Full text of Diaries of Henry Morgenthau, Jr. : Volume 858

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PRECISION TRADE MARK MICROSTATT - MICROFILM BOLL NO

DIARY

Book 858

June 23-26, 1945

June 23, 1945
10:43 A. N.

Mr. Harry
White:

HMJr:

Austria, have been prepared and they've been

working on it for quite some time. It came to
my office for initialing three or four days ago
and I didn't have time to go over it until last
night. They've been pressing for it, and I want
to know whether you would want to go over it
before I initial it or whether you'd want me to
initial it as member of this committee. It is
a very excellent document, incidentally. It is
a splendid document. It is on the political
directive . We all think it 18 very good.
You are thoroughly satisfied?
Yes. This is an amazingly good document.

W:

HMJr:

What?

We think it is an amazingly good document.

W:

HMJr:

Well, if you are thoroughly satisfied you initial
it as a member of a committee and let her go.

Yeah, but that will represent the Treasury approval.

W:

That's what

HMJr:

All right..
Now, shall I send you a memo giving you the digest
of it, or send you a copy and if you get a chance
you might want to...

W:

HMJr:

Give me a digest of it, but if you are satisfied
don't hold it up, let it go.

All right, air.

W:

HMJr:

What?

Right.

W1

HMJr:

V:

HMJr:
W:

I can't do any more than that, but you've got to tell
me that you are thoroughly satisfied.
Yee, W6 are thoroughly satisfied and I'm sure you would
be pleased at it.
O. K.

Fine. Bye.

PRECISION

TRADE MARK

MICROFILM

MICROSTAT

ROLL NO.

23 JUN 1945

Dear Dr. Kung:

I an clad to receive your letter of 9 June,
1945, and needless to say, I was pleased to have
the opportunity of seeing you again the other day.
I appreciate your assurance that the Central
Bank of China will continue to cooperate with the
United States Army and Navy Forces in China. de

in the Treasury realise the difficulties involved

in supplying our forces with adequate amounts of
currency and in making available banking faeilities within China,

Your expression of gratifientic that ar-

rangements have been made to ship to China the

remainder of the $200 million of cold is appreciated.
As you know, the easing of the transportation situ.
ation has facilitated going forward with the se shipments.

I am looking forward to the pleasure of seeing
you again.

Sincerely yours,
(Signed H. Margenthaway JA

Honorable H. H. Kung,
Boom 4201,

Weldorf-Astoria Hotel,
New York, New York.

ISF/SA/efa 6/22/45

THE CENTRAL BANK OF CHINA
CABLE ADDRESS

HEAD OFFICE
FICIAL DEPOSITORY OF THE
NATIONAL ADVERTMENT

CHUNOKING, GHINA

June 9, 1945.

Hon. Henry Morgenthau, Jr.

Secretary of the Treasury,
Washington, D. C.

Dear Mr. Morgenthau,

First of all, I wish to tell you that it gave me great

pleasure to have seen you today. After months of illness, it was
good to be able to get around end talk to old friends again.
Your letter of June 8, 1945 reached me just as I returned
from visiting you and I wish to thank you for giving the necessary
instructions to transfer the V35 million out of the unused portion
of the 0500 million loan for the purchase of banknotes. With
reference to the $25 million for the purchase of textiles, I an
glad to know that you will have transfers node up to this amount
at such times no the purchase are mode.

I wish to take this opportunity to tell you that I was deeply

gratified by the arrangement you have made with Dr. T. V. Boong
for D schedule or shipment for transporting to China the remaining

part of the $200 million worth of gold.
I also wish to take this occasion to assure you that the
Central Bank of China will continue to cooperate rully with the
United States Army and Navy forces in China. I. OB the Governor

of the Bank, will nake sure that our joint military effort in
never delayed because of currency or monetary needs. We have

cooperated fully for many years together and I would not'want
anything to mar this good record during the lost phase of our
common struggle against Japanese militarism and aggression.
with best personal regards,
Sincerely yours,

H. H. Kung.

c

June 23, 1945

MESSAGE FOR MR. MATTHEW CONNELLY, SECRETARY TO THE
PRESIDENT:

I have just received the message that you gave to
FitzGerald. Please thank the President for ne on

his proupt action in this matter.
Henry Morgenthau, Jr.
(

PRECISION

RADE MARK

MICROSTATT

MICROFILM

TREASURY DEPARTMENT

Fiscal Assistant Secretary
0
To MRS. NO NUGE

: have reported these totals
to the Secretary.
As I know be does not want

written reports, : just wondered
whether you wanted to send this

statement is or return 11 to no.

C

Mr. Bartelt

51

ROLL NO.

:

INTERDEPARTMENTAL WAR SAVINGS BOND COMMITTEE
WASHINGTON

0

III. DOUBTFUL
CHAIRMAN

61%

June 23, 1945

DEPARTMENT

Bureau of Engraving and Printing

A special effort 10 being nade to help the Bureau of
Engraving and Printing meet its quota. The Interdepart-

REMORANDUM FOR THE SECRETARY:

mental War Savings Bond Committee and my personal repre-

As of June 18, the standing of bureaus and offices of
the Treasury Department in the Seventh War Loan is as fol-

sentative, Mr. W. E. Barker, Jr.. are rendering every
possible assistance. The prospects for making 100 per cent
are hopeful, but by no seans certain.

lows:

IV. TREASURY AS A WHOLE

I. OVER THE TOP

Per cent of Quote

office

The percentage for the Treasury Department as a whole,
on June 18, was 92 per cent. Later reports indicate
Internal Revenue 10 up to 90 per cent, making Departmental
total 98 per cent. I am certain that the Department will
reach its quota when all field reports are in.

2163

War Finance Division
Office of General Counsel

1838
1558

Office of Chief Clerk

1315

Procurement Division
Foreign Funds Control
Division of Monetary Research
Secret Service
Bureau of Public Debt
Interdepartmental War Savings

129%
127%

1148
111%

Bond Committee

108%

Bureau of Accounts

1085

Supt. of Treasury Bldgs
Comptroller of the Currency
Div. of Research and Statistics
Division of Personnel
Office of the Secretary

V. ALL FEDERAL AGENCIES -- NATION-WIDE

126%

(

Over-all report not yet available; but indications are
that Federal employees will seet their over-all quota of
$305 millions.

VI. FEDERAL EMPLOYEES IN

107%

DISTRICT 01 COLUMBIA

105%
104%

As of June 18, civilian Federal employees in the District
of Columbia had reached 73.1 per cent of their quote of
$29,000,000. Indications are that D. C. total will reach

103%

II. WILL REACH QUOTAS

between 95 and 100 per cent.
985

Bureau of Customs

98%
978

935
S

Division of Tax Research
Bureau of Narcotics
Office of Treasurer of U.
Bureau of the Mint
Bureau of Internal Revenue

18th
50%

1/

I have been assured by the heads of all of the above
offices that their quotas will be reached or surpassed. The
Bureau of Internal Revenue telegraphed recently to its larger
field offices for an estimate of the prospects of making their
quotas, and the replies were favorable with very few exceptions.
Later report shows Internal Revenue 90%.

E. F. Bartelt
Chairman

MPRECISION

c

R

MICROFILM

o

28

ROLL NO

JUN

by dear Admiral Finkaid,
Under your leadership, the U. S. seventh Fleet
has emblasoned . proud and vistorious record on
the pages of history.

ky dear General Vandegrift:

The Marine Corps, true to tradition, has shown the
same qualities of leadership in the Havy War Bond

Your warn interest in and support of the Havy Tar

Progress is has in all other fields of endeavor.

I am informed that the Marine Corps currently leads
both the Havy and Coast Guard in bond allotment
participation.
It is heartening to note that Earine Corps personnel,
who have played such a determined part in the march
along the rugged road to Tokio, are equally determined

Bond Program have enabled seventh Fleet Personnel

As Commandant of the U. 3. Harina Corps, you have

not fine support

This sitation is presented to you in recognition
of the able leadership which you have given to the

given
leadership
but and you interested have been most
to theonly
Savy
War
Bond Program,

Department. I extend thanks and congretulations

generous in giving of your time and effort to the
Treasury War Loan drives. This citation is presented
to you in recognition of these services. with it @

to you.

to write an equally fine record into Navy THE Bond
their savings in for Bonds, personnel

in who are

history.
cousand, of
byour
already
doing so much
insure your
the security
democratic
way of life, to

are also insuring their individual future financial

security.

to provide for their individual future security.

Tar Bond Program of the Navy and of the Treasury
Sincerely,

my warm thanks and sincere appreciation.

(Signed) H. Margenthau, Jr.

Sincerely,

General A. A. Vandegrift, USMC

Admiral T. C. Kinkaid, USE

Commandant, U.S. Marine Corps

Commander Seventh Fleet

Headquarters

Floot Post office
381 Pracoisco, Celifornia

Washington, D.C.
(

PRECISION

TRADE MARK

MICROFILM

MICROSTAT

ROLL NO

by dear Admiral Eseaches

The U. 3. Coast guard bas played . splendid part The
in the success of the Savy ver Bend matches program. its

Coast Guard record in this respect of
distinguished record in all other vital phases
the Far effort.

Particularlymembers
noteworthy
is the
sanner
in which the the
of the
Reserve
have
gives to the program by the
support officers
and regular
sen of the
U. 5. Coast
Temporary
reserve
watched
Guard. and
(

This citation is presented to you in recognition
of the sealous leadership and support which behalf you of
have given to the War Benc Program. on are
the Treasury Department, heartfelt thanks
extended to you.
sincerely,

(Signaci) H. Mergenthas, in

Admiral B. R. Faesone, 03C0
Commandant, . 3. Coast cuard

leadquarters, 1300 It street, S.E.
washington, D.C.

12
June 23, 1945

11

U

MESSAGE FOR MR. MATTHEW CONNELLY:

It has been suggested to me that Mr. Smith Troy,
Attorney General for the State of Washington, and an

Sent by Secret Service to
Mr. Latta at the White House
at 11:25 A.M., June 23.

informed now with the Judge Advocate General somewhere
in Europe might make a very good Assistant Commissioner
of Internal Revenue.

a

Inssmuch as you are in the State of Washington, I would
like you to mention this to the President, and would
appreciate your making some inquiries in the state as to
Mr. Smith Troy's capabilities. If you hear good things
about him, and if the President thinks well of this
suggestion, would you make inquiries as to whether or not
the friends of Smith Troy think he would like a job of
this

kind. Thank you How many fish del
you catch?
Henry Morgenthau, Jr.

13

TREASURY DEPARTMENT

C

INTER OFFICE COMMUNICATION

the Marquette football team; in 1927

DATE

TO

FROM

Secretary Morgenthau

the Packer team, and

WES a member of the 1929, 1931

June 23, 1945

teams: st the present is

he end 1934; championship joined on played 1930, time and through he

one of the Big Ten officials; elected to the

John W. Fehle

Seventy-eighthCongress on November 3, 1942.

I SSW Mr. Dilweg this morning and the following
points were developed:

police

1. Dilweg has no administrative experience and did not seen to be particularly
Interested in administrative problems.
2. He is dubious 8.5 to whether be would
be interested in the proposed job, but will
think it over and get in touch with me.
3. He did not impress me 8.8 being at

all outstanding in ability.
C

The following statement of Dilweg's background is
taken from the Congressional Directory for the 78th
Congress:

"LaVern Halph Dilweg, Democrat, of
Green Bay, Wisconsin; WAS born November 1, 1903,

in Milwaukee, Wis.: was graduated from Washington
High School in 1921: entered Marquette University

his WSE
and had 1

in 1922, law degree and year admitted of engineering; to the received Wisconsin

bar in 1927: married to Klesnor Coleman of swimming fame, Milwaukee, Wis. in 1927: has family
of four children -- Jon Colenan Dilweg, 14:
Robert Anthony Dilweg, 9; Gary Thomas Dilweg, 6:
and Dianne LaVerne Dilweg, 5: moved to Green Bay,
Wis., in 1927 and began the practice of law
there; at present is a member of the firm of

Martin, Clifford & Dilweg, with offices in the
Bellin Building: is active in fraternal and civic
organizations, being past chapter chairman of

the Brown County Red Cross; is n member and past

president of the Lions Club of Green Bay: played

15.
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION

C

-2-

0

DATE June 23,
1945

compared to $7 million in the corresponding period of May. At the same time,
out-payments of large denominations of
currency decreased in this area and outpayments of smaller denomination notes

Secretary Morgenthan
FROM J. W. Pehle

increased

A review of the comments by the Federal Reserve
Banks on the reaction to the recent currency order
reveals the following:

4. There were many expressions of pleasure

of the Treasury's deleting the requirement that banks indicate why they regard
a particular payment as unusual.

1. On the whole the banks are accepting
the order with good grace and are
willing to cooperate.

5. Chicago reports that the initial newspaper comments of the Chicago district

2. There are a fev scattered criticisms
BE follows:
3.

The banks fear that the reporting
requirements will have an adverse

effect on their relations with
their customers.

b. A few banks meation the Constitutional and statutory authority for
the order.

C. A few of the banks object to the
extra work involved.

0

were critically in tone; probably due
to unfevorable publicity inspired by the
State Bank Associations of Indiana and
Illinois. On the other hand, the Iova
Association expressed approval of the
order and pledged cooperation. Chicago
reports that since your letter of June 9
and the deletion of one phase of the
reporting requirement the feeling of the
banks in much improved.

6. It seems clear that your letter of June 9
did a lot of good in producing n favorable
reaction to the Treasury order.

3. Since the issuance
of the
order, there
marked
increase
inflow
in denominations

has of currency been a in of the been $50 and

up. At the same time there has a
marked outflow of the smaller denominations.

For example, Philadelphia reports $26

million in receipts of currency in

denominations of $50 and over in the

first fifteen business days in June, as

Instine

Bill

20

PM

50

1945 JUN

SN78G89K WASH (LONG ) D 194 CLEV 20-502
MORGENTHAU

IN PRESIDENT GIDNEY'S ABSENCE, I AM REPLYING TO BELL'S
WIRE JUNE 19 REQUESTING REPORT REGARDING ATTITUDE OF FINANCIAL
INSTITUTIONS WITH RESPECT TO YOUR REQUEST FOR REPORTS OF
CURRENCY TRANSACTIONS.

REACTIONS OF BUSINESSMEN WHICH HAVE COME TO OUR ATTENTION HAVE

BEEN FAVORABLE. REACTION OF BANKERS HAS BEEN SPOTTY, BUT IN THE
MAIN FAVORABLE. YOUR RECENT LETTER TO BANKS ELIMINATING
REQUIREMENT OF - REASON FOR REPORT" AND STATING THAT NO BANK
NEED FEAR GOVERNMENT BECAUSE OF EEXXX ERROR IN JUDGMENT HAS

IMPROVED BANKERS' ATTITUDE. IN NO CASE HAS THERE BEEN ANY
CRITICISM OF THE OBJECTIVE, VIZ., TO OVERCOME BLACK MARKETS AND
TAX EVASION. OBJECTIONS VOICED ARE :

1. BANKS DO NOT LIKE TO BE POLICEMEN :
2. COMPLIANCE WITH THE REQUEST WILL NOT BE UNIFORM AMONG
BANKS, WITH THE RESULT THAT BANKS WHICH ARE CONSCIENTIOUS
IN REPORTING FEAR THEY MIGHT LOSE BUSINESS TO BANKS NOT so
CONSCIENTIOUS OR WHOSE JUDGMENT DIFFERS.
WE HAVE NOTED NO NEWSPAPER COMMENT OTHER THAN THE ORIGINAL
ANNOUNCEMENT, EXCEPT IN PITTSBURGH WHERE THE REPORTING WAS JUST
AND SYMPATHETIC.

THE FOLLOWING SUGGESTIONS HAVE BEEN RECEIVED AND ARE PASSED ON
G
A

T

--

REGO

MICROSTAT

T

R

0194/2

TO YOU WITHOUT RECOMMENDATION:

1. PERMIT CUSTOMER TO FILE EXPLANATORY STATEMENT TO BE FORWARDED
WITH REPORT.

2. REQUIRE REPORTS FROM WAR BOND CONSIGNMENT AGENTS.

3. CALL IN ALL LARGE BILLS. SUBSTITUTING NEW ISSUES AND
REQUIRING REPORTS ON PERSONS CONVERTING.

4. FLAT REQUIREMENT THAT ALL TRANSACTIONS IN BILLS OF CERTAIN
SIZE OR OVER OR TRANSACTIONS OVER CERTAIN AMOUNT BE
REPORTED WITHOUT REGARD TO LEGITIMACY OR UNUSUALNESS.

5. WAIVE REPORTS ON TRANSACTIONS INVOLVING PURCHASE OF
WAR BONDS.

FLOW OF CURRENCY IN THOUSANDS

(MINUS SIGH INDICATES NET PAYMENTS)

CLEVELAND

CINCINNATI
PITTSBURGH

MAY 1-16 aus

JUNE H6

-5,282

-14,413

-10,567

377

- 3,293

- 1,675

-4,924

- 8,421

- 8,328

-9,869

-26,127

-20,570

Rey

A

JUNE 1-16 1945

AS INDICATED ABOVE, NET OUTWARD FLOW HAS DECREASED.

