17 MR. WHITE: You leave decisions to me.
H.M.JR: Talk it over with white. When I say talk
it over with White, I always leave the decision to the
fellows who talk it over.
MR. BELL: The other thing I have to report is that
after yourmeeting the other day with the Fed we went into
my office and continued discussion. We wound up by agreeing we would have another meeting on Tuesday of the Committee and the Treasury people, and in the meantime have
Mr. Haas' group and Doctor Goldenweiser's group get together
on the points that would be discussed next Tuesday, or at
least discuss the points; they might not get together.
George had a meeting with Doctor Goldenweiser yesterday,
and it was a very good meeting. The attitude had changed.
The objectives are entirely the same on both sides, and
they had quite a frank discussion of the whole rate
structure.
H.M.JR: Just so there is no misunderstanding, I don't
like to see this Federal Reserve thing go up. I want to
be plain. But after having talked with Eccles and listening to him and knowing it is in the President's Budget
Message, you have to be realistic. I would like to go up
with Bretton Woods right away, but the President having
it in his Budget Message, and we have a War Loan coming
along in May, and the longer you wait, the more contro-
versial it becomes. It is like all of these things. You
have got to give them the thing in this town, and I
think that Eccles would do it, anyway. I think we can
do it this way in partnership with him. It isn't a
committee so much as--I forget the last thing Eccles went
up there on, something that Crowley was interested in.
MR. BELL: That was-MR. WHITE:
MR.
deposit insurance.
BELL: Exchange charges.
H.M.JR: You would think it was a normal thing; they
were up there for weeks.
183
- 18 MR. BELL: That was knocked down and dragged out
between FDIC and the Federal Reserve Board, and they got
into a terrible scrap over it.
H.M.JR: I have to get a promise out of Eccles that
he will be glad-MR. WHITE: I think he would agree with you that if
people on the Hill think there will be extended discussions,
he might well prefer to postpone it until the time approaches
when they will be forced to do so.
MR. BELL: He can't wait. You can't wait; you can't
go into a war loan it seems to me, with things hanging
over your head, and you can't wait until June 30 when the
ratio will be down to forty or forty-one.
MR. WHITE: Then Congress is forced to pass it.
H.M.JR: I haven't any way to change myself, but I
am trying to be practical and realistic. I figure that we
had better join them, and by joining them we might get a
better deal than if we stand by and say no, and with the
President's Message backing him, I would suggest that they
go up on the Hill by themselves.
MR. WHITE: I think you are one hundred percent
correct.
H.M.JR: Thank you, Mr. White. Will you tell that to
Mr. Luxford, please? (Laughter)
MR. WHITE: With proper qualifications I will make
outside.
now.
H.M.JR: White has agreed with me two days running
MR. WHITE: You told me to be on my best behavior
until I am confirmed. (Laughter)
H.M.JR: That didn't mean--
184
- 19 MR. WHITE: There is a backlog piling up.
H.M.JR: I was going to say something. Here we go
again. It's too much.
MR. LUXFORD: You might read about it in the papers.
(Laughter)
MR. VINER: I wondered if the Senate would confirm
him if they discovered he was a yes-man.
H.M.JR: He says yes. (Laughter)
Well, anyway, I didn't mean to interrupt you, but
let's go back and say--Goldenweiser and Haas were having
a love feast; I want to know what it was all about.
MR. BELL: It was about the whole financial program,
including issuance of additional bills. It was a matter
of issuing, and a different kind of obligation for that
lower end of the rate structure, and also discussing the
possibilities of one and three-quarter percent bonds. It
is all in the discussion stage, and it will be continued;
I guess it is going over this afternoon and will be continued Monday with a larger committee. They had pretty
generally agreed that we ought to issue two hundred
million dollars a week in additional bills. I don't know
whether you noticed the other day in the conference that
Eccles has completely turned around from what he said in
the summer.
H.M.JR: I'll say this: You have to explain that,
what Eccles said. I don't know whether you were in the
room or not, but he stayed behind and said, "Look, Henry,
just so there can be no possible misunderstanding, I
want you to know that I am in complete harmony with you.
We want you to borrow the money at the least possible
cost, and anybody saying anything contrary isn't telling
the truth. I am in complete harmony."
MR. BELL: I think he is sincere about that.
H.M.JR: He did say that. I don't know whether that
means he has turned around.
185
- 20 I wish you would explain to me what you mean so I
can concentrate. I don't know what you mean that he has
changed since last summer.
MR. BELL: I think it was in August that we asked,
or we told him we wanted to issue additional bills, and
in the discussion they took the view that we should not
issue bills, except for general fund balance purposes,
in other words, increase our general fund balance, and
not for money market reasons. I think they wrote us a
memo to that effect and said they wouldn't agree to issuing bills except on that basis.
The other day Eccles said we could issue bills whenever the money market needed them for purposes of excess
reserves, and that is a complete change, about-face.
H.M.JR: I have asked you to clear it with the people,
and I am not sensitive.
MR. BELL: I think by the end of next week we may
have something where you can sit down and discuss this
with the two groups, and maybe come out sometime after
that.
H.M.JR: The thing that bothers me is this: I go
back and then--people in New York have tried over a period
of two or three years to get us to increase the amount of
interest in accordance with what we are paying for money
of one year or less. Now, there has been a constant drive
on the Treasury for that, and I have been advised by
Haas and the people he has around that if that happens-by the way, I don't know whether this interests DuBois,
Luxford, and the rest of you.
MR. LUXFORD: It does.
MR. WHITE: They are learning.
H.M.JR: They have a lot of other stuff to do. Do you
want to get in on that? I didn't realize we switched.
O
(Mr. Luxford and Mr. DuBois leave the conference.)
186
- 21 H.M.JR: Now, Bell comes in here and tells me that
since last November the short money rate curve has changed.
It has sort of crept up on us. They say it is not intentional, but the thing which you people are going to have
to do for me is to be sure that when we take this--it is
supposed to be a straight line, and agree, if I still am
correct, that they tie up the short end and charge more
there, and at the same time reduce the ten-year money
from two percent to one and three-quarters. They really
have changed. That is the thing.
MR. BELL: It is better than that.
H.M.JR: I am still suspicious, because they have
tried to undermine me all the way around. They think
they get me down by charging more for the very short
money, and I mean, in the long run, I will be paying more
for the twenty and twenty-five year money. That is what
I want to know, whether Eccles has really changed.
MR. HAAS: You are right on that, but I think that-I am trying to analyze why there is the change. There
must be something, and the best I can make out of it is
this, that the bankers are going up so rapidly that unle SS
some change is made, the banking industry will be in a
very weak political position after the war, particularly
in view of the increase in the debt that is coming out
with the extension of the war. And I think that is a very
important force in turning them around.
Goldenweiser told me even Sproul and the whole
group over there was in agreement-- what they are proposing now is to cut three eighths to one-quarter.
MR. BELL: They had a long meeting after they left
us last Wednesday, Mr. Secretary, and went into the whole
problem.
MR. HAAS: I would still keep my fingers crossed.
H.M.JR: I will on the suspicion side. I can realize
times have changed since the Treasury was paying seventy-five
187
- 22 percent of the running expenses of the Federal Reserve
System through charges rendered us, and they were really
hungry for earnings.
You are going to have to get together with the old
man, too, because before you are going to get me to agree
to raising the interest rates on the money under one year,
you are going to have to-MR. HAAS: This proposal is to reduce those.
MR. VINER: The new proposal isn't going to raise any
rates; it is going to reduce them.
MR. BELL: From one quarter up to two percent.
it.
H.M.JR: It is too good to be true. I can't believe
MR. HAAS: Yesterday was really a love feast a°s you
call it, but their objectives and ours-MR. BELL: I really think Eccles is sincere about
doing this at the least cost to the Government, and I
think that all of their recom endations are based on a
money market reason that they haven't been able to support
this curve between the three-eighths and seven-eighths,
because of the volume, unless they just took everything
into the Fed. There is something to their side.
H.M.JR: Excuse me, I didn't mean to interrupt you.
You War Bond people certainly went into the thing very,
very thoroughly, because if it is true, it means a whole
complete change in the basket, and you certainly want to
know what is happening. And that is what you are here
for Coyne. See?
(The Secretary held a telephone conversation wi th
Mr. Eccles, as follows:)
o
188
January 13, 1945
10:38 a.m.
HMJr:
Hello.
Operator:
Chairman Eccles stepped out of his office for
about five minutes.
HMJr:
Well, as soon as he comes back.
Operator:
Right.
10:49 a.m.
Marriner
Eccles:
Hello.
HMJr:
Marriner?
E:
Yes, Henry.
HMJr:
E:
HMJr:
Feeling all right?
Yes, feeling fine.
Good. The purpose of this call is this: I would
like that Joe O'Connell, who is General Counsel
of the Treasury and who reoresents us on the Hill
in legislative matters, get together with you
just as soon as possible, along the lines of this
legislation in changing your reserve requirements
and then also the backing for your bill. See?
E:
Yeah.
HMJr:
We realize here the necessity of prompt action.
We also -- you, too -- we don't want to get Bretton
Woods stymied. You see? Now, I don't know who
goes on the Hill for you, but
E:
Well, I -- I usually go for myself
HMJr:
If Joe
E:
HMJr:
on the legislative end of it.
could talk with you, if it would be agreeable
to you, possibly having him, if it's going to be
yourself, call on both the Democratic and Republican
members of Banking and Currency, whom we have been
working very closely with, on Bretton Woods, to make
sure that if we go up with this -- if you go up
189
-2HMJr:
Cont'd.
with this piece of legislation, that it would be
handled promptly and handled -- and not be a matter
of months, You see? Because we don't want Bretton
Woods, frankly, side-tracked.