$

6TH LN FROM BOTTOM MK HEADING OF THREE COLUMNS

JUNE 1-16 1945

SEX MAY 1-16 1945 JUNE 1-16 *****
1944

1
1

T
A

$
U
Y

D1 94/3

$

TRADE MARK

FLOW OF CURRENCY IN THOUSANDS

(MINUS SIGH INDICATES NET PAYMENTS)

JUNE 1-16 1945

CINCINNATI
PITTSBURGH

-5,282

-14,413

-10,567

377

- 3,293

- 1,675

-4,924

- 8,421

- 8,328

-9,869

-26,127

-20,570
E

CLEVELAND

JUNE H6 1944

MAY 1-16 Aus

1

AS INDICATED ABOVE, NET OUTWARD FLOW HAS DECREASED.
$
1
4

6TH LN FROM BOTTOM MK HEADING OF THREE COLUMNS

,

JUNE 1-16 1945

*** MAY 1-16 1945 JUNE 1-16 XXXXX
1944

T

R

E
A

$
U

R

a

D1 94/3

8

I

FOLLOWING FIGURES FOR FIRST SIXTEEN DAYS OF JUNE 1945ARE
SIGNIFICANT :
50's AND UP

CLEVELAND

- 8,839

3,803

CINCINNATI

- 1,644

2,157

PITTSBURG

- 5,494

2,155

- 15,977

8,115

A

5's 10's . AND 20's

THESE FIGURES SHOW A NET COUTWARDHDAW OF SIXTEEN MILLION

* IN SMALL BILLS AND A NET INWARD FLOW OF EIGHT MILLION IN
LARGE BILLS, SUGGESTING SUBSTITUTION

T

HAYS .
E
G

R
A

P
H

:

T

I

PRECISION

TRADE MA

MICROSTAT

MO.U.S.PAS.OFF

MICROFILM

ROLL NO.

Bell
W83WASH C93 LONG PHILA JUNE 20-346P
MORGENTHAU

1915 JUN 20 PM 4 08

U

ANSWERING MR BELL'S WIRE OF JUNE 19, 1945, GENERAL REACTION

R
.

Y

TO CURRENCY REPORTING IN THIS AREA CONTINUES TO BE FAVORABLE. A
T

FEW BANKS MENTIONED THE EXTRA WORK INVOLVED IN MAKING THE REPORTS.

C

THE WAIVING OF THE REQUIREMENTS AS TO THE REASONS FOR REPORTING
[

THE TRANSACTIONS HAS EVOKED FAVORABLE COMMENTS. QUESTIONS RAISED

9/5 JUN 20 PM 5 51

HAVE BEEN OF A TECHNICAL NATURE AND NOT RELATED TO PROPRIETY OF
ORDER. NEWSPAPER REPORTS HAVE BEEN CONFINED TO FACTUAL STATEMENTS.

ONE COUNTRY BANK REPORTS CONSIDERABLE EXCITEMENT IN ITS CITY
T

AS A RESULT OF VISITS, SINCE PUBLICATION OF TREASURY'S PROPOSAL

R
C

E
C

2ND WD SIGN PLS AND IN SHEET 3 3RD LAST LN MK 6TH WD OUTWARD TNX

TO EXPAND FORCE OF INVESTIGATORS, BY REPRESENTATIVES OF COLLECTOR

A

W73GC13K WASH D 194 MORGENTHAU SINED IN SHEET 2 7TH LN FROM END MK

OF INTERNAL REVENUE WHO WISHED TO EXAMINE THE BANK'S DEPOSIT
D

TICKETS.

C

RECEIPTS OF CURRENCY ALL DENOMINATIONS IN FIRST 15 BUSINESS
C

DAYS IN JUNE 1945, AMOUNTED TO $71,400,000 AS COMPARED WITH
I

$59,500,000 IN CORRESPONDING PERIOD IN MAY. RECEIPTS OF CURRENCY
IN DENOMINATIONS OF $50 AND OVER AMOUNTED TO $26,000,000 IN FIRST

I

15 BUSINESS DAYS IN JUNE AS COMPARED WITH $7,000,000 IN COREESPONDING
:

PERIOD IN MAY. TOTAL PAYMENTS IN FIRST 15 BUSINESS DAYS IN
JUNE AMOUNTED TO $83,000,000 AS COMPARED WITH $67,500,000 IN
CORRESPONDING PERIOD IN MAY. PAYMENTS IN DENOMINATIONS OF $50

AND OVER AMOUNTED TO $5,500,000 IN FIRST 15 DAYS IN JUNE AS COMPARED

WITH $8,200,000 IN FIRST 15 DAYS IN MAY.
DRINNEN

:

21
I

SN76WASH B206 LONG BOS 20-1220₽
J

HENRY MORGENTHAU JR

Ball

TR DEPT

1945 JUN 20 PM , 17
2

PURSUANT TO REQUEST UNDERSECRETARY BELL'S TELEGRAM 19TH, WE

SN83WASH B602 NY 20-518

.

9:5 JUN 20 PM 5 38

SUBMIT FOLLOWING GENERAL REPORT ON CURRENCY ORDER: NEWSPAPER COMMENT

:

MORGENTHAU TREASURY
I

G

TO DATE MOSTLY FACTUAL; CLIPPINGS FORWARDED PURSUANT YOUR PREVIOUS

R
A

ABOUT $275,000 RECEIVED TO DATE FROM MISCELLANEOUS SMALL BANKS WITH-

P

REURTEL K-187, SUPPLEMENTING OUR PREVIOUS REPORT THERE HAS BEEN

0

.

REQUEST. APPROXIMATELY 60 TCR-1 REPORTS RE TRANSACTIONS AGGREGATING

1

ID

SURPRISINGLY LITTLE NEWSPAPER COMMENT AND WE HAVE RECEIVED VERY

H

OUT COMMENT BY BANKERS SINCE MAILING OF YOUR LETTER TO BANKS. PREVIOUS
LITTLE UNFAVORABLE COMMENT FROM THE BANKS NEARLY ALL OF WHICH HAVE

COMMENT SCATTERING, MAJORITY FAVORABLE BUT SOME CRITICAL OF EXPECTED

&

EVIDENCED A WILLINGNESS TO COOPERATE. SEVERAL OF OUR NEW YORK CITY
ADVERSE EFFECT ON CUSTOMER RELATIONS AND QUESTIONING CONSTITUTIONAL

BANKS WERE MUCH CONCERNED ABOUT QUESTION #2, THE ELIMINATION OF WHICH
C
.

WAS PLEASING TO THEM. THE CLEARING HOUSE BANKS HAVE HELD TWO

AUTHORITY. MARKED INCREASE IN INFLOW OF CURRENCY IN DENOMINATIONS OF

$50 AND UP, ESPECIALLY IN $100 BILLS. ALTHOUGH THIS TENDENCY BEGAN

MEETINGS FOR DISCUSSION OF THE PROGRAM WITH A VIEW TO FOLLOWING

C

BEFORE, IT HAS BEEN ACCELERATED SINCE ISSUANCE OF THE ORDER. CONVERSELY,
UNIFORM POLICIES AND MAKING REPORTS EFFECTIVE. WE REGARD ENTIRE

DURING SAME PERIOD THERE HAS BEEN A MARKED ACCELERATION IN THE OUTFLOW

C

PROGRAM AS SATISFACTORY AT THIS TIME.

OF SMALLER DENOMINATIONS, ESPECIALLY $20 BILLS. DURING PAST MONTH ONLY
ROUNDS.

NEGLIGIBLE NET CHANGE IN AGGREGATE CURRENCY IN CIRCULATION.

WILLIAM WILLETT, FIRST VICE-PRESIDENT.

J

1

H

T
R

E

PRECISION

MICROSTAT REG. U.S.PAT. OFF

TRADE MARK

MICROFILM ROLL

Bell

t

23

W82WASH F212 ATLA 20-230P
SECRETARY MORGENTHAU

UN 20 PM 4 01

t

OUTSPOKEN CRITICISM OF THE RECENT CURRENCY ORDER HAS IN THIS
C

I

DISTRICT BEEN LIMITED TO A VERY FEW BANKERS WHO HAVE SAID THAT THEY

I

OBJECT TO ACTING AS AGENTS FOR UNCOVERING INFORMATION FOR THE PURPOSE

G

SN52WASH RH 133 RICH 20-420

:

SECRETARY MORGENTHAU

Jandis

945 JUN 20 PM 4 3A

OF PROSECUTION. A GREAT MANY SEEM TO FEEL THAT THE ORDER TENDS
TO BREAK DOWN A LONG-ESTABLISHE CONFIDENTIAL RELATION BETWEEN THE

H

BANKER AND HIS CUSTOMER: BUT THE OVERWHELMING MAJORITY IS QUITE WILLIS

T

RETEL OF UNDER SECRETARY YESTERDAY, AS FAR AS WE KNOW THERE

R

TO COOPERATE BECAUSE THE NECESSITY OF CURBING TAX VIOLATORS AND BLACK

E

HAS BEEN NO MATERIAL CHANGE IN SITUATION IN - THIS DISTRICT

A

$
U

HAVE EMPHASIZED, THAT NO HONEST MAN HAS ANYTHING TO FEAR HAS BEEN VERY

T

VERY FEW ADDITIONAL COMMENTS HAVE BEEN RECEIVED, NONE OF WHICH

MARKET OPERATORS IS THOROUGHLY APPRECIATED. YOUR STATEMENT, WHICH WE

C

AS REPORTED TO YOU IN PRESIDENT LEACH'S TELEGRAM OF JUNE 7.

R

EFFECTIVE.

HAS BEEN UNFAVORABLE. FOLDER OF NEWSPAPER CLIPPINGS SENT YOU

THE POINT HAS BEEN MADE TO US THAT THE ORDER, IF INDEFINITELY

JUNE 7. NO SIGNIFICANT COMMENT HAS APPEARED SINCE THEN. RETURN

CONTINUED OR EXTENDED IN SCOPE, MIGHT EVENTUALLY RESULT IN AN

FLOW OF CURRENCY TO THIS BANK AND ITS BRANCHES FOR FIRST NINETEEN
E

7,740

40,841

5,666

35,883

11,994

ORDER SUFFICIENTLY TO PRODUCE ANY SUCH RESULT. THE POINT HAS ALSO BEEN
MADE THAT THERE IS ALREADY OUTSTANDING SUFFICIENT CURRENCY TO FINANCE
BLACK MARKET OPERATIONS.

A

WALDEN.

PRESS COMMENT, JUDGING FROM LEADING PAPERS ALL OVER THE DISTRICT

I

JUNE

39,297

THERE SEEMS TO BE NO GENERAL FEAR THAT THE TREASURY WILL EXPAND THE

*

MAY

6,086

I

APRIL

40,809

H

MARCH

505 & OVER

T

20s & UNDER

INTERFERENCE WITH THE FREE INTERCHANGE OF DEPOSITS AND CURRENCY; BUT

G

DAYS OF LAST FOUR MONTHS IN EVEN THOUSANDS OF DOLLARS, AS FOLLOWS:

$

HAS BEEN ALMOST TOTALLY LACING. THE PRESS LARGELY CONFINED ITSELF TO

U

BRIEF NEWS STOREIS QUOTING YOUR STATEMENT AT THE TIME THE ORDER BECAME

R

EFFECTIVE.

C

1

OUR CIRCULATION CONTINUES TO EXPAND, BUT SINCE THE ORDER WENT IND
&

EFFECT, THERE HAS BEEN A NOTABLE REDUCTION OUR IN OUR PAYMENTS OF 50'S

AND UP, AND, THIS MONTH, IT APPEARS THAT WE WILL HAVE NET RECEIPTS OF
50'S AND UP FOR THE FIRST TIME IN SEVERAL YEARS.
BRYAN.

G

8

24

Bell
W79G6OWASH (LNG) GX234 CGO 20-242

25can
945 JUN 20 PM 3 55

Bill

HON. HENRY MORGENTHAU

t

IN ABSENCE OF PRESIDENT YOUNG THE UNDERSIGNED IS REPLYING TO

20 PM A 22
.

BELL'S WIRE OF 19TH RE RECENT CURRENCY ORDER. STOP. INITIAL

W98G07WASH (LONG) H184 STL 20-307

I

NEWSPAPER COMMENTS IN THIS DISTRICT WERE LIMITED IN NUMBER
MORGENTHAU
C

BUT RATHER CRITICAL IN TONE FOR THE MOST PART, PROBABLY DUE
TO UNFAVORABLE PUBLICITY INSPIRED BY STATE BANKERS ASSOCIATIONS

SINCE MR. DAVIS' TELEGRAM TO YOU ON JUNE 8 THERE HAS BEEN NO

OF INDIANA AND ILLINOIS. ON THE OTHER HAND IOWA ASSOCIATION

MATERIAL CHANGE IN EIGHTH DISTRICT IN REGARD TO TREASURY

EXPRESSED APPROVAL OF PURPOSE OF ORDER AND PLEDGED CO-OPERATION.
1

STOP. PRINCIPAL CRITICISM OF BANKERS RELATED TO VIOLATION OF

C

DEPARTMENT REPORTS OF UNUSUAL CURRENCY TRANSACTIONS. SINCE THAT

DATE HAVE RECEIVED TWO LETTERS FROM FINANCIAL INSTITUTIONS AND

CONFIDENCE BETWEEN THEMSELVES AND CUSTOMERS WITH POSSIBLE LOSS

NEITHER WAS CRITICAL OF TREASURY OBJECTIVES IN RESPECT TO REPORTS.

OF GOOD WILL, ALSO INABILITY TO DISTINGUISH MOTIVES FOR CURRENCY

HAVE OBSERVED NO NEWSPAPER COMMENTS SINCE THOSE SENT BY MR. DAVIS

TRANSACTIONS AND SOME RESENTMENT THAT TRADING WITH THE ENEMY ACT

TO YOU ON JUNE 8. DOLLAR VOLUME OF LARGE DENOMINATION CURRENCY

C

WAS USED AS AUTHORITY FOR ORDER, AND THAT INSTRUCTIONS WERE NOT

DEPOSITED XXX DEPOSITED WITH US FROM JUNE 8TH TO 19TH WAS IN EXCESS OF

C

DIRECTED TO ALL BUSINESS ESTABLISHMENTS. WE HAVE HAD NO DIS-

USUAL EXPERIENCE CONTINUING TREND REPORTED IN OUR TELEGRAM 8TH. IN

PART C-2 OF REPORT FORM, WE BELIEVE FEELING OF BANKS IS MUCH
&

IMPROVED AND NEWSPAPER COMMENT HAS PRACTICALLY DISAPPEARED. WE
$

HAVE NO DOUBT THAT BANKS IN THIS DISTRICT ARE PREPARING TO COOPERATE. STOP. OUR CIRCULATION SHOWS NET DECREASE $9,000,000
&

C

JUNE 1 TO JUNE 19 INCLUSIVE, STOP. EXCESS OF RECEIPTS OVER PAYMENTS OF BILLS IN DENOMINATIONS $50 AND OVER $33,500,000 SAME
PERIOD.
DAWES.

IN EIGHTH DISTRICT HAVE RECEIVED SEVERAL FAVORABLE COMMENTS
REGARDING YOUR LETTER JUNE 9TH CLARIFYING OBJECTIVES OF ORDER AND
ELIMINATION OF REQUIREMENT THAT PART C-2 OF REPORT FORM BE COMPLETED.
HITT.
A

LETTER OF JUNE 9 AND ELIMINATION OF REQUIREMENT OF ANSWERING

$

C

CONVERSATIONS WITH OFFICIALS OF BANKS AND OTHER FINANCIAL INSTITUTIONS

J

C

G

ADDITIONAL WORK REQUIRED OF BANKS. STOP. SINCE SECRETARY'S

J

APPROVAL OF PURPOSE OF ORDER NOR EXPRESSION OF DESIRE TO AVOID

U0

RECISION

TRADE MARK

MICROSTAT

REG. U.S.PAT. OFF

MICROFILM

ROLL NO

27

E

07

I

26

20

PM

1945 JUN

Bell

W67G49WASH 164 MPLS 20-234
MORGENTHAU

W84GC26K WASH J196 KC 20-453
HENRY MORGENTHAU, MXXX JR. SECRETARY OF THE TREASURY

THE MAJORITY OF BANKERS IN THE NINT H DISTRICT ENDORSE YOUR
RECENT CURRENCY ORDER ALTHOUGH SOME BANKERS QUESTION THE PROPRIETY

REPLYING MR. BELL'S WIRE OF JUNE 19, THERE HAS BEEN LITTLE OR NO

OF REPORTING CERTAIN CONFIDENTIAL TRANSACTIONS STOP GENERALLY
SPEAKING BANKERS ARE FAVORABLE TO YOUR PROGRAM AND WILL GIVE
FULL COOPERATION TO REPORTING UNUSUAL CASH TRANSACTIONS WXXX

NEWSPAPER COMMENT INTHIS DISTRICT REGARDING RECENT CURRENCY ORDER,
AND SUCH COMMENTS AS HAVE BEEN MADE WERE THE REPORTINGOF FACTS WITH

C

WHERE THERE IS AN INDICATION OF INCOME TAX EVASION OR BLACK
MARKET OPERATIONS STOP THERE HAS BEEN NO MARDXXX MARKED INCREASE

C

IN THE INFLOW OF CURRENCY, BUY THERE HAS BEEN AN APPRECIABLE

NO INDICATION OF PRESS BEING FAVORABLE OR UNFAVORABLE. WHILE NOT TOO
ENTHUSIASTIC ABOUT ASSIGNMENT, BANKERS GENERALLY EXCEPT IN FEW
ISOLATED CASES HAVE INDICATED WILLINGNESS TO COOPERATE TO FULLEST

C

DECREASE IN THE DEMAND FOR LARGE BILLS

EXTENT AS THEY ARE IN SYMPATHYWITH THE OBJECTIVES. HOWEVER, THEY
PEYTON

RECOGNIZE IT AS A DELICATE TASK WHICH REQUIRES HANDLING WITH TACT AND
C

DIPLOMACY TO AVOID EMBARRASSING SITUATIONS WITH CUSTOMERS LEST THEY
8TH LN 6TH WD BUT.

FEEL CONFIDENCE BETWEEN THEM HAS BEEN VIOLATED. ONE PROMINENT BANKER
SAID BANKS WOULD FEEL BETTER ABOUR XXXX ABOUT REPORTING REQUIREMENT
IF TREASURY WOULD ASSURE BANKS THAT THIS WAS NOT OPENING WEDGE FOR

OTHER ASSISTANCE GOVERNMENT MAY REQUEST OF BANKS IN SIMILAR MATTERS
WHICH MAY HAVE TENDENCY TO COME BETWEEN THEM AND THEIR CUSTOMERS.

TOTAL PAYMENTS AND RECEIPTS OF CURRENCY, ALL DE NOMINATIONS, BY THIS
BANK AND ITS BAXXXX BRANCHES HAVE BEEN ABOUT NORMAL FOR FIRST 19 DAYS
THIS MONTH, ALTHOUGH ALL OF OUR OFFICES REPORT RECEIPTS THIS MONTH
HAVE INCLUDED SUBSTANTIAL AMOUNT OF LARGE BILLS AVERAGING 4 AND 5
TIMES NORMAL. ALSO SOME INDICATION THAT CURRENCY IN SAFETY DEPOSIT
BOXES 18 BEING WITHDRAWN AND DEPOSITED IN COMMERCIAL BANKS.
KOPPANG.

RECISION

TRADE MARK

MICROSTAT ,

MICROFILM

ROLL NO.

.

L165-20

WHO ac42

JUNE 20-45-4359

BELL, TREASURY

915 JUN 21 AM II 49
REURTEL 19TH. CURRENCY ORDER APPARENTLY RESPINSIBLXX

28

RESPONSIBLE FOR SUBSTANTIAL NET RETURN FLOW OF

CURRENCY IN LARGER DENOMINATIONS AND FOR A DECREASE IN

I

RATE OF EXPANSION OF TOTAL CURRENCY OUTSTANDING.

SN89GC1 6;2-'# M147 DLS 20-435P

I

SPECIFICALLY NET RECEIPTS AT ALL OFFICES OF THIS BANK

JUNE TO 19 ARE:

.

BELL

$2,298,000 IN 100'S

$

REURTEL 19TH WE HAVE OBSERVED IN THE NEWSPAPERS PUBLIXXXX PUBLISHED

.

1,631,000 IN 500'S

IN LARGER CITIES OF THIS DISTRICT NO UNFAVORABLE EDITORIALS WITH

3,893,000 IN 1,000'S

C

REGARD TO THE TREASURYS CURRENCY REGULATIONS.ON THE OTHER HAND, WE

NEWPAPER COMMENT HAS BEEN ALMOST NON-ESXX EXISTENT SINCE

UNDERSTAND SUCH NEWSPAPERS ARE SYMPATHETIC WITH THE PROGRAM AND ARE

4

PUBLICATION OF TREASURY'S INITIAL PRESS RELEASE. BANKERS

FULLY COOPERATING WITH IT. WE HAVE CONTACTED THE LARGER BANKS IN
DALLAS HOUSTON SANANTONIO AND EL PASO AND NONE OF THEM RAISED ANY

IN PRINCIPAL CITIES GENERALLY APPEAR WILLING TO FILE

8

REPORTS SINCE THE ELIMINATION OF PARAGRAPH 2, PART (c),

C

QUESTION OF IMPROPRIETY REGARDING THE PROGRAM. THESE BANKS ARE
a

OF TCR-1. IT APPEARS HOWEVER THERE MAY BE LACK OF

COOPERATING TO THE FULLEST EXTENT, AN OFFICER OF THE LARGER DALLAS

UNIFORMITY AMONG BANKS IN DETERMINING TRANSACTIONS TO BE

C

INSTITUTION STATING EMPHATICALLY HE WAS AGAINST THE BLACK MARKET

REPORTED. FOR INSTANCE, SOME BANKS ARE UNDECIDED WHETHER

C

1

AND TAX EVASION. SINCE JUNE 11945 OUR HEAD OFFICE HAS PAID OUT
$633,000 IN BILLS OF $50,xxx $50 DENOMINATION AND ABOVE AND HAS

a

GAMBLING OPERATORS WHERE SUCH TRANSACTIONS HAVE BEEN
1

C

THE PRESIDENTS CONFERENCE AND IT MIGHT BE WELL FOR YOU TO CONTACT

THEY SHOULD REPORT TRANSACTIONS WITH RACE TRACKS AND OTHER

I

RECEIVED $3,006,000 IN SUCH BILLS. PRESIDENT GILBERT ATTENDING

CUSTOMARY AND NOT ILLEGAL. REACTION OF A FEW BANKS STILL

HIM
1
&

APPEARS TO BE UNFAVORABLE ON GROUND THAT A BURDEN HAS BEEN

PLACED ON THEM AND CUSTOMER RELATIONS WILL BE DISTURBED.

8

MOST BANKS STATE THEY BELIEVE THE NUMBER OF REPORTABLE
I

TRANSACTIONS WILL BE SMALL, SEVERAL FEELING THAT PUBLICITY
HAS FORESTALLED SOWE DEPOSITS AND WITHDRAWALS WHICH MIGHT
OTHERWISE HAVE BEEN EFFECTED. WE ANTICIPATE SEVERAL

HUNDRED REPORTS FOR UXX JUNE WILL BE FILED IN THIS
DISTRICT.
CLERK.

1

1

COLEMAN.

TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION

DATE 6/23/45

TO

FROM

Secretary Morgenthau

E. B. Fussell

The most significant feature of the mail reports
this week is the continuing number of letters dealing with
our tax evasion drive.
The Secretary's and White House mail combined
show:

43 applications for jobs
36 reports of evaders
4 (only) letters dealing with HartfordElliott Roosevelt loan
Commissioner Nunan and various Bureau of Internal

Revenue offices, of course, receive many additional letters
of information about tax evasion and applications for jobs,
but the number who write the Secretary as rectly, as contrasted with letters on other subjects, indicates a very
general reaction.
Letters regarding instructions to banks, etc.,
to report currency transactions -- 18 favorable, 3 un-

favorable, are also interesting. In this connection,

however, one of the unfavorable letters makes the probably
significant comment that there is still much adverse
criticism among bankers who do not feel called upon to
write.

At the start of this new method of analyzing
mail I asked War Finance to install a digest system.
This has entailed considerably more work than is justified
by the results. Unless you disagree, I will ask War
Finance hereafter to digest only letters dealing with
general subjects, indicating the trend of public opinion,
eliminating the letters which deal mainly with suggestions
as to types of promotion, etc. The "box score" report
by Mrs. Forbush gives a good idea of the general scope
of such letters.

and Final

0

31

WAR FINANCE DIVISION
J.M.Morse
to

June 23, 1945

Mr. Pussell
DIGEST OF MAIL
FOR

REPORT TO SECRETARY

Constructive Suggestions

Use "Dr. Win The Mar* as alogan for 8th Mar Loan in connection with
the Roosevelt Memorial Bonds- 1

Put forth a effort to sell bonds at ball parks during the 7th inning
stretch- 1

Have system of pin and varied ribbons to designate people who hold bonds

certain length of time without cashing thea in- 1

(referred to us by Senator Vandenburg, to whom reply directed)

Cultivate a extensively the use by business and individuals of
sintatures (as stickers) of War Bond posters- 1
Point up aore where we use statistical tables the amount of interest one
losss on appreciation bands by cashing at various dates before

maturity- 1

33

32
0

Mar Finance Division
War Finance Division

-2-

-3-

June 23, 1945

June 23, 1945
Miscellaneous

Is it possible to get payment now on a lost Liberty Bond?- 1
Criticism

Please have Treasury keep landlord from putting Mother out- 1

7th War Loan E Bond quota much too large; why don't we give more

attention to F's and 0's?- 1

(Executive Manager for Florida)
Postmaster at Ludiow, Miss., giving War Bond program poor cooperation;

unwilling to issue bonds unless pressed- 1
(State Chairman for Mississippd)

War Finance Division wastes 16 M. film. Certain private industries
using them for their own advertising- 1
(Member State Department of Education, Columbus, 0.)
Many people in Iows charge OPA with bad faith when it cuts canning sugar
allowance, and argue that by same tokan is no assurance Government
will redeem War Bonds- 1
(Reported by Executive Manager for Iowa)

(Bond selling youngeter in New York City)
Can we get help on having OPA release rationed goods for War Bond

auctions?- 1

(WFCommittee in Pikeville, Ky.)

will Treasury endorse campaign by Veterana' organisations of Spencer,

Iowa, to use bonds as fund for memorial to veterans of this war?-1

Private wanting Treasury to get him out of Army so be can work for
us- 1
Party in New York turned down by State Committee as volunteers wants

us to over-rule decision) would donate Goya if granted- 1

Chain letters involving War Savings Stamps- 3
Songs submitted- 5
Slogans submitted- 4

Poster designs submitted- 2
Poems submitted-- 4

Skit for theatres showing superiority of bonds over cash because former

can easily be replaced if burned-

Suggestion we use editorial from Quitman (Ga.) Free Press streasing fact

war is still on so why dress about refrigerators and vacations- 1
ad.

Suggestion - use their (Seagram's) War Bond - preaching moderation

in drink- "No don't want Bond acoay in whiskey-- 1

PRECISION

TRADE MARK

MICROSTATE

NO. U.S.PAT.OFF

MICROFILM

TREASURY DEPARTMENT

34

INTER OFFICE COMMUNICATION

DATE June 23, 1945

TO Mr. Charles S. Bell
FROM Secretary Morgenthau

During the next few months I think that you can be of
special service to ne and the Commissioner of Internal
Revenue if you arrange to devote a large portion of your
time to the administrative problems connected with the
Revenue law enforcement expansion.

douth o'comull and

Specifically, I want you, with Commissioner Nunan's con-

currence, to advise and assist in putting into operation
adequate procedures for recruiting, training, distributing,
promoting and transferring persons engaged to work on this
drive. You should give the Commissioner every assistance
possible on problems of space, office equipment, and related
administrative services.
I went you, Mr. O'Connell and Commissioner Nunan to
examine thoroughly the present organizational setup in the
Bureau of Internal Revenue, including the possible need for
top administrative personnel. The three of you should submit for my approval such plans for changes as you may agree
are necessary to achieve maximum effectiveness in this canpeign, and for the permenent improvement of the Bureau,

I an detaching Mr. Elmer Irey from his other duties to
assist, temporarily, you and the Commissioner in carrying
forward this special program of work.

OK.JAMS.

ginn

geer

ROLL NO

STON TRADE MARK MCROSTATA MICROFILM

TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION

DATE June 23, 1945

Secretary Morgenthau

TO

Charles S. Bell

FROM

pooll
Subject: Current Plans for

Internal Revenue Expension

In addition to the steps already teken and reported to
you in earlier memoranda, Commissioner Nunan, up. O'Connell
and I have agreed to the following procedures for expediting
the development of a top notch law enforcement organization
in the Bureau of Internal Revenue.
PERSONNEL PLACEMENT

0

Instructions have been issued to Collectors to release
five nen each to the Special Agents, Intelligence Unit, in
their respective districts in order to form B nucleus of
trained personnel for the expanding investigative service.
These instructions will be supplemented by directions to
release an additional number of experienced deputy collectors
who are acceptable to the Intelligence Unit and deserving of
promotion.

Similar instructions will be issued to Supervising Agents
in Charge, Alcohol Tax Unit. Further, experienced Revenue
Agents who have shown special interest and sptitude for investigative work shall be transferred if mutually agreeable to the
Revenue Agent in Charge and the Special Agent, and approved by
the Bureau.

The transfer of these men, with the exception of Revenue
Agents, shall be made without prior approval from Washington,
and the Collectors shall be automatically authorized to promote

-2from within to fill vacancies thus created and to recruit
locally to fill zone deputy collector positions at the
entrence level.

In making these transfers the transferred employee shall,

if otherwise entitled to the privilege, be transferred with
reemployment rights on the Collector's Office.
Concurrently with the recruitment of new personnel,
qualified Revenue Agents and Special Agents shall be pronoted in accordance with the Bureau's promotion from within
policy.

The previously established ratios for stenographic and
clerical employees shall be controlling at this time and
all offices are to be instructed to recruit accordingly.
SUPERVISION

In connection with the enlargement of existing and the

establishment of additional field offices, supervisors will
have to be developed and assigned to construct these offices.
Sufficient intermediate supervisors aust be developed rapidly
in order to maintain en acceptable standard of production
and at the same time provide adequate supervision and on-the-job

training for the new recruits.
For the most part, the supervisors should be selected
from existing personnel in the Special Agents' offices. Consideration should also be given to the best qualified employees
transferred from the collectors' offices. Procedural instructions directing the special agents to carry out such plans
will be prepared and released to the field.

ECISION

TRADE MARK

MICROSTAT

MICROFILM

ROLL NO

37
-

8
TRAINING

The training of new recruits and newly appointed supervisors shell be developed by Mr. Elmer Irey, with the concarrence of Commissioner Human. The existing facilities of the
Coordinator's Office and the Bureau of Internal Revenue shell

be utilized for this program and it will be carried out in
each of the Special Agents' districts. The training program
already under way in New York City will serve as a pattern

for the other Districts. In the event . given district has
no personnel available or qualified to carry out the training
program, arrangements will be made to provide training
specialists from Washington or other Districts.
CHARACTER INVESTIGATIONS

Character investigations of all new recruits shall be
the responsibility of Mr. Elmer Irey, and instructions will
be issued to the District Coordinators immediately, outlining
the new type of streamlined investigation that is to be made.

s

0

SPACE AND EQUIPMENT

with the exception of 25 cities to be covered by the
Department's space control staff, authority to lease

and equipment subject

Bureau shell be greated each Special Intelligence

and
Agent
in Charge,
Treasury by
Unit,each
spaceRevenue
the purchase
only Income
to Agent, post Tax approval Unit, as

well as Collectors. This authority small be conditioned by
the prevailing ratios employed by the Bureau,

Procedural instructions implementing this authority will
be prepared immediately. If possible, present recommendations

of the Agents for the establishment of field offices in certain
cities will be approved immediately to expedite the establishment of the offices.

I

+ RECISION

TRADE MARK

MICROFILM

MICROSTAT

ROLL NO.

38

-4C

WORK LOAD PROGRAMATING

The Bureau will take immediate steps to survey present
operating procedures with a view toward asking such changes
in organization and methods as may be necessary to channel
and distribute the work of the Bureau in harmony with the

expension of respective offices. In this respect it is
agreed that the tentative expension quote set may be subject
to change during the next few months.
INSTRUCTIONS AND DIRECTIVES

All policy directions regarding personnel, organization,
space or equipment shall be promulgated over the signature
of the Commissioner of Internal Revenue, with the advice and
concurrence of the General Counsel and the Administrative
Assistant to the Secretary.
0

Concurred in:

Commissioner of Internal Revenue

Counsel

Approved:

Marywathan
Secretary of the Treasury

C

2"

39
25

23 JUN 1945
June 23, 1945

Mr. Charles Bell
Secretary Morgenthan

Congressman Compton White wants - to see Mr. J. Richard

Altiere. He wants - to give his . raise.
will you please look over the attached personnel record
and talk to - about 11 Monday?