E:
HMJr:
E:
Well
And I don't think you do either.
we've got a meeting -- let's see -- Tuesday
again. Sproul is coming down and we discussed this
the other day, and we've got our lawyers busy working on a draft. We haven't agreed here among ourselves as to just. what we would ask for -- whether
the -- eliminate entirely the reserve requirements
or drop them down to some percentage -- whether it
would be temporary or just what -- just what we
would do on it. The
HMJr:
Well, could O'Connell
E:
If you would -- do you want this before Bretton
Woods or after?
HMJr:
E:
HMJr:
Well,
I'll -- if left to me, I'd like to have it
afterwards.
Uh huh. I think Dan and the boys feel they ought
to have it before, don't they -- or do they?
Yes, they'd like to have it before in that it would
be a matter of sort of Whisking it through Congress.
You see?
E:
HMJr:
Yes. Well
But I think Dan would agree if it's going to be
up there for two or three months -- then we'd
rather start with Bretton Woods and leave this
thing in the position that it would be so obvious
that they'd have to do it as sort of a last minute
gasp. You see? There're two schools of thought.
E:
Uh huh.
HMJr:
But
-3 E:
HMJr:
190
can't -- I can't believe that they could spend
an awful lot of time on this legislation. It's
either -- it's a pretty simple thing.
Well, you know our set-up here. I look to Dan to
I
contact you and other members of the Board.
E:
HMJr:
Yeah.
Now -- but on a legislative matter like this,
Joe O'Connell -- and going on the Hill, it would
be Joe.
E:
Uh huh.
HMJr:
Now
E:
HMJr:
Joe -- Joe would handle -- is he going to handle
the Bretton Woods on the Hill?
He -- he -- on over-all legislation, he handles
everything.
E:
Yeah.
HMJr:
But when it comes to taxes, I mean, it's Roy Blough.
E:
Yes.
HMJr:
Bretton Woods will be Harry White. We've got to
have one man
E:
HMJr:
He's your contact man?
on the Hill. But he -- we divide the thing un
depending upon what it is. See?
E:
Well, I'll tell you -- let me do this, then, let me
get in touch with Joe next week and we'll go up and
see if we can talk to Wagner and Spence. It would
be those committees that would handle this.
HMJr:
E:
HMJr:
E:
That's right.
And they should be able to indicate to us whether or
not they could get pretty prompt action after the
legislation is introduced.
Yeah. And they might very quickly tell us which way
they d like to handle it.
Yes. Which they would like to handle first.
4
HMJr:
191
Yeah. But we'd like to do it with you on the
Hill on account of Bretton Woods, if that's
agreeable to you.
E:
Yes.
HMJr:
E:
Is that all right?
That's okay. We'll be -- we'll be willing to
either do what we can to -- to get it through
first or to wait and get it through last.
HMJr:
Well, nothing could be more
E:
It doesn't -- it really doesn't -- or if one should --
HMJr:
E:
if this should get started and it should bog down,
we'd ask them to hold it up.
Well, I couldn't ask for anything more.
So far as we're concerned, we -- we certainly
don't see that there's any reason to have the
slightest conflict. It seems to me in the consideration of the matter, I can see how -- so often, this
is what happens: the House will hold the hearings
before the Senate. You may -- will find the House
is holding hearings on Bretton Woods before the
Senate gets to it, so that the one body might be
handling one piece of legislation, and another
another. I think on our legislation they might
turn it over to a sub-committee. That often
happens in the Senate.
HMJr:
E:
Well, just as long as
Well, I'11 work with O'Connell and -- and you can
tell him if -- if he wants to get in touch with me
about
any aspect of it, I'll be very glad to talk
to him.
HMJr:
All right. Well, he'll be doing that.
E:
Yeah. Okay, Henry.
HMJr:
Thank you very much.
E:
Good bye.
192
- 23 -
H.M.JR: We couldn't ask for anything better, could
we?
MR. WHITE: Perfect.
H.M.JR: The only other thing contemplated Was where
we would stand vis-a-vis the State Department.
MR. WHITE: We are having a meeting this afternoon.
Dean's men said they would come over here, but I said we
would go over there. We are going to discuss three items
on the agenda, one, the draft of the letter from Stettinius
to the President with your signature that you questioned
him about; second, the presumed proposed Budget Messagea proposed message from the President on foreign economic
matters; and, three, the specific type of legislation on
the bill, so that after that meeting we will have a clear
idea of what we are doing.
H.M.JR: So by Monday we ought to know.
MR. WHITE: We ought to know what is ahead of us.
H.M.JR: Well, that is making progress, don't you
think? Just from visiting, Jake, don't you think there
is a much better spirit around here?
MR. VINER: Yes. It is almost indecent, the amount
of cooperation that is going around now.
H.M.: JR: It is good for a couple of weeks, you know.
I don't want to make you blush again, but--
MR. VINER: That was very nice, I thought, on the
rate structure thing, and on this thing, the currency
thing.
H.M.JR: Now, may I say something while I have you
two gentlemen here to advise me? I would like to say this
in the strictest confidence--this is an over-night thought,
and you may both jump on me or say anything, but I would
like to say something here in the strictest confidence,
and that is this: I don't like the attitude of the New York
193
- 24 -
Bank boys. It isn't worth a G. D. I think it is terrible.
And the other day they told me--the committee on, I think,
Bretton Woods--I thought Sproul was kind of ugly the other
day over this. I want to get this over to Harry. Their
committee--this man from General Motors-MR. BELL: Brown?
H.M.JR: Brown. I just want you to give me a couple
of minutes to get this out of my system. And B. Ruml-MR. HAAS: Conway--
H.M.JR: And I gather-MR. BELL: This is the Board committee?
H.M.JR: I just wan t to do it as much for the record
as anything else. I was sitting and waiting with Stettinius-and I want you people to get this--to get the flavor of
this to see the President, and in came Winthrop Aldrich
and the President of the American Chamber of Commerce.
They were sitting about that far away--) Mr. Paul Watson
was, and Stettinius and I were sitting as far away from
Paul Watson, and we were talking. Addressing himself to
Aldrich and Eric Johnston, Stettinius said, "I just want
to say to you people that I think the way the American
Manufacturers have been behaving is the most outrageous,
stupid, asinine behavior I have ever seen. He was referring to certain bulletins they have gotten out on LendLease. And he said, "Believe me, if I ever go back into
business and am ever connected with U. S. Steel, they will
never see me write out another check for ten thousand dollars for the American Manufacturers Association.
MR. BELL: Good for him.
MR. VINER: That isn't Johnston, you know.
H.M.JR: I think he was doing this for the benefit of
Winthrop Aldrich. He said, "I don't know what is the matter
with my former associates in business or why they are so
stupid and so dumb," and he just laid it on the line. I
194
- 25 was simply flabbergasted, see, that this very group that
Stettinius in a very forthright manner-- I was simply
breathless--was attacking, the American Manufacturers
Association, more or less the same people who control
or overlap in the Federal Reserve Bank of New York-certainly the man he was attacking was one. He mentioned
Tom Lamont, Brown of General Motors, and he might as
well have added Winthrop Aldrich. This was all for the
benefit of Aldrich, I believe, certainly not for Eric
Johnston. And after all, the Federal Reserve Bank of
New York, as fiscal agent, lives and exists more or less
for the good-will of the Treasury Department. I am
getting to the point gradually. And, Harry, they are
going to fight us. And the expression on what's-hisname's face here the other day--I don't think I could
make the appeal that I did to Randolph Burgess or
Fleming and make the appeal to the Federal Reserve Bank
in New York and get anywhere. This is my feeling, and
I just want to think that the only thing these people
understand is power.
One of you gentlemen said the other day that the
Federal Reserve is trying to justify some of this; they
are looking for a place in the sun.
Now, Boston has been very cooperative, as has Chicago,
and, Harry, I would like to seriously think of moving
some of the Treasury business to either Chicago or Boston
where, I have a feeling they are sympathetic. This man
Fleming who is President of-MR. BELL: Flanders.
MR. WHITE: Philadelphia has been cooperative.
H.M.JR: I just want to know why we should center
all this vast fiscal agency business in New York where
I think they are out to cut our throats. I think the
only kind of thing that this fellow B. Ruml, or Mr. Brown,
or Mr. Sproul, understands is power politics in that field,
and I think they are out to cut my throat personally. He
has directed it to me and the President, and I just want
o
195
- 26 -
to ask you--I want to first ask White if I am over-emphasizing
the sensitivity of my old elbow, I mean, whether you feel
you can make any headway. You are a good friend of B.
Ruml's, and I would like to know whether you can make
any headway, let's say, on the Bretton Woods thing.
MR. WHITE: I have never talked to B. Ruml about
it, and I would like to try. I want to see him on that.
I think there may be some chance with him. I am positive
there is absolutely no chance with Sproul or with Fraser,
or with several others I might mention. I do think that
on that matter and on other matters they have been un-
friendly. I thinkBeardsley Ruml has a certain amount of
rancor against the Treasury on taxes, but I believe--and,
Lauch, I would like to get his views on that. I think he
is much more susceptible to reasoning, and much less
O
inclined to be--I think you could get results with him.