Dear Mr. President:

Under section 18 of the Ast approved 26 May 1924 (3) Stat. 144).
establishing the Foreign Service Retirement and Disability Fund,
deductions from the salary, pay or compensation of employees entitled

to the benefits of the set shall, in effect, bear interest at the

rate of 45 per - In pursuance to sendations of the Acting

Secretary of the Treasury, approved by President Coolidge under date
of . August 1927 such portion of the fund not needed for innediate
payments is invested in special 48 obligations of the United States.

Section 3 of the not of 24 April 1939 (Public Las 40, 76th

-

Congress), assedded the Act of 24 May 1924 (43 Stat. 144). by provid-

ing that any Foreign Service Officer my, at his option and under

such regulations as may be prescribed
bydate
the President,
deposit
retirement,
his
the
additional

to

be

returned,

at

of

is

. lump sun, or to be used to purchase additional annutties. These

additional deposits bear interest at the rate of 35 per compounded on 30 June of each year.

On 28 May,1945 the amount of $6,000, representing additional
deposits not needed for immediate payments, became available for

investment for account of the Foreign Service retirepant and dis-

ability fund. In order that there sight be - less of interest to
the fund, this amount - invested is special series of Treasury

notes, entering 30 June 1949 and bearing interest at the rate of

35 per - which corresponde to the earning requirements of the

Act. It is anticipated that free time to time as additional

become available, investments will be sade is station Treasury issues
for the purpose entited above.
Since the Second Liberty Bond Act provides that notes my be

issued only with the approval of the President, I trust that the
method of Investment which booting effective 28 May 1945 in

connection with the amount of 86,000, mosts with your approval.
Faithfully yours,
(Signed) H. Mergenthau, Jr.
The President,
The White House.
Approved:

(Nind 6/8/45

BUY

OFFICE OF THE

ARMY-NAVY LIQUIDATION COMMISSIONER
NEW WAR DEPARTMENT BUILDING

WARNINGTON 11. D.C.

June 23, 1945

Honorable Henry Morgenthau, Jr.

The Secretary of the Treasury
Washington, D. C.

Dear Mr. Secretary

It WAS very thoughtful of you to send se

a copy of your letter of June 21st to Mr. A. E. Howse,
Administrator, Surplus Property Board. Immediately up-

on receipt of it, I wrote to Governor Hurley as per copy
of letter enclosed.

Dan Ball and your staff have been of so much
help to UP that I was anxious to convey to the Burplus

-

Property Board my wish that they in answering the letter,
express my sentiments.

with warnest personal regards.
Sincerely,

TIM:K

form la : Colu
THOMAS B. McCABE

Commissioner

⑉

..
2"

23 June 1945

Governor Robert Hurley

Purples Property Board
Somietmal Center Building
Washington, D. C.
Dear Bebt

Secretary Mergentheu has forwarded - . copy of Mc Letter of June 21
to Mr. House, Administrator of your Board, Ln which he expresses the interest
of the Treasury Department La the financial Aspects of surplus disposal in

foreign countries and their general responsibility for United States foreign

financial policy. He says that TO have been requesting their advice DOBOBTD-

Inc the acquisition and disposition of foreign surrencies, and other finanstat millers, and states that before they can go any further in advising US

they would Like a specific request from the Surplus Property Board indicating

the extent of the responsibility which the Board would like the Treasury to
assume.

In Br. House! reply I wish you would have his emphasise to the Treasury

that I have indicated to you our appreciation of the advice and counsel of
the Treasury Department and that you urgo then to continue to give us their
recommendations. You might all his attention to the paragraph La our Guide

for Field Commissioners marked FB. Second Offering in which it is specifieaily stated that acceptance of foreign authoriza will be *subject to any

conditions recomended by the U. 8. Treasury and State Departments with
respect to the overall acceptable amount of any such currency, the applicable
rate of exchange, and the provisions of conversion".
Mr. House night state further that you have been informed by BY that

have similited to the Treasury all of our important documents and drafts
of Aida Besoires for their recommendations before submitting the to your
Board and that I have assured you this practice will be continued.

PO

Dan Ball, Glasser and Outser have all been very cooperative. You will
resall Dan Belits constructive suggestions made at the mooting La my office

the forepart of this work. Our desire is to continue having these nootings
the TO have smothing important to discuss, and in this number keep State,
Treasury Gommoree, Army, Havy, KFC and yourselves fully informed BA to our
proposed plans.

I - sincerely grateful for the strong support which you and Colonel
Beller have given no is neeting all of our major problems of foreign disposal.
Sincerely,
Signed
THOMAS B. McCARK

Commissioner

-

PRECISION TRADE MARK MICROSTATA MICROFILM

ROLL NO.

43

TO:

memo

matt Connelly
says the Resident

acted on your
Senie Pooselett

message right

awaycalled from

Olympial Wash.
were at
Mr.

Sales PiteGerald asked for lime

44

TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION

4

DATE - 2 June,1945

Secretary Morgenthau (For action)

TO

100 Coe

FROM

F.C. HDW

Subject: India's
for the lond-leasing of 208 million
ouncesrejunat
of silver.
1. The Treasury has been requested by the Government of India to
lend-lease 200 million ources of silver for coinage and open

marient sales for rice stabilisation purposes for the sixteen
month eriod or Karch 1, 1945 to June 30, 1946. This request
for 200 million ounces to in addition to the 185 million ounces

already lend-lessed to India.
It is felt that the Treasury should not atteupt to ASSOS India's
need T'og" silver For the entire sixteen month period in view of
the Synanic and rapidly changing conditional in India. Instead
It is thought months
that NOwith
should
review
India's
silverrecommendation
requirements
a view
to anking
periodic
covoring the onsuing Uir oe month period. 40 have discussed this
procedure with representatives of the Government of India and
they CAVO Indicated DO objection to it.
As indicited in the attached table, the Government of India,
an of June 30, 1945, will have a little leas than enough Nver
to stoot its needs during the following three month period, July
through September, 1945. Unload India Is given immediate

3.

resures.co at at lonat three months sup lies will bo forthdonsin roah lend-lease diring the next for months, she will
have to ourtail sharply 120 0 of ailver or face the prospect
of complete dopletion of her silver stocks.

h.

5.

It := Gerclare BUT eated Sist the Treasury recommend the
Art ediato lond-lessing of 1:1 million ounces of silver to India,
62 amount equivalent to about tiree months' requirements.

If alean 1:1 million othaggo of silvhr are loss-lossed, it will
bring the total OF ofivor loni-lossed to India up to 226 million
01/1000. HC 12:11 still have outstanding for future determination
the resender of India's 200 million cunco request, 1.0. about
107 Willon 01100 98.

OK. that

Government of Indi a Silver Fosition
An of June 30, 1945

(million ouncos)
Silver Stook and Recoipts:
Net Balance on hand, March 1, 1945

Lend-lease silver received in March
Lend-lease silver received In June

28.0
20.0
15.0
93.0

Silver Consumption March 1 - June 30. 1950
Coinage
Salea

27.6
26.8

56.0

39.0

Stook on hand June 30, 1945

Needs for three month not ico June so to
September D PM
Coinace

Sales for stabilization purposes

20.7

19.8
40.5

PRECISION

TRADE MARK

MICROSTAT

REG. 0. S.PAT.OFF

MICROFILM

ROLL NO.

46

47
I

25
I

June 23, 1945.

Nevortheless, this Department certainly could have
no objection to the consideration of the matter by
the Congress. I are sure that there are no valid
grounds against continuance of the reporting requirements during warting until the evasions which they
were designed to meet have been overcome.

My dear Mr. Ludlow

In the boliof that you may find it interestings

Reference is sade to your letter of June 6, 1945
concerning the instructions relating to reports of
currency transactions recently issued by this Depart-

I enclose B copy of a statement concerning a letter
about the reporting instructions which was recently

ment.

considerations expressed in the letter, it soons
clear that the reporting requirements cannot be regarded as an undue infringement upon relationships
between financial institutions and their clients.
No one who is honestly fulfilling his legal obligations to his government need have any concern that

with respect to the first of your specific
questions, I wish to state that the instructions were
issued for the purpose of furthering our efforts to
stamp out serious ovils of tax evasion which have

arison under martine conditions. It is our intention
to withdraw the instructions at the earliest moment
consistent with this purpose.
Secondly, it should be noted that although the
instructions do not expressly specify the ainhan
size of transactions to be reported, they Indicate
that, except in unusual circumstances, only transactions involving $1,000 or more of currency in donominations of $50 or higher, or involving $10,000 or more
of currency in any denominations need be listod. This

sent to all banks in this country. In view of the

his affairs will be interfered with through the

operations of the reporting system. Moreover, as I
have already indicated, this Department has made
every effort to hold the administrative problems
involved in the reporting requirements to & minimum

which will not unduly burden financial institutions
or the government.

Sincerely yours,

Department intends to follow a cossion sense policy in

the requirements and it hopes

that institutions will be

administering financial reporting guided administrative by similar

considerations. It would be an undue
burden on both reporting institutions and this Departmont If reports were made of insignificant transactions.
Thirdly, since existing statutes amply authorize
the issuance of the instructions, this Department PO
gards special legislation on the subject as unnecessary.

Honorable Louis Ludlow

House of Representatives
Enclosure

Earnoldgna 14 June 1945

RECISION

TRADE MASK

MICROFILM

MLCROSTAT

BOLL NO.

June 23, 1945

ID Jr had the tell Mr. White that he

48

should
to
if Incheck
couldMr.
findDuBois*
out whatfiles
he here
had taken
and
If
he
couldn't
find
out
here
his,to Du3ois.
to write

OFF

49
0

June 23,1945
Harry White

Secretary Morgenthau

I have just read Joe DuBois' letter from Paris.

I note that he says he has a memorandum which he has

been showing various people. Do you know what that
memorandum Ia? I wish you would get a copy of it and
show it to me as $ 000 as possible.

50
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION

DATE June 23, 1945

Secretary Morgenthau

TO

FROM

Mr. White

This refers to your note of June 23rd, asking about
the memorandum which Joe DuBois stated he had been showing

various people.

I don't know what nemorendum he refers to. I have
spoken to Mr. Coe and Mr. Giesser; we all feel it must be
some of the chapters of the German book which I think he
took with him along with some other material on Germany.

If you like, we can ask him to specify what it WAD
that he referred to.

A M ROLL NO
52

-2-

51

TREASURY DEPARTMENT

0

INTER OFFICE COMMUNICATION

DATE 23 JUN 1945

Secretary Korganthau
Charles S. Ball

TO

Purchases for the week ended 10 June 1945 affected
by the Procurement Division totaled $8,353,000.98 or which
$7,000,000 was Land Lease: $950,000 WILS UURRA, and
$403,002.95 was regular.

Unusual requisitions Included 281.00 wool blankets
for civilian relier by UNBILA 10 the amount of $978,500;
3,340,000 pounds of truck tires and tubes, and tractor
tires and tubes for meeting civilian noods in operations

relatins to lilitary occupation or conquered territories
and redeployment of allied troops in the amount of

$1,540,000; 20.000 pairs of pliers for Australic in the

Saved new assignments were received by the Procurement Price Adjustment Board, and ten cases were disposed of
involving determinations of $775,000.

An inquIry WBJB received from the Philippine government

in regard to Procurement furnishing school supplies to it.
Most of an earlier order for the Philippine government amounting to about $180,000 una been loaded on board ship.
The Office of Surplus Property, Department of Commerce,
WELE requested to discuss with the Surplus property Board an

amendment to its Regulation No. 2 to facilitate the issuance
of surplus property through the stores and issue warehouses
of the Procurement Division.

A case history 12 being prepared covering all commodities
purchased under authority of Public 117, approved 7 June 1939.
This report also compares the Army and Navy Munitions Board
tontative specifications with those used in making purchases
for the current stockpile.
In connection with the Lend-Lease Program, the du Pont
Company has reported the re-use of 37,086 additional bobbins
returned from the United Kinddom with resultant savings of

amount or $15,300; 120 cotton dusters for combatting
salaris mosquitoes In flooded areas of the 10 thorlando in
the amount of $1,808.60; 10,895,660 pounds 01 raw wool for
the Belwinn =overnment 1 the amount of 84.348.021.25;
1,606,000 pounds of rayon tire cord fabric for the United
Kingdom in the amount or $1,235,000; 23,000,000 pounds of

O

$14,977.85.

there were two mastings of the Contract Termination
Board at which time four cases were recommended for settle-

cotton fabric for China to be used in barter transactions
for obtaining supplies for Chinese troops. 100 are now
being solicited for .200 pounds of Cancara Bagrada, for

ment.

The last report on the Seventh War Loan Drive submitted
the Treasury on La June showed Procurement Division
(Washington Office) 169% over the top. The Field offices
gained and the report shows them 116.10% making an overall
for Procurement of 125.1

making tharmseuticula in the United Kingdom, in the amount
or $66,950.

to

Unusual purchases included $50.000 pill boxes for

use to civiling hospitals in Italy in the amount of

2 loud speakers with amplifiers, associated microphones
and cable for the Department or Justice In the amount of

2,132.96; O sixty watt portable F.M. stations in disguised

trunk form for the Department or Justice In the amount 01
$21,000.
0

a

LEIM-LEASE
0

TREASURY DEPARTMENT-PROCURKMEN DIVISION

STATEMENT OF ALLOCATIONS, OBLIGATIONS (PURCHASES) AND
DELIVERIES TO FOREIGN GOVERNMENTS AT U.S. PORTS

AS OF JUNE 16, 1945

(In Millions of Dollars)
Administrative

$ 47.2

s

Deliveries to
Foreign Cov'ts
at U.S. Ports

$ 3983.7

# 121.5

$ 2145.5

$ 1733.3

: 30.4

$ 1998.3

$ 19.2

$ 523.3
221.7

-

(Purchases)

$ 2217.5

$

$ 5027.0

$ 10.0

$

Obligations

22.7

$ 26.1

-

Cleared by W.P.B.

$ 97.0
$

Requisitions Not

$ 24.2

$ 1180.4

19.6

58.5

Purchase

$ 117.3

8.2

Undistributed

$

$ 176.6

$ 2284.3

$ 159.3

Expenses
$

Requisitions in

8 5947.0

: 2303.4

China

-

U.K.

Total

Allocations

Russis

Miscells neous

Deliveries to foreign governments at U.S. Forts do not include the tonnage that is either
in storage, "in transit" storage, or in the port ares for which actual receipts have not been
received from the foreign governments.

0

O

U.N.R.R.A.
TREASURY DEPARTMENT - PROCUREMENT DIVISION

STATEMENT OF ALLOCATIONS , OBLIGATIONS (PURCHASES) AND
DELIVERIES TO FOREIGN GOVERNDENTS AT U.S.PORTS

AS OF JUNE 16, 1945

(In millions of dollars)
T.M.R.H.A.

3 201.0

3 200.0

Expenses
8

Allocations

Administrative

Total

1.0

Requisitions in
$9.29

8

8

Purchase

39.20

Requisitions not

:

3.58

8.03

120.47

: .76

3.50

3

#Deliveries to U.M.R.R.A. at U.S.Ports do not include the tonarce that Is either
in storage, "In transit* storage, or in the port ares for which actual receipts have

not been received from the foreign governments.

-

: 121.23

.

Deliveries to
Foreign Cov'ts.
at U.S.Portse

:

(Purchases)

:

Obligations

8.08

-

cleared by W.P.D.

PRECISION

MICROFILM

MICROSTAT

ROLL NO

55
WICTORY

TREASURY DEPARTMENT

1

FISCALSERVICE

Washington
June 23, 1945
TO THE SECRETARY:

In response to your oral request, I as sending
you herewith the weekly report relating to payments
to veterans.

VETERANS PAYMENTS
UNDER

a. I. BILL OF RIGHTS
Week ended June 15. 1945
Number of

recipients
O

Unemployment

benefits

Self-employed.
Students'
subsistence
allowances

Amount

Cumulative
Amount

Number

823,659 $16,479,125

29,307

$592,859

2,913

236,618

26,115

2,731,749

640

48,408

11,849

710,259

1.170

116,823

3,910

34,030

$1,044,709

Tuition and

fees for
students

Total

a

C

a

416,789

865,533 $20,339,925

$20 A week; four weeks' allowance for each month
active service, not to exceed 52 weeks
Difference between monthly earnings and $100.
$50 a month without dependents; 475 with dependents.
Limited to $500 per annum.

of

PRECISION

TRADE MARK

MICROFILM

MICROSTATI

ROLL NO.

56

GABLE TO HOOLELLAND AND KATZXI, BERS, FROM O'DWIER, WAR REFUGES
BOARD

Reference your 3256.

Mr. Earl Harrison and Board approve Katahi's ascompanying Harrison on forthooming survey trip. Pearess

also agrees but hopes this assignment for Kataki will be
terminated within three months.
Harrison will communicate with Katski as GOOD as

he arrives in Europe. As soon as itinerary is known, Pearese
wishes to be advised.

THIS IS - - CABLE NO. 537

11:20 a.m.
June 23, 1945

Miss Ripple (for the Secty). Cohn, Model, Nutchison, McGermack, Files.