Now, I am not sure, and I think one of the ways--if I
might suggest --there are some past episodes I don't
want to bring in which went fifty percent of the way, but
I think there is a definite possibility with Ruml, but I
don't think there is any with the others.
MR. BELL: Well, you have a good friend on that Board
in Bill Myers.
MR. WHITE: I don' know him.
H.M.JR: What do you mean, good friend?
MR. BELL: Isn't he a good friend?
H.M.JR: Don't kid me, Dan. Listen, the Cornell
group-- will give you some editorials from the American
Agriculturist, the Cornell group of Bill Myers.
MRS. KLOTZ: Ed Babcock and--
Eastman, I think, wrote the most vicious
attacks on Roosevelt on the front line dollar that I have
seen in any publication in the United States, barring none.
H.M.JR:
Bill is just a toad; there are about three or four of them
together. He is President of the Cornell trustees. Of all
198
- 27 -
the vicious stuff I ever read! I am telling you people,
see, that if "hite wants to take it on, I would like him
to go to New York and test the thing out.
MR. WHITE: I think I would like to try.
H.M.JR: Eccles as much as said the other day, "I
don't think I can do anything;" the Board is split. I
don't think he can do anything, but I would like White
to try it.
I would like Lauch to think about it a little bit,
because I have got--I made real headway with what I call
the constructive bankers, Randolph Burgess and William
C. Potter, who is now President of the clearing house,
and who is more or less the leader there. And feel I
have real friends, not personal friends, but friends of
what we are trying to do, the financing of the war. I
0
don't have any personal friends there, but they would
give me a chance, see? I mean, to exist and do my job,
but these other people, I think--I may be wrong, but I
think they are just out to cut my throat. And if I
think they are, I think it is about time we back
can
in the only kind of language they understand,
fought and
that is to take some of their business away from them.
MR. WHITE: What do you think of Ruml? What do you
think of my judgment on that?
H.M.JR: I am very, very serious about this, Dan,
and you will have to tell me how to do it, but I will
make the most of it personally.
MR. BELL: I am not thinking of that. We don't just
create business in the Federal Reserve District; it is
created by Government activities, and they carry on the
activities of the Government in that District. We don't
move the Government business around from one District to
another.
H.M.JR: I want the Foreign Funds business done in
Chicago.
MR. BELL: Some of it is done there.
197
- 28 -
H.M.JR: I can move it, lock, stock, end barrel.
New York is too crowded; we can move it to Chicago.
MR. WHITE: I think the decision may be made that
if one wishes to go to that length, there are 8 lot of
things the Treasury can do of a number of varities. I
don't say not to examine the question, whether it is
desirable to do so; I merely say there are a lot of cards
in our hands.
H.M.JR: I have had two telephone calls from the
Chairman of the Bank at Boston.
MR. GASTON: Flanders?
H.M.JR: No, the Chairman.
MR. WHITE: Creighton.
H.M.JR: He called me two days ago and said he wanted
to
help. "I will do anything you ask me to do. I want
to come down and help you. Give me something to do.
See? He called me up twice. He said, "I want to do something. Give me something to do; I have had a lot of
experience; I have been to Russia four times; I have
traveled all over the world. I want to go to work for
you."
MR. BELL: He is one Chairman who really takes his
job very seriously.
MR. WHITE: He is favorable to Bretton Woods,
incidentally.
H.M. JR: I was up there in Boston, and his whole
annual statement was confined to Bretton Woods.
Look, Dan, I want to do my job. I want to finance
the war at as low an interest rate as I can, but I am
telling you that this crowd is out to get me. They are
moving in on me, and this fellow, Sproul, never forgave
me for the fact that I licked them on the fight that the
o
Federal Reserve Banks didn't run the war Loans, and I t ook
198
- 29 the business away from them and gave it to Ted Gamble
and his organization on a State basis, which I did in
the summer, a year ago. The man was so sick over it
he had to go to the hospital. He has never forgiven
me. We have this wonderful organization, but the fellow
sat there with just an ugly look on his face. lie just
looked ugly and hostile, see. He was wrong, and at that
time Burgess and Potter came and took my side, and we
licked him. But I couldn't have done it without Burgess
and Potter, and I got the whole banking fraternity with
me, except this little clique, which is, as near as I
can make out, Morgan's see. I think if you analyze it,
you will find it all stems back to J. P.
I am not looking for any fights, but if they are,
I am willing to take them on. And I don't know any other
way to fight them than to take business away from them.
There must be a lot of things we can do.
MR. BELL: There are some things you probably could
move. I don't know whether you could get foreign govern-
ments to move accounts.
H.M.JR: Do you know what happens the first time
Sproul resigns? They come and say, "Who do you want as
President?" We will name somebody, and we will name
somebody as Chairman of the Board, too. That is what
is going to happen. These people aren't going to lose
business. The minute we indicate we are going to move
stuff to Boston and Chicago, Sproul has got to resign.
Now, I don't want any of this repeated, and I am not
looking for fights. I am a very peaceful fellow, but I
want to do my job. I want to do what Mr. Roosevelt hired
me for, and that is to finance this war at a low cost.
But when these fellows--I think they are trying to move
in on my job, and the spleen against me and Mr. Roosevelt-I am not going to take it sitting down.
MR. CURRIE: I think there might be a chance of
splitting a group there, but I agree with Harry that Ruml
ought to be, in line with some of his other views, in
favor of Bretton Woods.
199
- 30 MR. BELL: I can't understand Ruml's being on the
other side.
MR. CURRIE: Do you know he is?
MR. VINER: Do you know he is on the other side?
MR. BELL: He headed a committee--
H.M.JR: Sproul said so.
of the Board of Directors, which was
Ruml, Brown of General Motors, and Sloan of the Bankers,
MR. BELL:
and Allan.
H.M.JR: And Williams of Harvard.
MR. BELL: They came out with a report to the Board
that they were against the International Fund, but not
the Bank.
H.M.JR: Sproul is coming down to try to beat
Bretton Woods; he is going to come down and fight us on
the Hill.
MR. BELL: But I asked him, if you recall, if he
was going to volunteer to testify, and he said, "No, we
are not, but we probably will be called.
MR. WHITE: I am very much surprised about Ruml; he
hasn't been present at any meeting of the Federal Reserve
Bank in New York at which we presented our case. Every-
thing he got, he got from the other side. But the Inter-
national Planning Association is meeting next week to draft
a resolution, and they asked me to come up and sit with
them. I think there is an excellent chance that Ruml
would reverse his course in the Treasury if you gave him
half a chance. I think so. I will tell you why. I
think the situation with him is different than with the
others.
H.M.JR: I know, you have told me the Ruml story.
I will tell you now, you go up to New York, and if he puts
200
- 31 -
it on a purely personal basis, I will take half a day-and I won't take benzedrine that day, either- to talk to
him. I won't have pink pants and a velvet coat on, either.
I didn't put those stories in the paper; they came right
out of the General Counsel's office.
MR. O'CONNELL: Impossible.
H.M.JR: What?
MR. O'CONNELL: Impossible.
H.M.JR: No it isn't. I mean, Paul, if you want to
call a spade a spade. He is a great friend of B. Ruml's,
and Paul thought he could run him over, and B. Ruml out-
smarted Paul and put it all over him, and Paul got sore.
MR. BELL: I told Harry to be careful or he would be
outsmarted.
H.M.JR: And when Paul got sore he got dirty; that is
the story. I wasn't in on any of that, but they blamed
me. Ruml used to -after he made all these attacks, he
went around in the evening and would get drunk up at
Paul's house and have a wonderful time discussing me. I
wasn't in on that fight at all. The only thing was, Paul
waited too long, and Ruml put it all over him. And in
the end Paul got plenty dirty, and, as usual, I am the catchall on this thing. That is the story, take it from me.
MR. WHITE: Whatever it is, I think he is worth working on, because I don't think his views or attitudes
are the same or even similar with many of the rest of the
boys that I know.
H.M.JR: Paul wouldn't come to grips with Ruml; he
thought he could just outsmart him. Ruml put on the most
marvelous campaign, and strictly in the office Macy's tried
to deduct it from their income taxes, and it was disallowed.
MRS. KLOTZ: And how! (Laughter)
o
H.M.JR: Sure.
201
- 32 Am I right, Joe?
MR. O'CONNELL: I don't know, sir. I would support
you if I had any reason to believe you are right.
H.M.JR: I am right. They put it on their expense
account, and I was told it was disallowed.
MR. O'CONNELL: I will be glad to see that it is
disallowed.
MR. WHITE: I didn't realize that Duke was as tough
as that.
H.M.JR: Somebody came in grinning from ear to ear.
All of the expenses of his campaign were charged to Macy's.
MRS. KLOTZ: That was so incidental.
H.M.JR: It makes Harry's job harder.
MR. WHITE: It makes mine insuperable.
H.M.JR: If I am wrong on the disallowance, I will
let you know, but I know they charged it up, and I am
ninety percent sure it was disallowed. Have a look at
it.
MR. O'CONNELL: I will.
MR. WHITE: He has just written a book which, aside
from the tax section, about which there can be differences
of opinion-- know we differ--is really an excellent forwardlooking book.
H.M.JR: The man is a very able fellow, and he and I
used to think we worked together. I asked him originally
to get all those statistics on department stores, remember,
George? We did the job and turned it over to the Federal
Reserve--there were a number of things. But I think you
will find that in the personal attack which was levied at
him he thinks I am at fault, and I am telling you--and I
o
don't lie--I was not. I had nothing to do with it, because after
202
0
- 33 -
all, I don't get down to that level. I had nothing to
do with it.