Frive 6/23/45

MPRECISION TRADE MASE MICROSTATI MICROFILM ROLL NO.

57
$

COMMANDER THIRD FLEET

June 24, 1945

My dear Mister Secretary

I an very appreciative of your letter
of the eighth of June 1945. It is good to know
that my small effort is some help to you in the
7th Mar Loan Drive. May the fine work of you
and your department continue unabated.

Sincerely yours,

o

W7. tabley
W.F. HALSEY,

Admiral, U.S. Navy.

The Honorable Herry Morgenthau, Jr.,
Secretary of the Treasury,
Washington, 25, D.C.

59
58.
O

June 25, 1945
9:15 s.m.

-2MR. OLIPHANT: There are one thousand three hundred

and thirty-two Deputy Collectors' posts of duty.
H.M.JR: But how many on the kind of things they do
in each Collector's office?

INTERNAL REVENUE

Present: Mr. D. W. Bell
Mr. C. S. Bell

MR. OLIPHANT: Inside the office, you mean?

Mr. Oliphant

H.M.JR: Yes.

Mr. O'Connell

Mr. Irey

MR. C.S. BELL: They have a Special Agent and in
many cases about fourteen Collectors.

Mr. Peble

Mr. Tickton
Mr. Hasa

H.M.JR: No. I'll tell you what I want. Take

Mr. Sherwood

Baltimore or take New York. They have got to collect
miscellaneous taxes and there is a fellow, I take it,
in Baltimore that is a head of Miscellaneous Taxes.

Mr. Atkeson
H.M.JR: Good morning.
MR. PEHLE: Good morning.

MR. C.S. BELL: I don't think there is.
0

H.M.JR: It doesn't make any difference. There are
miscellaneous taxes. Start at this end with Captain
Bliss. I want to take Miscellaneous Tax. I want

H.M. JR: Now, where is the Acting Commissioner?

0

to

is how such in

MR. O'CONNELL: He should be here in a minute,

know how many men there are in Washington, how many
men
in each

because he left his office about fifteen minutes ago
and he will be here with Mr. Atkeson. I don't know
where he is, but he should be here.

for there Captain are Bliss, place. Now, money whatever is he collecting the Division

each Unit, see? And how far is he behind? And then I
want to take the normal income taxes. How many income
tax returns are there, what is the backlog, what is
each office doing, and how many people are there on

H.M.J JR: Well, anyway, Commissioner or no Commissioner,

this is what I want, and Internal Revenue is going to have
to give it to me, see? George can help me get started,

a

basis? other words, I want to take each
this work.
care whether
monthly importantofsegment
In I don't
you start in Washington or at the bottom. I don't

but it is perfectly ridiculous to run his shop like--

Internal Revenue is supposed to collect how many dollars?

MR. HAAS: Forty-seven gross.

want to know about just penal cases, but I want to
know, If I have to go back to my original example
of Mr. Grant of Chrysler, who knew each night or each
morning what every single sales agent--do to
accountants--h many cars he sold and how many he
had on hand, and I an sure the treasurer's office

H.M.JR: And not know what is going on. Now, what

owed.

MR. HAAS: Forty-seven gross.

H.M. How much?

want, George, is this, and I want to start in each
field office, see, each Collector's office, sixty-five

knew how much money he paid and how much money he

I

Collectors' Offices. I don't know how many branches
there are.

0

60

-4This is what I want the Bureau to do, and this is
an order, gentlemen. I will be reasonable about getting
you started, but I think once you get--if you don't

Now, Mr. Grant, in his heyday, could go into a room

hear me, Mr. Sherwood, come up here.

see how many cars he had on the floor, how many
were sold on that day, how many were on the way, and all

and

MR. SHERWOOD: I hear you quite well, Mr. Secretary.

the rest of that for one district. Now, along comes
the question from Senator Willis of Indiana, and

he

H.M.JR: Mr. Hass will help you and everybody else

asks me, Why haven' you examined Mr. Hartford's

will help you, but I will go back to the example of

return for 1942?" Well, the only answer I get and
the only answer I can give him is, "We have got to

Mr. Grant who was the greatest sales manager In the
world, who was Vice President in Charge of Sales for
General Motors, and every morning Mr. Grant would
go into a room and for every single agent in the

compare 1942 and 1943.

United he could tell how cars he sold

MR. O*CONNELL: No, that was a partial answer.

States had many

that day, and how many he on the floor, and

H.M.JR: That's the answer you gave no.

how many were on the way to him. In other words,
be was able to keep track of his business.

MR. O'CONNELL: No, the nemo which I gave you on

Friday pointed out the chronology of it. (Attachment
A.) The simple answer is we are two years behind in
that work.

Now, I don't like to go back too much on back

stuff, but last fall I was suddenly told about six
million checks that had to go out. I think Mr. get
Sullivan told me--he isn't here--that he had to
them out on time. I may not be correct, but at least
I think I an correct. Then, suddenly they found they

0

H.M.JR: But nobody told me that.
MR. O'CONNELL: It has been common knowledge for

C

couldn't get them out. I was under the impression
that the examination of income taxes--I think I have
memos in my file which say that each year we are

five years, Mr. Secretary.
H.M.JR: Oh, no, no, no! I will show you . memo
quite to the contrary.

current from the year before. I think I can go
back to Mr. Helvering's time, and nobody told me

that we are two years behind, see, until T get
a letter from Senator Willis asking me why Mr.
Hartford-- but I am not here to scold you this morning.
I an here to make some suggestions, and try to be
helpful, but I am going to be very, very insistent
that I get what I ask for, see?

(Mr. Sherwood and Mr. Atkeson enter the conference.)
H.M.JR: Good morning, gentiemen.

I will show you 8 meao which shows that each year
WAS current.

Now, they tell me that Mr. Atkeson is trained to
do this and can do it very well. This is his business,
and if it isn't. when I get through
he can tell ne
was
but that is what I thought he hired
for. Mr. Hasa so,
has done this for me, but I was in a for worse jam in
Farm Credit when it was . matter of saving people's

MR. CONNELL: I would like to see one of those.
H.M.JR: I will show you one from John Sullivan
saying that we are current each year.
MR. o' CONNELL: Bill, you case in in the middle

of it.

H.W.JR: Well, I will do it again.
1

0

63

62

M-1

0

MR. ATKESON: Yes, Mr. Secretary, we have been developing

the schedules along the lines you're speaking about. Now,
in order to get information in consultation, can Mr. Haas
and Mr. Tickton, who have indicated an outline. workwith us?Ispent
all day yesterday attempting to develop schedules slong these
lines with the idea of gettine them started coincidental

C

getting them from each other. But been I can in see
farms, the handwri ting for twelve on the years wall. and I haven't held job satisfactorily and I

Washington Presidents without learning something, President of

with the first week of the new fiscal year. Now, it's
roing to push us, of course, to get them out and in effect
at that time, but I think we can do that. It's quite a
little schedule and we are aware. I think, of exactly
what you are driving at and we'll do everything in our

to two to insist that I know what any want to know

am going knows, where I stand. I start

a

eachcorporation

Division, take Miscellaneous Taxes, at and the bottom

there. I don t care whether you but start start some place.

whether you start at the top, much back-

power to meet it.

or Hliss has so many men, he has so of June;
Captain collected so much during the month at
log, he the month of June he had so many people the

H.M.JR: Do I make myself clear?

during each man collected so much money during lost

MR. ATKESON: Yes, sir.

work; June; he added so many men or he We so
month of and we start this the first of July. Division

H.M.JR I don't know as much about the Bureau as I

many men, on Alcohol Tax and do every single head of

can start I want to know who the

that you have got. and I would like to have whatever
that Division did, If It is sixty-five Collectors' Offices, want #
you the Units break are. it down to that. I don't know, but I
plan.

should, but I'm going to learn more about it, and I'm
not going to scold. I want to be helpful, but from
here. my anxiety to get the Bureau the money which
Mr. O'Connell and Mr. Nunan said you couldn't get in
order to carry out our responsibility and through my
ballyhooing these things, I've got a blank check from
Congress for you. Now want to make good. I want the
Bureau to make good. 1 nant the Bureau to feel it's an
integral part of the Treasury, and that my only interest
is the reputation of the Bureau. I took the pain Friday-and I did It with a heavy hand--to let it be known that the
Congress of the United States was trusting the Bureau to
make this investigation of Martforde- Nunan-HartfordRoosevelt--because the papers were full of the fact that
Congress was Investigating. I came to the Bureau's

0

basis

0
the If you sixty want five to Units--you break it down people on but . know production I you want can to come be able

of back after I told you what . I month, want, and if necessary, sit
to go there across all the day hall with once Commissioner Nunan collecting and the rest fifty of

down this thing over, the work of whether
do
you and look and see whether we are gaining or many
billion dollars how many people we put on it, hired how to
we are losing, lose, and whether the nen who are to me, Mr.

rescue out of my office. Did you see it, Mr. Sherwood?

people we something else. So, you can say job and do
It are doing you made us take the men off this

MR. SHERWOOD: I saw it,Mr. Secretary.

Morgenthau, that. Then, it is my fault unless I change.

H.M.JR: Well, somebody else should have come to it,

But I don't want to hear . year from didn't now, examine "We have

Hartford case. The reason we so and so.

but I don't want it thought from one end of the country
to the other that the Congress of the nited States

another was because you made us put it on where the

Hartford I want to know once a month down to

doesn't trust the bureau.When things get hot I come to
the #ureau's rescue, and 1 wish the people down the line

In other words, straight basis breaking it do as
Bureau small a stands unit as on is a practical. Mr. Atkeson, can you
that?

0

64

65

M-2

-7-

0

(

in the Bureau would know that I'm their friend. I

MR. SHERWOOD: Complete support, yes. We do have

don't know whether you were in the Bureau when Senator

an analysis we've been making on a three-months basis.
Now, Dr. Atkeson has been carrying on an operation

McKellar held up the pay of eight hundred some odd
people for three months because he wanted one nan fired.

which is completely entirely different from everything
we do. It gives breakdown of individuals to corporations. I should like Mr. Tickton to examine that or

I stuck by that fellow and I've also stuck by the Bureau,
but I've not to know my task, and if e're two years
behind 've got to do those things which are most
important, and maybe I'm wrong, but I think we can go
ahead on the whole front, but 1 want to know, so that

anyone
mayisbe
designated. It's completed, and
so far aselse
the who
Bureau
concerned--

H.M.JR: They've got to talk with Atkeson, because
Haas knows after twelve years how I like things, and that
it's not very difficult to present them to me the way

don't come to me six months from now and say, "Well, and

you we did the black market; we let everything else go,

it's Morgenthau's fault.

&

-8-

like. But as I understand it, Mr. Atkeson is doing

MR. SHEEWOOD: Of course, Mr. Secretary, in the
Hartford-Roosevelt case there was no examination of
any 1942 returns because the tax for that year was
eliminated because of the forgiveness and we had no
1942 tax--we had a 1943 tax job. The 1942 returns
had to be examined with the 1943, and no examination
was conducte for 1942, so 1942 and 1943 became
available to us in 1944 of March.

other work, and I hoped you would talk it over with
Commissioner Nunan, because what I'm asking is an

eighteen-hour a day job. He's going to have to build
up his staff, and why take a good statistician and
make him a representative on the Hill?
0

MR. SHERWOOD: I think the Doctor has been over it,

and it is spread out too thin, and I think he has been
the given the kind of job he wanted. I think I can give you
kind of job you want if I'm given the opportunity

MR. D.W. BELL: So you're not two years behind?
MR. SHERWOOD: No. we're just now working on the

1943 year, which is the only individual tax year we have.

H.M.JR: Because of this meeting this morning I
wanted your help to accumulate this Saturday and

H.M.JR: Well, Mr. Helvering gave me this impression,
and he was a very honorable fellow--of course he hasn't
been here for a couple of years--we always clean up
within twelve months.

prepared. I've made it clear in my own mind what I want,
see, but I don't know how big staff Atkeson has. But
on he has got to get a big enough staff. I want this

because when you people come in tomorrow, you'll Sunday, be more

. monthly
basis, and he ought not to do anything thing else.
Okay,
Joe?

MR. SHERHOOD: I think, Mr. Secretary, that needs

this qualification. We're making two hundred fifty
less in these years than in prior years

MR. O'CONNELL: Okay, after a week or so, because

think it would not be right to take Atkeson off the work I

he is doing with the Ways and Means Committee, because

because examinations of the lack of personnel. - complete all the

work we can do, and--

that, Bill, ties very closely in to the sort of thing

Mr. Atkeson is very definitely concerned with.

H.M.JR: Can 1 count on yours and Mr. Nunan's
support on this?

H.M.JR: Well, George will help him all he can until
Atkeson can give this thing full time.
0

MR. HAAS: Tom is . little confused because he wondered

it ifmonthly
this weekly
report--if you still want that. Do you want
now, or--

67
0

-9C

- 10

"To haven't got the men", or The have the men," this

man or that, so we can run it like a business. It's
the biggest business in the world, and there isn't

H.M.JR: I want to so on a monthly basis right
away, a monthly basis, but I'd like to have--I'r one
of these thirteen period, four week fellows. Would
that be all right with you?

any other business in the world that can't say where
they are as of last night. Okay, gentlemen?
MR. ATKESON: Yes, air.

MR. ATKESON: Yes, sir.

H.M.J I'll see you again tomorrow at three.

H.M.JR: Because a monthly thing is a bad report.
Would that be more difficult?

You come in and we'll develop those plans, if you
will, please.

MR. ATKESON: I don't think so.

H.M. JR: I want thirteen reports of four weeks,
otherwise-MR. ATKESON: It'a not comparable.

H.M.JR: Thirteen reports of four weeks each.
0

MR. ATKESON: As a matter of fact, 1 think it would
be more convenient, because we do keep our mailing or
assessment list on a weekly basis ending every Friday,

C

that we

so it will all tie in very nicely. I would like to

on this program, on programs

say, working Mr. not Secretary, only the staff but have other now is

for Mr. Blough, in connection with the post war tax

are all tied in together, and I
the
services
plans. would like I think
to utilize
they of same
the staff in
compiling the information that you're interested in.
H.M.JR: Well, look, I'm riving you a job through
Mr. O'Connell, through Commissioner Sherwood, to you.

to get it. and you it

centlemen know what I want, and I insist on it,
Now,
I'mit,you
fellows
have service
out soand
I get
andoing
I think
I'm doing
you & to work

by insisting on it. But I want to know so I can get--

I can't remember the name, Head of Alcohol Tax, Charles
Berkshire--Berkshire, and say, "Look Berkshire, it's

wonderful," or, "It's terrible. Get the head of
enforcement on something else, "This is good," or

"This is bad. Now, what's the matter with it? You

see? So he can sit down and take each of these sections

and have the cold facts, what they're doing, and if they say,

0

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MICROFILM

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59

COPY

ATTACHMENT A

.2-

June 22, 1945

Secretary Morgenthau

There follows a more detailed statement as to the
chronology of events and the character of the investigation

Joseph J. Connell, Jr.

under way.

This refers to your inquiry about the article in
this morning's Times Herald to the effect that in-

On June 15 Mr. Cann conferred with Messre. Doughton,
Knutson and Stem, advising them that the Bureau would
like to proceed with a thorough investigation before
formally reporting to the Committee and asking that they

vestigation on the Roosevelt-Hartford loan was being
held up by the failure of the Bureau to submit necessary
information to the Congressional Committees.

be permitted to get all the facts. This was agreed to.

This report is based on information obtained from
Mr. Norman Cann who is heading up the field investigation
which the Bureau is conducting under arrangements discussed
with Chairman Doughton and Representative Knutson of the

Immediately, one of the key men of the New York office,
Mr. Olson, was called to Washington and directed to undertake
an investigation of Mr. Hartford's 1942 and 1943 returns.

Ways and Means Committee.

The agent in charge at las was instructed at the
same time to proceed with an investigation of Elliott
Roosevelt's returns, and, in addition, to investigate the
radio company which was the subject of the loan (Texas
State Networks, Inc.), the stock of which was pledged as
collateral for the loan. The Texas agent was also directed
to examine into the properties reported to have been set
aside in trust by Elliott Roosevelt.

The investigations are proceeding as rapidly as possible
in New York, Texas and Washington, D. C. The Committee

members have expressed anxiety to get the completed reports
as early as possible but at the same time they have an understanding of the scope of the examination required and to
Mr. Cann's knowledge have not expressed any dissatisfaction
with the Bureau's efforts to date. The orders to the key
men in the field have been to the general effect to proceed
with all possible dispatch, but at the same time strive
earnestly for an adequate report which will give sound
support to a decision which must be justified not only
in Congressional inquiries, but also possibly before the

C

0

The New York agent was also directed to investigate
the new radio company which was to be organized, known as

Transcontinental Broadcasting Company, Inc., which required
the securing of information at sources in Pittsburgh,

Delaware and Texas.

courts in case of litigation.