Well, anyway, you go up to New York. And, Lauch,
you keep your ear to the ground on this Federal Reserve
in New York business, will you please, and also think of
some of the things if we wanted to make a move?
Viner likes this thing, and I am sure he will-MR. VINER: Have you talked to Frank Altschul, about
that group? Do you know him well?
H.M.JR: He is related to the family, but I don't
know him very well.
MR. VINER: If you know him--well, he can tell you
all you want to know about the inside of what the currents
are in that group in New York.
H.M.JR: I wouldn't go to Frank Altschul for it. I
mean--what is he, a first cousin of my wife's through
marriage? He has a lovely wife. I would go to Mrs.
Altschul in a minute; she is a charming lady. lie
happened to be in on another matter.
MR. VINER: That is why I saw him in the anteroom.
(The Secretary holds a telephone conversation with
Senator Barkley, as follows:)
January 13, 1945
203
11:18 a.m.
Senator
Barkley
Henry.
HMJr:
Alben.
B:
Fine. What have you got on your mind?
HMJr:
No thing. You called me a week ago today and
I've been trying to catch up with you ever
since.
B:
Well, I've been hard to catch.
HMJr:
I know you have.
B:
HMJr:
B:
I'm a slippery boy. I'm eel
No, I wouldn't say that.
eel-like. Well, I've been busy trying to
get this Senate organized, and get the Committee -get the Committee vacancies filled. What I wanted
to talk with you about: Nunan, I think, wants to
appoint Stewart Berkshire as his assistant.
HMJr:
Yeah.
B:
I sent you a letter the other day urging this
appointment but I thought I'd just put in a
HMJr:
B:
personal word. He's a good man.
Is he a Kentuckian?
He was born and reared in Kentucky and owns the
farm on which he was born and reared but he was
appointed from Texas. Of course, that ought to
be against him.
0
HMJr:
(Laughs)
B:
But nevertheless
HMJr:
Where was he born?
B:
He was born in Kentucky.
HMJr:
But he lives in Texas?
-2-
204
B:
He lives -- his voting home 1s in Texas. He went
out to Texas, I think, after he was grown.
HMJr:
I see.
B:
But really he is a Kentuckian. And he' S been in
the Internal Revenue Bureau down there -- well, for -ever since Roosevelt came in.
HMJr:
Yeah.
B:
And he's been a good man.
HMJr:
Yeah.
B:
And I think -- I understand that Nunan really wants
to appoint him.
o
HMJr:
Well, I'm glad to know you're interested in him.
B:
Well, thank you.
HMJr:
Thank you, sir.
B:
Good luck.
HMJr:
I need it.
205
- 34 H.M. JR: Tell Berkshire if he knows what's good for
him he'll lay off.
to--
MR. O'CONNELL: I think Berkshire knows how he ought
H.M.JR: Tell him to lay off or the first thing
he knows he will be sent to the field. You know how we
do those things.
MR. BELL: One thing, Mr. Secretary on that change
in the rate structure--you told Mr. Coyne and Mr. Gamble
and his organization to get in on it. I think we ought
to c onfine the discussions to the four walls of the
Treasury. It is all right to tell Ted and Bob, but they
can't discuss it with their organization. It's got to
ge confined to this group.
H.M.JR: Is that agreeable?
MR. COYNE: Entirely.
H.M.JR: But, after all, they have a manufacturing
company and are planning a new line of goods. Their
salesmen should be consulted if it is going to be success-
ful. That is the way I look at it.
MR. COYNE: We appreciate consultation, and wouldn't
comment at all, except by some agreement with Mr. Bell.
H.M.JR: And some of the remarks I made here may be
slightly tinged with personal feelings, but I don't want
to--
MR. COYNE: You made some that I agree with, Mr.
Secretary. I can remember a year and a half ago, too.
H.M.JR: Well, I mean, some of the scars didn't heal
in New York.
MR. BELL: They didn't heal in other places, either.
Gradually they are healing. Fleming carried his right
o
to the day he resigned.
206
- 35 H.M.JR: Fleming?
MR. BELL: Fleming of Cleveland. We had wonderful
cooperation from the bank in all of our processing work
all down the line, but Fleming was really bitter to the
day he resigned.
H.M.JR: Who else besides Fleming and Sproul?
MR. GASTON: John Peyton, probably.
MR. BELL: No, John Peyton has switched. He has
done a wonderful job out there, and I thought he would
be the worst of the lot.
MR. GASTON: The San Francisco man.
MR. BELL: In another year or so he will be out.
H.M.JR: Nature will take its course.
MR. COYNE: Ira Clark will be in. He runs that bank.