At the same time . further investigation was directed
in Washington, D. C., with respect to the four thousand
dollar check reportedly paid in settlement of the bad debt.

Apparenti y Mr. Stam reported yesterday to members of

Joint Committee. We had no representative present at

did advise
Mr. in
Cann
that the time. Mr.
Stam
advance of his

report that he would recommend that the Committee await its

Mr. Cann has been in daily communication with both
New York and Texas in directing and expediting the
investigation.

detailed investigation until the completion of the Bureau's
report. There was no indication of any criticism as to the
progress being made by the Bureau.

0

The New York investigation of Mr. Hartford's returns
is proceeding satisfactorily and is expected to be concluded
next week. Mr. Hartford has been cooperating with the
agents in furnishing all requested information.
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The Texas investigation relating to Elliott Roosevelt's
returns has encountered greater difficulties, because of

inability to locate all necessary records, the fact that he
maintained several bank accounts, and the variety of tax
advisers who participated in making his returns.

When the report is in order it is intended to take the
matter up with you before submitting any information to the
Committee.

0

$

63
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June 25, 1945

9:30 B.B.

0

There are only usually the three wire services that come
up to ask what is doing, if he knows anything.
.JR: I know, but Gable goes that in the afternoon
and he does it himself. He doesn't designate somebody else
to do it, and he gets results, and I thought the way he
handled that story the other day TIS S terrible. Anyway,
I would like you to go up there this morning, will you?

GROUP

Present: Mr. D. E. Bell
Mr. Caston
Mr. C. S. Bell
Mr. Peale
Mr. Hass

Mr. O'Connell
Mr. Coe
Mr. White

MR. FUSSELL: Yes.

Mr. Luxford

H.N.JR: At ten o'clock. And also I went to know
If every day ONI is in on this. I don't see why we
should have OWI sitting in as spy every norning they

Mr. Partelt
Mr. Fuzsell
Mrs. Klotz

I don't mind them coming to my press conference,

meet. but I don't know mhy they should be running all over

my building. Does anyone want to make any comments?

N.M.JR: Good morning. Now, look, Fussell, before
you sit down, to you can watch the time. Just sit down.

MR. GASTON: No. I didn't think Cherlie was holding
press conferences. I remember going into that once
before and I didn't TO up to see, but I didn't understand
he ROS holding any press conferences. He shouldn't hold
any, in my opinion.
hell, anyway, he does every morning at ten
o'cleck, and he doesn't know what is roing on, and when
he does I don't like the way he handles that. will you
tell him that, please?

would like you to sit In on this no-called ter o'clock

press conference starting mit this morning that Charlie
Shaeffer has, see? After all, over at the White House
when they have . press conference, Mr. Ross has it even
if the President doesn't have it, see? And : don't know
what Charlie Shaeffer does at ten o'clock. I never could
find out. Certainly the suggestions I made about the
Hartford thing he handled with 6 sledge hanmer, and
would like you to go up there this morning at ten o'clock

O

O

I

if he is going to have one, and just sit in and listen,
looking forward to your holding there instead of his

MR. FUSSELL: Yes.

holding them.

H.M.JR: Now, the other thing, Harry, I had Konnet
in yesterday for an hour and a half, and don't know--

I don't know how many press men you have around. You

should have Charlie Shaeffer there and Irving Perlmeter
there. There is one at Procurement. I'd have his in.

maybe you and Coe and your people--I want Heas to know what is
going to Europe under 3-C. Do you know what is going

I don't know how many press men you have around Treasury,

to Europe?

but I think it--Shaeffer doesn't know it. It WAR denonstrated the other day he doesn't know. I tried to keep
him informed. I told him, If you don't know, It is your
job to come to see me, if he is going to hold . press

MR. COE: Be get a brief report on the requisitions
which are going through. Substantial volumes of stuff
have been going through.

up there every day at ten. I think it is just ridiculous.
KR. FUSSELL: It isn't quite as ornate, Kr. Secretary.
0

O

64

.3.
H.N.J. I think it is very important. I went to

H.M.JH: Well, do you know? Does White know?

know whether it is on time-whether Western Europe is

going to be able to go through the winter or not. The
only way I can find out what is going on, and I would
like you to--either you can consult with white or with
Coe--now, I don't know when this 3-C thing started,
how much they get--if it is 3-C. An I using the right

MR. HITE: I know what the original request WES,
but I don't know how many they filled. I don't follow

it.

H.M.JR: Do you know how much cotton and how

language?

much steel?

KIL COL: Yes.

MR. WHITE: I don't follow it.

H.M.J. But there is to real flow going. For

instance, he tells somebody known this--

H.M.JR: Don't you think it is important?

but Crowley has issued E directive saying they can't
have any loconotives after the 1st of January of

NR. WHITE: Only if you are interested in . special
problem, because the way we decided to begin with what

this your, or any of that stuff.

they were going to get and which organization would go about

it and are they getting it. If you are interested in
their getting more or less, we will follow it.

H.M.JR: well, we spend all the time arguing about
what they get and then we don't follow through to see

finances I

0

MR. COE: There has been a controversy on that.
I didn't know he said they couldn't have any.
0

whether they get it or not, and it has got direct

are going to take the position that I an Chairman of this
Advisory Financial Committee on Bretton Boods, then I
have got to know what the United States Government is

would relation like on to the have, George, of is this this: Government. He reeled What off

when he would get it. I would like for each one of
these countries, see--you get the figures from Coe-I would like to be able to go in and see that France

doing to sid these countries, and where we are ling
down, and I don't know.

got, I think, forty to fifty thousand tcns. This

MR. D.N. BELL: Why isn't the whole lend-lesse program
important and not just 3-C? The whole thing is cash.
That's what E.O are interested in, in the role of

month was an enormous amount. On the top would be

what they have been allocated to get for this calendar
year. I think it is for a calendar year, and hom much

financing.

of the t they are paying for themselves, and how much

of it is und lend-lease.

H.N.JR: All right. Wouldn't you like to know?

Now, I think it is of real interest because we have
spent a lot of time getting it and then we sort of kiss

D.L. BILL: That I know in a general way is the
over-all picture, because it is part of our estimated

it good-bye and don't know whether the thing works or
not. Tie don't know whether--

cash position that we do not break it GORD 6.2 to 3-C.

MR. WRITE: Largely until I pick it up, but we haven't

felt it is our responsibility or interest in seeing they
get it or not, but if you think it is-0

H.R.JR: And I think it is very important that the

Secretary of the Treasury does Know this, because if we

0

RECISION

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MICROSTAT

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67
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H.M.JR: Well, let's take the whole lend-lense and

H.A.JR: Well, it would be nice to know what is
going on. I have got to go to 8 Frenchman to find

break it down.

out.

MR. HAAS: Geographically?

VR. WHITE: hell, your range of interest can be as
broed as you Rent to make it, but if you are going
to take over the task of finding out how each of these
foreign countries is doing, what the supply situation
is, that can be done. That quite 8 bit to chew off.

H.M.JR Geographically, financially, and anything

else you can get.

MR. D. BELL: By categories, major categories?
H.M.JR If they buy six hundred locomotives or
nine hundred locomotives, that is important, and then--

H.M.JR: Tell, the figures are available.

I completely forgot that big bunch of this stuff

11. WHITE: Oh, yes, I mean, some of these car very
easily be made available.

me buy through Procurement.

MR. PEHLE: On that stuff, Mr. Secretary, : arranged
while I WBS down there for all the requisitions, particularly

H.N.JK: I do want to know, because I think that
the whole thing--first I WBC interested in winning the
war in Europe but now I en interested in peace in
Europe.In order to have pesce in Europe me have got
to have these people supplied in such way that they
can PO through the winter without E revolution. Now
is the time to find out what they are going to have
next October, and : want to know.

to come over to Frank's and . summary of them 00 he knows

what is going on. Tie did tie that in.
C

H.M.JR: Well, anyway, I want a statistical picture
once a month. I want to sit down once 8 month, and if
anybody is interested they can al down with ae, and if I
an going to be the top fellow in this international
financial picture, I mant to know what is roing on,

MR. WITE: Then the specific interest, I gather,

and we might as well train for it. They tell ae that-make a note of this, Mrs. Klotz, that B fellow by the

is that you want to expedite shipments.

name of Potter that just came back--he is the head of
the Combined Coal thing, and they have not hig plans
on it, that the President had . lot of cables over the

H.K.JRI I didn't my that. I ment the facts first.

I want the facts first. Then, if they are not getting
then, I an in a positi to bring it to President Truman's
attention. But until I KNOW the feets, I can't do
anything about it, but it has . direct effect on our
dollar position.

week-end.

There is McCley and will Clayton and Crowley about
getting conl,and this coal commission, what they are
going to do,and what they are going to do to start up

Okay, Ur. White?

the Ruhr and the Sear.

this stuff.

MR. WHITE: Sure. If you are interested in that,
they can easily supply you with that.

MR. CUE: We are on most of that supply--on most of
those supply matters.

H.N.JH: I should think you would be interested,
of all people. What?

We seen to be completely left to one side on all of

0

FM

ROLL

69
-8-

68
O

H.V.JR: I can't the whole picture, what me promised
them, what they are getting, and what they are not getting,
and after 1 have got the picture I can decide what I want
to do. I think the people in the Treasury should know.

VR. WHITE: Could be. I don't think the dollar

ER. PEBLE: Can those figures include military
lend-lease or are those secret figures

position-MR. COR: There in too much to follow.

VR. WHITE: They give aggregates.

VR. HITE: has significance. You can use It
as on excuse if you are interested in seeing France
gets what you promised to give them.

WR. PEBLE: Because those are interesting.

H.M.JR: Well, I spend weeks on the thing on What's .

counittee,and then 1 62 left in the vacuum.
the sense of drawing these things up?

H.K.JR: I think TO can get them.

MR. WHITE: You spent weeks on the question BE to

MR. PIBLE: In the sense we send in continued

whether or not you want them to get certain things in
the light of what they had in cash, whether they should You

get It for nothing, whether they should pay cash.
also agreed at the time that you would re-examine it
at sometime in the near future whether you wanted to
change your mind. But, there is justification needed,
Mr. Secretary. I don't think you are offering any.

0

military stuff.

0

J.V.JR: Coe CBD find out. Do you suppose there is
such a series of charts in existence?

If you are interested in that, sure.

113. WITH: Yes. It way not 20 into 8.5 much detail
as you want, but they 0 to--you car get them geographically
and you can get them by large categories to the larger
countries. They are printed every three months, and I
an sure that FEA must have very detailed date.

H.M.JH: I BILL interested.

VI. U.V. RELL: There is . pretty great lend-lease
report sent to Congress every quarter.
MR. WHITE: Every three months.

MR. COE: They don't have a breakdown of the kind
which we want on the financial side. They have never
been able to do it. They have a regular commerce figure.

H.M.JR: I an interested, and I want it net up.
The may I want it, George, is statistically, once .

Then they have figures showing what is spent which

month, If possible.

don't jibe with the export figures.

The country you have
in
knowing
what
they
havewhether
got and interested it
hitherto VR. WHITE:
only
been

has in been kept up to schedule, BILL Russia, and you used to

receive it, and recently you decided it masn't as acute.

e don' supply it. Te have It. But 11 you are interested
In the other countries, it CBD be quite easily provided.

0

0

70
10 0

I told him If he wanted somebody while he was over there
he should take Taylor, and one of the questions he asked-I want to know whether Taylor would know the answer.
For instance, he asked me about--he's preparing himself to no over, and 1 wonder if I gave him the correct
answer--how did I propose to pay off Socony in Rumania,
or General Motors in Europe, Germany, for their plants,
out of reparations, or out of money In this country?
I said in my opinion they should not be mixed up with
the preparations, that we had enough money, I thought.
My impression was there is about seven or eight hundred
million dollars, German finances in this country, which
is more than the total claim that American companies

H.M.JR: Well, you see, there's the thing which is
very interesting. Make a note of It, having money
come back. This whole thing--I asked to see him, he
didn't ask, because I wanted to find out. The whole
thing built up to a point we net a million tons a
month out of the Ruhr and the Saar, in order to give
each family in advance a half ton of ooal. Now you
have got to have your basic figures. He leads up to
that and I gather he's going to ret-MR. COE: We learned on Saturday that Secretary
Stimson recently wrote the letter to State suggesting
that four or five men, including yourself, sit down
on the question of War Department's now being unwilling
to finance relief to certain areas. They have been

have.

MR. PEHLE: That's wrong.

H.M.JR: Is that wrong?

taking the position,
in Italy, and they
aboutparticularly
and

were worried coal, another question was that

MR. PEHLE: Yes. The claims against Germany far
exceed the assets.

0

H.M.JR: Who can give me a memorandum on that?
MR. COE: We can.

101. WHITE: Data has already been checked and

and--

there'

MR. WHITE: No, no. Frank has time and the staff
to handle it, and he's set up to handle it.

H.M.JR: Coe, would Taylor have that at his finger
tips?

H.M.JR: Well, then, Potter, who just cane back

thesurvey,
will you
fromEurope,
who has made

get

MR. WHITE: I doubt it. But be can easily get it.

hold of him and have a talk with him, and find out
what his report is on the Ruhr and the Saar, and how
we arrived at the figure of a million tons a month?
I mean, the whole thing all comes back, are they going
to have a revolution? Are these people going to be
able to say, *Well, we've got to do this and that for
Germany to keep then from revolting, and all the rest
of that stuff, and 1 want to know. Now on the thing-I had a long talk, almost two hours, with Hopkins, and
recommended to him first Yost in the State Department.

H.M.JR: What?

MR. WHITE: I doubt it very much.

Well, Frank, would you be thinking of
like that, what have we

he to take Taylor, what we

different decides H.M.JR: things ought And got, to I send think and

Taylor so that he could have it see?
that it would be nice, Frank, 11 you would write a

I

0

the War Department said it would not finance the coal
question. State-H.M.JR: Excuse no. I don't want to ask Harry to
do this while Bretton Woods is on, but I wish you
would get hold of Mr. Potter, If Harry hasn't time

He couldn't get Yost, and then I recommended Reams.

0

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PRECISION

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13

M-4

12

12-

M-3

H.M.JR: Well, it's so different. Anyway, I want
different ones thinking what we should possibly give
him or give Taylor. That's about all.

- 11
0

letter to Taylor, for my signature, telling him that

Mr. GASTON: Is that Wayne Taylor?

Senator Kilgore said of all the people that appeared
before him, Taylor made the best impression. I
don't know what we should give him. He wanted my
plan for Germany and he pressed me very hard, and I
said he couldn't have it unless I got permission from
Mr. Truman, and I'm going to ask Truman If I should

H.M.JR: No. No, Taylor.
MR. CASTON: Our Taylor?

MR. WHITE: Bill Taylor. He's in London.

give it to him. But I don't think it's generally
known that he's going to go with Hopkins.

MR. GASTON: Did he appear before this committee?

MR. WHITE: Hopkins saw the brief, the six-page

H.M.JR: In London.

proprosal.

H.M.JR: What's that Harry?

MR. WHITE: Kilgore saw him in London.

MR. GASTON: The outline?

MR. GASTON: Kilgore, oh, yes.

MR. WHITE: When it was first discussed.

0

H.M.JR: On what, Harry?
O

MR. WHITE: On Germany.

MR. WHITE: In London?

MR. LUXFORD: He sat in on the original?

MR. PEHLE: Yes.

19. WHITE: Yes. It's a little bit vague in my mind.

VR. WHITE: I didn't know that.

I'm ninety-five percent positive that he had a copy of

H.M.JR: In London.

that.

MR. GASTON: I'm confused because 1 didn't know
about Bill Taylor appearing before any committee here.

H.M.JR: That was before Quebec?

MR. WHITE: That's when we had a meeting in his

H.M.JR: Here? That gets down to a question of my
appearing, and somebody wrote me a letter about wanting

office,which WBS attended by State Department and McCloy,
and myself.

somebody to appear.

H.M.JR Before Quebea?

MR. WHITE: Mike Hoffman, and they called up again

MR. WHITE: Well, I'm not certain. I think so.

and they've got him scheduled for Wednesday.

H.M.JR: Well, the thing is, today it's so different.

H.M.JR: Well, 1 don't want Mike Hoffman. I don't
think he's--

MR. WHITE: I think it is, after State Department's
consideration of it.
o

MR. PEHLE: They had hearings, Harry. They took
testimony and he testified. I gather from something
Kilgore said--

0

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13

14

MR. WHITE: Do you have an alternative?

MR. PEHLE: How about getting Schmidt back?
back.

MR. FUSSELL:
Mr. Secretary, will there be a press
conference
this afternoon?

H.M. JR: I don't think so.

H.M.JR: The alternative would be if we get Sahmidt

MR. WHITE: Oh, I don't think myself it's worth
while,
and I think
Hoffman can do as good a job in
this particular
field.