Peyton has come in very nicely.
H.M.JR: Where else?
MR. COYNE: Other banks have fallen in line. Philadelphia
is great. Chester Davis has been very good, and with the
possible exception of New York; they have had a lot of
mental reservations up there.
MR. BELL: There were only four spots where bitterness
stuck out, New York, Cleveland, Minneapolis, and San Francisco,
Certainly Cleveland and Minneapolis.
MR. COYNE: Minneapolis is all right.
MR. BELL: John Peyton switched completely around.
H.M.JR: You will be interested. Aldrich said his
man in New York--
207
- 36 MR.
COYNE: Fred Gehle.
H.M.JR: He has arranged so he can stay with us for
another loan.
MR. COYNE: Swell.
H.M. JR: Gehle was afraid he might lose his seniority
while he was away, but he has tak en care of that.
MR. BELL:
Did he do a good job?
MR. COYNE: Yes, the best that has been done in
New York.
O
208
January 13, 1945
11:54 a.m.
HMJr:
Hello.
Operator:
Eugene Meyer.
HMJr:
Hello.
M:
Good morning.
HMJr:
Henry speaking.
M:
Eugene Meyer.
HMJr:
How are you?
M:
All right except I've been having a cold.
HMJr:
I'm sorry.
M:
Not very serious. Who's responsible for the
tax -- who got Jimmy to do that? He didn't think
that up.
HMJr:
Uh
M:
Or don't you know?
HMJr:
I don't know.
M:
Have you got any ideas on the subject?
HMJr:
No, I really don't.
M:
You don't think that that was his own grand idea,
do you?
HMJr:
I really don't know, Eugene. I've had no contact
with him.
M:
I see.
HMJr:
Why?
M:
I was just thinking about it and wondering who put
him up to it.
HMJr:
Oh.
M:
It's a little out of his line, isn't it? I mean,
his usual line.
-2HMJr:
Well, I don't really know. I -- I -- the only
M:
Yes, you wrote me you appreciated it.
HMJr:
Yes.
M:
He wrote me, too. He wasn't pleased.
HMJr:
He was not pleased?
M:
HMJr:
203
thing I know I was very pleased at the editorial
you ran about it.
(Laughs) No. However, I'm not trying to get you
and him into any more tangles, but I wrote him back
that I stood by my opinion
No, I -- strangely enough -- I mean, I've had no
contact with him since then and I just don't know.
And, oh, Washington is so big.
M:
Yeah. Well, I didn't -- I thought maybe you had
an idea.
HMJr:
No. Evidently you do.
M:
No, I haven't. I got to thinking about it though
and I said to myself, "Jimmy's mind doesn't turn
in the tax direction very much. II He was in Appropriation Committees -- never even on the Ways and
Means
HMJr:
Well, he's got a big staff there now, you know.
M:
Huh.
HMJr:
And
M:
HMJr:
But, my God, he hasn't got the staff -- if they
were all devoted to taxation, he wouldn't have
a big enough staff to be getting off tax policies.
As a matter of fact, leaving him out, at no time
since I've been here, have Treasury's relations been
as good as they are with the Joint Committee on
Taxation on the Hill.
M:
Huh.
HMJr:
We've been working very closely with Joint
-3-
210
M:
Well, I know, but all the more reason for not
disturbing it.
Yes, I think so.
I once issued a report on the wheat situation
in which -- when I was managing director of the
War Finance 'way back in '24 -- and I thought to
myself, "Well, gosh, here' 8 a thing that will have
huge circulation, be carried in all the papers,
and I put in everything that I knew about anything.
HMJr:
Yes.
M:
Or thought.
HMJr:
Yes.
M:
HMJr:
M:
HMJr:
M:
HMJr:
M:
And I did put in some matters related to taxation
in a very general way and its effect on the economic
conditions of the country.
Yes.
Mr. Mellon sent for me about it. He was then
Secretary of the Treasury.
Yes.
And he -- I had practically discounted the Treasury
tax program without ever having talked to anybody
about it.
HMJr:
And he didn't -- he didn't like it?
M:
Yeah, he was very much pleased.
HMJr:
Oh, was he?
M:
Yes.
HMJr
Well, I'll be darned. Well, I don't
M:
HMJr:
Well, it was in general terms. I had no schedules.
I just figured that was one -- Byrnes' episode
was one of those things that happen and it's over
the dam and now on to the next one.
M:
Yeah. Well, you're not spending time thinking about
it?
-4HMJr:
M:
No.
The only reason I was I got a letter from him
after a few days -- I saw him in the meantime
about something else and he said he was going
to write me
HMJr:
M:
Yeah.
which I invited him to do, but not for
publication, and I answered him, not for publi-
cation.
Hope to see you soon.
HMJr:
Okay.
M:
Okay. Good luck.
211