MR. WHITE: The factual material that he's to present,

Mr. Secretary--I think that he knows the stuff. I think

MR. PEHLE: He's older and much more nature in
appearance in fact.

he's quite competent to discuss the narrow field which
they will want him to discuss, and if you have somebody
else, it will be more difficult for that somebody else.
Whoever you may select to keep off the broader German
my
field. he can very appropriately say, "That's not in
problem

(Secretary holds telephone conversation with
Senator Kilgore.)

H.M.JR: That's all right. The President told him

practically the same as he told me. He says he has

H.M.JR: Well, let's take the time. ho called up

divided it a little bit differently because of this nan's
appropriation. I think it runs out the first of July.

for Kilgore, and what did they say they wanted?

MR. WHITE: One of the clerks on Kilgore's Committee,
Schinnel, called up to say that they have somebody scheduled

0

for Wednesday--they re hoping to have for

want him to of

President Truman wants, to 20 up and +ive them the

economic, historical background?

of Americans
some the cartel relationshave to

property which Germans have amount

Wednesday--and foreign holdings which they discuss there. here him the and They scheduled amount the want

in can

MR. WHITE: Well, I think the choice is extremely
limited. If you want to get Orvis back, the boys think

fundstheir
some and
ways
hide

he makes a more nature appearance. I'm sure he does.
He would have the added attraction of being fresh from
Germany, and would be able to give the kind of experiences
which always go well in a committee. It might also have
the advantage of bringing home to the committee that the
Treasury is actively operating in that field and has men
in there. It would have that advantage if we do get men

discuss revealed which by the foreign of Germans activities. assets which have abroad of the been

can promote research or propaganda abroad through the

funds they have, the kind of problems will oh Mike, I
think, would be quite adequately prepared to discuss,
and he can confine himself to that narrow area, and he
has been instructed so far, and he '11 carry it out,
that if that
they It's
asknot
himinany
questions, for him to
reply
hisother
bailfwick.

over in time, and it might be a very good thing to get

Orvis Schmidt to find out what he's doing and send him

right back again. So, If they can writ, I dont know how

H.M.JR: If we sent Mike Hoffman, thirty years old,
up there
to testify on this thing, I don't--

long it would be, ten days maybe.

H.M.JR: Oh, no. I can call up McCloy and tell him

MR.WHITE:
He's a very snart boy, Mr. Secretary.
His age
has--

H.M.JR: I know, but--

He'll have to get another appropriation. Well, Harry,
who is your Assistant Secretary in Charge of Foreign,
and so forth? Who is the best qualified man to do what

to send a message over that I want him back immediately.
He is to leave today.
0

MR. WHITE: If that's the case, then I can see where
he would make a more interesting showing than Mike Hoffman.

76

77

h-1

15

16

If Orvis is out for one reason or another, It seems to no
that Wike Hoffman could handle it adequately. He could be--

)

0

(Secretary holds telephone conversation with Mr. McCloy.)

H.M.JR: All right, how far did we get?

H.M.JR: Where's Orvis Schmidt, at SHEAF?

Charles?

MR. COE: Yes.

MR. C. S. BELL: I haven't anything, sir.

H.H. JR: I'll call him up myself.

H.M.JR: Daniel Bell2

MR. PEHLE: That's the way.

MR. D. W. BELL: I haven't anything.

MR. D.W. HELL: Is this hearing for Wednesday?

H.M.JR: Luxford?

MR. WHITE: Those would be the only two that I could
think of.

MR. LUXFORD: I don't know how far you have been kept
up--

H.M.JR: What?

H.M.JR: Anybody want to go up on the Hill?

MR. WHITE: It seens to me those are the only two.

MR. LUXFORD: I have to go at ten-twenty. The war
criminal problem is again being negotiated with the
State
in
particular
War
Department
War, and Navythat
Departments,
and
with
considerable
difficulty
the
and
State

H.M.JR: I think it would be good. How long has
Orvis been over there?
0

MR. PEHLE: About a month and a half.
O

in

boys have flushed them out enough to know that in a way their
fears are in connection with Russia and Yugoslavia, They

Germany until--

are afraid that they will be pulling the wrong people in as
war criminals, and they are setting up the procedure, or
attempting to, which would make it very difficult.

MR. PEHLE: A month.

And he could talk, and he could simply say,
Forel go Funds, and this is why

H.M.J: Did you get this secondhand?

H.M.JR:
not
here,
"I'mhead
and to
talk, butI'm
this
is of
myI'm
field
and'm
very

MR. LUXFORD: I got it from the directors and our boys

sorry, I can't talk about the other business.
MR. WHITE: Of course Mike would say precisely that, too.

attending those meetings.

H.M.JR: See, I made you custodian of our allies while

MR. D.W. BELL: They might both go. Mike would have
more current information.

Joe was gone.

MR. LUXFORD: That is right. Our attack has been one
of forcing out into the open what the issues are and the

MR. WHITE: They might both come up. It depends on how long-I

redrafting of the directive, but there definitely is trouble

H.M.JR: Don't misunderstand me, I have confidence in

so far as what they are trying to do is concerned.

Hoffman, but he does make a very youthful appearance. of the

4

mean, Schmidt would make a better appearance
two committee. that All right, I've been doing most of the talking.
Charlie Bell?
MR.C.S. BELL: I have nothing.

sense

are trying to hold back on two main points, one, industries,
and two, the question of extradition of war criminals. The

MR. WHITE: Two weeks. I don't think he got to

Mike I think he' a very able person, but I think before the

the

0

H.M., JR: Should I be interested in that, Harry?

78

79

h-3

18
17

H.M.JR Who is chairman of that?
MR. LUXFORD: I think you should.

MR. WHITE: It is not handled by the IPCOG Committee.
The SINNCC Committee played around with it, the same one that

MR. WHITE: I would if I were you.

handled Germany before. They are not handling it by what
we have called the initials, the IPCOG Committee, which
handled Germany. They are taking it out in this other
committee. The difference between the two is the Treasury

MR. LUXFORD: I just wanted to mention to you what was
going on. At an appropriate point we may have to go further,
but we are forcing them on the record in regard to what they
are trying to do.

is in one and out of the other.

H.M.JR: It doesn't make sense.

H.M.JR: Is today Burgess' day?

MR. GASTON: The whole thing is preposterous in my

MR. WHITE: Yes, and they may also go into an executive
session with myself. Fulbright asked me for some questions
that he can ask no. He wants me to answer them, refute a
lot of the questions.

opinion; this making the peace and economic future of the
countries that were conquered is apparently in the hands

of the military, and to no it is nothing.
MR. WHITE: Well, State--

H.M.JR: An executive session with you, yourself?
0

MR. WHITE: I an not sure whether it is going to be an
executive session after Burgess gets through. Burgess would
like to make it an executive session before he starts, but
Senator Wagner is opposed to it, so I don't know what is
going to happen. They were going up this morning to find out.
Dean Acheson and I spent an hour and & half with Senator

Millikin at his office Saturday at Senator Millikin's request.
We may have budged him, I don't know.

H.M.JR Anything else?
MR. LUXFORD: No, I haven't anything else.
MR. WHITE: Were you through, Luxford?
MR. LUXFORD: Yes, I am through.

MR. WHITE: If you are interested in getting in on the
Japanese directive, It is being prepared now. They are
keeping us on the edge. They are asking us about some
things, and some they are not, but we are out of it officially.
I don't know at what point you want to make an effort to get

back in officially. We have never been in officially.

:

MR. GASTON: Well, military and State is not enough.
To me it is preposterous.

MR. WHITE: No, it is my thought after going into the
details of what the men have to contend with that there is
no use maneuvering from our position unless you take it up

with the officials and get it up officially.
H.M.JR: Take it up with Grew.

MR. COE: Grew stayed off at the time of the IPCOG
You asked him about that, and the understanding
meetings. that Grew would be the one. Henceforth as these things
was arose and there was specific reference to Japan it would be
taken up in some group like the IPCOG one.

H.M.JR: Should I call Grew, or should I call Clayton.
MR. COE: Clayton himself seens to be out of the SWNCC

thing, so I suppose it is Grew.
MR. WHITE: Isn't it being run by the Army?

TRADE MARK

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80
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19

MR. D. W. BELL: What about McCley? Isn't McCloy

H.M.JR What I would like you to do is take his letter

chairman?

and get all the answers you can give, and see Walter George
and have a talk with him today.

H.M.JR: I will follow it through. What else?

MR. O'CONNELL: You are not anxious that we get a letter
which would be released to the press today?

MR. WHITE: There is no official basis for it, so if
you do follow through, I think that that is what you ought
to get, because when it is just an understanding, the boys

H.M.JR: I an not going to have a press conference.
I would like to answer It as soon as possible, but there
is no rush. I would like to get Walter George's advice.

have & hard time operating.

H.M.JR: Are you going on the Hill, too?

MR. O'CONNELL: All right.

MR. O'CONNELL: I hadn't intended to.

H.M.JR: I will call him up and ask him whether he will
see you this afternoon.

H.M. JR: All right, you go ahead, you fellows.
MR. WHITE: I think Joe should be up there if they are
going to have an executive session, and there may be an
executive session today.
C

MR. O'CONNELL: I didn't think there would be an

0

executive session today.

he?

20

MR. O'CONNELL: It is a very impertinent sort of letter.
If you put out an answer which you wish to publicize, a
brushoff would be the thing, because the letters are pertinent.
We wouldn't answer some of the questions for him anyway. The
complete answer is that the Treasury is examining the whole
thing, and when we have completed our examinations we will
report to the proper committees, to Ways and Means instead of

MR. WHITE: Will you join us in about ten minutes?

Finance.

MR. O'CONNELL: Burgess goes on right away, doesn't

MR. GASTON: I agree on the brushoff, but I don't
think we ought to give out any information.

MR. WHITE: Yes.

MR. O'CONNELL: That suita me, but I was raising the

MR. O'CONNELL: I will be down before he is through.

question. I think the silent treatment is best along the
line here. No one is paying much attention to Willis or

(Mr. White, Mr. Luxford, and Mr. C. S. Bell leave the

which 1s a Republican paper.

the Republicans in this connection except the Times Herald

conference.)

MR. O'CONNELL: I gathered from what you said earlier
that you weren't going to have a press conference today.
wondered whether you wanted a new thought. I sent Senator
Willis a letter on the Bureau before the publicity appeared,
and as I told you Saturday morning, we were thinking of writI

ing a short letter to Willis, not at all on the defensive,

which we could get out. We probably would have it by noon

if you wish to sign it.

(Secretary holds a telephone conversation with Senator
George.)

H.M. He says it is purely political and we should

just give him a courteous answer. I was thinking to say,
"Well, we have all the facts. We will present them to the

Joint Committee on Taxation.

HIV

83

82

H-6

-22-

O

ment has I would made like ninety-two to report percent also of that its the Seventh Treasury War Depart- Loan

quota.

MR. O'CONNELL: Yes, I think that is the right slant.
There isn't any reason why we should fall in their trap in
trying the thing in the newspapers with added facts or
without them, but we will have a short letter which I will

H.M.JR: How much?

MR. BARTELT: Ninety-two percent, and I think we will
be up to ninety-eight by the end of this week.

have when we go down to see Senator George.

H.M.JR: At two o'clock in the Office of the Secretary.

H.M.JR: Good.

MR. O'CONNELL: May I be excused? Sherwood is waiting

George?

for me, and I would like to talk to him and maybe bring him
down with me.

MR. HAAS: The Budget Bureau asked if we would advise

their fiscal agent, the idea being that the President might
issue the Budget summation by August 1, but I don't think

H.M.JR: All right. This thing I referred to, Gaston,

will bring that up tomorrow on how we are going to handle
McKellar, when Nunan is in here.

they have & definite commitment. Maybe you know.

I

MR. O'CONNELL: Yes.

0

H.M.JR: This request of McKellar's for an appointment
in Internal Revenue--I don't want to discuss it until Nunan
is here.

0

MR. D. W. BELL: No, I understood they were contemplating
August 1. That is about the usual time.

H.M.JR: Anything else? I gave you some things to do
today, didn't I?
MR. HAAS: Yes.

MR. GASTON: I see.

H.M.JR: I want to get Nunan's reaction.

them.

H.M.JR: And if you don't have a large enough staff, get

MR. O'CONNELL: I am anxious to get that. I have talked
to Cann and Sherwood, and their reaction was what I gave you

MR. HAAS: Thank you.

Saturday morning.

H.M.JR: Frank?

H.M.JR: We will go into the thing tomorrow morning,
Gaston being political, and you being In Internal Revenue,
and I want to see how Nunan reacts.

MR. COE: I have nothing, air.

MR. O'CONNELL: Gaston being political!

H.M.JR: What did you do? Did you decide how to
reorganize your department?

MR. GASTON: Yes, we will see about that. (Laughter)

VR. COE: I have a memo that is being typed up now.

(Mr. O'Connell leaves the conference.)

H.M. JR: Is it good?

MR. BARTELT: Mr. Secretary, I want to report that we
are making very good progress on tax refund cases. Last week
we paid about one million sixty-nine thousand, bringing the
total up to two and one-half million. That means we have
just about twenty-one and one-half million to go.

85

84
24 -

23

MR. COE: Oh, then, you have what you want.

MR. COE: I think it gives what we want. I have disoussed it generally with Harry, but I haven't shown it to
him. I an afraid It is the usual thing, certain things we
are doing in order to produce certain things we need. We
will get a little more informal organization. I will hand
a full-dress document in to you. There is one thing, Mr.
Secretary, we have been a little puszled by, and due to your

H.M.JR: The Department started to give me what they
thought about the press, which I didn't want. I wanted
simply what the Russian press said uninterpreted.
MR. COE: They are very interesting.

Moscow telegrams. They have never sent any over before.

good contacts with State we have been getting a deluge of

H.M.JR: Is this what I am getting?

They are mainly reports on the newspapers in Russia.

MR. COE: That's what you are getting.

H.M.JR: I an very much interested in those myself.

H.M.JR: Because when I got what the State Department
got out about what the Russian press said, it was no good.

MR. COE: We have gotten them up for you.

This is it.

H.M.JR: I get more information out of those reports
than I do anything else on the whole European situation.
I am going to try Grew on this.

MR. COE: You got what you asked for then.

H.M.JR I think it is more interesting than reading
the daily newspaper.

(Mr. Coe hands Secretary two memoranda dated June

15, 1945 and June 22, 1945.)

Pehle, I will give you a few minutes If you will

0

stay behind.

MR. COE: That is a brief nemo, but I think they are
mainly to skin through.

MR. GASTON: That thing you mentioned to Fussell

upstairs, I think If press conferences are being held
upstairs they ought to be stopped. They ought not to

H.M.JR: What is this? I don't think you meant to

be encouraged. Your suggestion was about bringing in
certain people and getting something more formal. I
think that would be a mistake. There should not be any

give me this.

MR. COE: I an sorry. They are very interesting but
I warn you they haven't given you what their own political
analysis is; they are mainly furnishing view of how the

press conferences. If he is setting a certain time at

which the newspapermen come up to talk to him, that
should not be done.

Soviet is reacting in their press to the developments
of the world.

H.M.JR: He does. Every morning the wire services

H.M.JP It isn't an analysis of the press itself?

come up to see him.

MR. COE: It is an analysis of the press itself,

MR. GASTON: But going in the direction of putting
it in Pussell's hands and making it all the more formal
that Fussell can handle it better than Shaeffer, that's
going in the wrong direction. I don't think we want to
organize formal press conferences upstairs. If they

a condensation, but it is not the Department's own.

H.M.JR: I don't want the Department's. I have
that,and that is what I didn't want.
(1

H-11
H-10
26

0

25

in at a up on telephone,

are being held, we ought to make it just a matter of

drifting
one to
time,
Information. the I
and so forth,
givecalling
out routine
wouldn't have press conferences.
H.M.JR: Why?

MR. GASTON: It is substituting somebody else than

yourself as spokesman. If you want to do that, substitute
someone else as spokesman for Treasury policy, you could

do it, but I don't think it is a wise thing to do. We

don't need press conferences by somebody else. We don't
have enough business here to justify that. We can give
out routine stuff to the men as they come along.
H.M.JR: Ted Gamble does it.
MR. GASTON: I know, but Ted Gamble is running a

big propaganda machine. I never felt the need of holding
press conferences. I didn't hold press conferences.
C

or or

It is not the right idea. Steve Early, yes, that's
unique, that's different. I don't think any department-I may be wrong, but I don't
think any department
conferences
unless it is inhas
the
absence somebody of holding the Secretary press something of that sort,

unless the Secretary just doesn't want to.

H.M.JR: Well, I am going to have a talk with Fussell
and see what happens. I don't know which is the better,
to see them at one time or to have them drop in. And the
first thing he knows he is having favorites and telling
one story to-MR. GASTON: It's his business to see he doesn't
have favorites.

H.M.JR But certainly the thing is going on where
the press could be guided and Shaeffer just isn't doing

it.

MR. GASTON: Well, the press can be guided much

better if you don't take them in a group.
H.M.JR: Well--

MR. D.W. BELL: I think Shaeffer started that, Mr.
Secretary, at the time when you woren't holding press
conferences. Remember, there was quite & period there
that you didn't have press conferences, and he was
trying to keep the boys in a good human and he started
it.
I didn't know he was doing it every day, but I
think they come in and ask questions, and keep current
on things that are going on that Shaeffer can give
then. He doesn't give them any policies.

MR. GASTON: I think that's right, but I think
the habit of having them all acceptable at one time
leads to the wrong direction.
I would like to say one more word about something

that is none of my business either, and that is this
thing about Europe and the peace.

I think President Roosevelt neglected proper form
of organization for the treaty problems of the disposition
of occupied countries. I don' think there is any
really proper form of governmental organization set up
yet, as illustrated in the fact there is this by-play
of crowding us out, and so forth, and it is too much
military.
It seems to me that President Truman might be sold
the idea of a really conscious, deliberate, ,organization
of the Cabinet and the Government to solve these really

on

important problems. I think there is just authority

being grabbed, and the thing is kind of being done in
the corner.

H.M.JR: You're right.
MR. GASTON: I think my suggestion was possibly

you could work out a definite plan and go to him
and say, "There, this is the broadest thing we have
got on all governmental propositions.
(The Secretary holds a telephone conversation with
Mr. Grew.)

June 25, 1945

10:00 A. M.

27 -

H.M.JR: He has it on his desk.

HMJr:

Hello,

Operator:

Senator Kilgore.

HMJr:

Hello,

Senator

Now, there is no reason Mr. Clayton should--Mr.
Clayton doesn't know anything about Japan. It has to
be people who lived with it.
MR. COE: One of Clayton's nen brought over a part

Kilgore:

Hello,

HMJr:

Morgenthau speaking.

K:

of it to us including the political--

HMJr:

H.M.JR: Well, anyway, that's that. Herbert, you
are right. I have spoken to the President & couple
of times about it. 1 have a notion to ask him. The
first of July he is going to do something.

I just got in from West Virginia, and got myself
lined up on these hearings. After I talked to you
I started checking on the materials to see just what

K:

might be questionable.

MR. GASTON: There should be a plan. There are
two fundamental misconceptions. One is Army shouldn't
be interfered with wherever they are in occupation
and the other the State Department should manufacture

HMJr:

Yeah.

And in the meantime I got a call from Mr. Clayton,
right after that - so on the strength of that call
I called the President and asked him. I said we
had advertised the hearings, what did he want done?
He said well, he wanted the henrings to go ahead,
but he wanted any question of future policy left

K:

International policy. It shouldn't.
H.M.JR: Yes. What else?

$

Kilgore talking. How are you this morning?
All right.

out.

MR. GASTON: Do you have something you wanted to talk
to me about?

HMJr:

H.M.JR: It was this business--

.until afterwards. He wanted the hearings in two
series. One set of hearings to give the background -

K:

the economic background, and then as soon as the

MR. GASTON: Fitz mentioned something.

Berlin conference is over a series of hearings on
policy.

H.M.JR: about Senator McKellar, and I don't want
to discuss it until Nunan is here.

HMJr:

MR. GASTON: All right.

K:

see you. (Mr. Pehle.)

HMJr:

MR. PEHLE: Yes, sir. Do you want Herbert or anybody else here when you talk about Americas United?
MR. PEHLE: Okay.
(

I see.

So we are just going ahead merely with the historical
background. He has requested every department to out

out anything that deals with policy.

H.M.JR: I have not to rest a minute, and then I'll

H.M.JR: No.

Yeah.

K:

0

I see.

And serely give economic and financial history up to
the present time, which would be a foundation stone
for a statement of policy later. But he doean' t want
anything said on policy until after the Berlin conference.

MICROFILM

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90

We were to start this morning with State Department and Mr. Layton and just work our way
on through. And the Baruch hearing as a matter
of fact it was such a surprise that I was out of
town on the day it was held.

K:

HMJr:

Yeah.

K:

Well, I thought I'd call you up and tell you what be
told me.

HMJr:

Yeah, well

HMJr:

K:

He said what he wanted was - the reason he wanted

K:

that was that he wanted to keep all the whole carts
covered up well until after that conference.

HMJr:

K:

HMJr:

K:

HMJr:
K:

HMJr:
K:

I gathered that -- did you know that Baruch was going
to testify before.
Baruch made that request of the Military Affairs Committee. See that wasn't before the subcommittee.
I see.

I wasn't even at the meeting. Senator Thomas, the
chairman of the Military Affairs Committee presides
at that meeting.
Did you know Baruch was going to do that?

Well, I didn't know how far he was going. I knew he
was going to testify.

I was out of town.

HMJr:

Yeah. Well, your Mr

K:

As a matter of fact Baruch's whole statement was

gractically your policy there according to the

editorial I BAW in the paper this morning.
HMJ

What paper was that?

K:

It's the News.

HMJr:

News?

K:

Yeah.

HMJr:

The Washington News?

K:

I think that it 18 - yeah. It's one of those tabs.

HMJr:

HMJr:

Yeah.

Kt

K:

But he made that request to Senator Thomas, and

HMJr:

Senator Thoma gave the permission to talk before
the whole committee.

HMJr:

I see.

K:

And the subcommittee didn't have anything to do with
it.

HMJr:

I see.

K:

Our hearings were scheduled to start out - he wasn't

HMJr:

1 see.

even on our schedule, see.

(Laughs) I see.

Senator Thomas told me before I left that Mr. Baruch
was going to testify before the whole Military Affairs
Committee, and wanted ne to be present. I told his
I didn t know anything about it and couldn't be there.

Well, that is what he has told me. That's why I
told you I had better not come up there.
Yeah.

91

Oh, yeah. I haven't seen it.
Well, what he said, I think, was all right, but,
or course, what we've done is we've gone much further
in showing how to solve it.

Yeah. I know. Well, I mean it was in line with that.

K:

HMJr:

Definitely.

K:

HMJr:
K:

He made a good start. Very good start.
Now what was suggested was this. That in as such as
if we got you up here, they d probably - some of the
Republicans would probably ask you.

HMJr:

Yeah.

PRECISION

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MICROSTATI

MARK

MICROFILM

BOLL NO.

June 5. 1945
10:09 A.M.

92
Hello.

HMJr:

But we were going to ask somebody else 10 the

K:

Department, who could any that he couldn't go into
those details he knew nothing about them, that
they were detailed to another san.

HMJr:
K:

HMJr:
K:

HMJr:
K:

Ieah.

Mr. John
McCloy:

Hello. How are you?

HMJr:

I'm all right, and you?
O. K.

M:

And that would save us what do you think about that?
Well, I certainly think I should not come.

HMJr:

I think you shouldn't come at this time, but should
come after the Berlin hearing.

HM

I'd like to come after the Berlin hearing.
All right. That's fine, then if we can get somebody
from down there who can sun up the economic facts as
found by Treasury Department, then we can go ahead

HMJr:

C

HMJr:

HMJ

HMJr:

wants historic background and nothing as to the future.

HMJr:

Teah.

HMJr:

Just the background on which the plans will have to
be laid.

HMJr:

HMJr:

Well, we'11 do the best we can.

M:

K:

O.K.

HMJ

Thank you.

K:

Thank you.

Under Colonel Bernstein.
Yes.

M:

K:

100. Who is head of Foreign Funds for Treasury is
at Frankfurt.
Yeah.

M:

No idea as to any future planning.

Orvis Schmidt - if you've got a pencil.
Wait a minute. Orvis Schmidth

But as I understand what President Truman wants - he

K:

Nothing to do with future planning, but just the
background.
Yes.

M:

0. K. fine.

Departments to give the sort of economic background
Yes.

M:

we have available.

K:

Who tells no that the President wants the different
on Germany.

M:

Well, I understand what you want, and we'll do the
best that we can, and we'11 give you the best that

Jack, I'm just through talking to Senator Kilgore.
Yes.

M:

about economic background.

HMJr:

93

He is a civilian - I mean Schmidt.
Yes.

HMJr:

M:

And I would like to get him back at once, because they
want his to testify Wednesday, but if you could get back a
message so he could leave tomorrow he could get
here and testify Thursday.

O. K. Well, I'11 do what I can. I'll tell then to

put him on the plane and send him back as fast as they
can.

HMJr:

Would you do that?

94
C

-3-

Yes, Orvis Schmidt. I can't guarantee what time he
will be here.

M:

HMJr:

0

No.

HMJr:

HMJr:

as to what our set-up is now and what problems we are
finding now. Lou Douglas just came in a minute ago.

to let Harry White know when we can expect him back

HMJr:

so we could let Senator Kilgore know.

M:

Right, right. Now are you going to testify up there?

M:

HMJr:

No.

HMJr:

They've got me down for Friday.

M:

HMJr:

I tell you what he told me. President Truman is
No, dividing wants the thing divided into two pieces.
For the present, just the background.

HMJr:

RMJr:

M:
0

HMJr:

HMJr:

Future, yesh. Wants to keep off the policy, I'm told.
off the policy.

Tell him that.

You tell him that.

M:

I will.

HMJr:

Is be there?

Yeah, wait a minute - you want to talk to him?

M:

Yeah.

Yeah, he's just here now. Just arrived - with, well,
he's just going to start the story.
Well tell him this time I expect to see him, or my
feelings will be hurt.

Yeah, he'11 be around to see you.

M:

And after Berlin, the future.

Did he?

I'11 tell his that.

M:

Yeah.

M:

So they'11 ask me to come up after Berlin.

Yeah. I don't know qui what he wants se to testify
about. I'11 just go up and sort of shoot off the cuff

M:

But I'll get him here just as quickly as I can.
Well, if you would tell whoever handles it for you

M:

95

M:

HMJr:

So they are going to keep me off.
(Laughs)

M:

HMJr:

HMJr:
M:

HMJr:
M:

HMJr:

Yeah, well

M:

Hold the wire.

Douglas:

Hello.

HMJr:

Hello, Lew.

D:

He got on the policy all right.
Well, he's free-lance.

HMJr:
D:

Yeah, yeah.

HMJr:

But you heard the same thing, that

D:

I heard that Truman had indicated that he when night he
M:

Yeah.

Mr. Lewis

(Laughs)

They had Baruch up there.

M:

HMJr:

HMJr:

Yeah, be embarrassed before this thing - and later

could do it.

Hello, Henry, how are you, air?

I's all right.
Good for you.
And you?

I'm all right, thank you, Henry.
Well now, this time don't wait until you've about got
one foot in the overseas plane to say that you wanted
to see me.

0

June 25. 1945
10:20 A.M.

I won't, Henry. Well, we had bad luck the last time.

D:

HMJr:

I know. Well, I'll tell you.

D:

You going to be here on Friday and Saturday?

HMJr:

Yeah.

D:

May I come in and see you then?

HMJr:

Senator
George:

Hello.

HMJr:

Henry talking.

Yee, Henry, this is Walter George.

G:

HMJr:

HMJr:

Surely.

HMJr:

Do you want to have lunch with ne Friday?
Love to, Henry.

D:

HMJr:
D:

HMJr:
D:

C

HMJr:
D:

HMJr:
D:

HMJr:

HMJr:

HMJr:

HMJr

HMJr:

One o'clook.

HMJr:
D:

HMJr:
D:

One o'clock - I shall be there.

Bye.
Bye.

Well, what time would be agreeable for your

HMJr:

Well, any time, say two o'clock, or anytime after two.
Two o'clook. He'11 be at the office of the Secretary

0:

Yes, that's right.

Good.

All right.

And asking me a lot of questions. Now sometime
around noon or so we'll have all the answers that
we can have. I wondered if you would receive my
General Counsel, Joe O'Connell, sometime this afternoon, and let him go over the matter with you and
get your advice as to what we should do.

all day.

G:

D:

Senator Willia of Indiana.

I'd be glad to, Henry. I expect he had better come
to the Secretary's office over there because we will
be tied out over there this morning - today, I think

0:

Thank you.

Thank you ever so much. What time?

I'm sorry. Walter, I had a long letter from
I saw it published.

G:

I guess that's true. All right.
All right, Henry.

Only fair?

Only fair.

G:

Lunch on Friday.

Lunch on Friday. I should love to.
We'11 give you what a civilian eats in America.
(laughs) Well, that will be more than some civilians
eat on the other side.

How are you?

Fair, only.

G:

All right, air. I've just got back and I'm here

D:

Hello,

HMJr:
G:

HMJr:

in the Senate

at two o'clock.

Yee, I'd gladly see him here, but I won't be back

over here I don't think until
We'd like your advice because this is really a party
issue - they ve made it a party issue.

98
-

June 25, 1945

10:32 A.M.

Well, I read that letter and I thought it was pure
politics.
Yeah. I would be largely guided by whatever you ad-

G:

HMJr:

HMJr:

Mr. Joseph

vise.

I don't know that I can help a lot, but I wondered it just
G:

just give him that a courteous
Well, seemed to me that it was so political

Grow:

Good morning.

HMJr:

How are you? Mr. Grew, can you hear net
Yes, perfectly.

G:

if reply, you would but anyhow do more I'll than be glad to see O'Connell.
HMJr:

Well, some of the questions we can't answer.

HMJr:

seemed to think was a pretty good Directive, and of
which Mr. Clayton was Chairman. Hello?

Yes.

I mean we just haven't got the information.
Yes.

HMJr:

0:

HMJr:

G:

And I could just give him a courteous reply and will any be
presented that at to the Joint Committee on
Yes.

G:

HMJr:

When we have all the facts.

HMJr

Yes.
G:

HMJr:

Which we expect to.
Yee.

HMJr:

G:

HMJr:

G:

See?

I see.

0:

making an investigation, and when the we Joint have
HMJr:

We all are of now the facts, we will present then to

G:

Committee on taxation.

I'll be glad to think it over, talk and with in the him.
G:

HMJr:
G:

Yes. meantime, Well, when O'Connell comes over I'll

Thank you so much.

Yes.

Now they have a group which is not headed by

and
Mr. Clayton getting out a directive on Japan,
we are very much on the outside, and I an informed
thatit.you
people yourselves are not wholly inside
of
Hello?

the proper time that the information taxation.

G:

As you know. under what you people call an informal

committee for Germany we got out what everybody

G:

HMJr:

Hello.

Yes.

I may be wrong as far as State is concerned, but as
far as Treasury
outside
fringe. is concerned, we're just on the very
Yes.

Now, I think that committee which Mr. Clayton headed
did a very good job on a directive on Germany, and
we have I'd a real interest in it in the one for Japan
and
appreciate it if you would make some inquires
and see what is happening.

oh, I know all about it. I have the paper before me,
it's not in final form yet. It has not been approved
yet, and we've got to study it and possibly modify it

before we want it to go anywhere.
HMJr:
G:

A11 right, Henry.
HMJr:
G:

Yeah.

But we
working
angle
in are
it you
mean? on it now. You - there's a financial

Well, there is in all of these things.
Yee.

-

HMJr:

After all in all of these questions once they begin
to occupy these countries the Army has a strong
finance section. As I say we've been on the one for

Germany, we've been in on the one for Austria, now
why are we suddenly excluded on the one on Japan.
G:

HMJr:

Well, you haven't been excluded because the thing is
not yet in a form where we could properly send it out
to anybody because we haven't all agreed on it ourselves yet.

Well, the time must -- I find to get in on these things
is when they are being in the formative period.

G:

HMJr:

G:

HMJr:
G:

Well, I'll look into it and see here.
It 18 a different group, you know. I don't think
Clayton is Chairman of the group on handling the
directive for Japan.
No, he's not at all.

Why it should be a different group, I don't know.
Well, there are a good many reasons for that. In
the first place, Clayton doeen't know anything about
Japan whatsoever. This thing is being drewn up by

people who do know something about Japan.
HMJr:
G:

Yeah.

It requires a very expert hand on this matter. Its

problems out there cannot be settled by people who
have never lived there and don't know anything about

the situation, the psychology, and all the rest of it.

HMJr:
G:

HMJr:

G:

-3-

100

Mr. Clayton never lived in Germany either.

Well, he has a better grasp, I think. of European
affairs than he has of Fareastern affairs. However,
that's not here nor there, but I'll see-what the
situation of the paper is now. I think we shall want
to have it passed by our staff committee or considered
by it before we send it to anybody else, and it is
coming up very shortly.
Well, I would very much like to have a look at it myself,
and have my assistants have a look at it, before it is
too late.

Oh, yes. Well, nothing will be crystalized, of course,
until other people have had a chance to look at it. It
will have to go to War and Navy and all the rest of it.

HMJr:

G:

KMJr:
G:

And so, if you will 800 it is made ava
me, I would appreciate it.
I'11 see that you get a look at it in
I thank you.

All right.

HMJr:

Bye.

G:

Bye.

June 25, 1945

102.

103

11:04 A.M.

HMJr:

Hello,

Operator:

The Attorney-General.

HMJr:

Hello.

HMJr:

And I felt that the experiences in the
proceedings with him, that he isn't the kind at
all
that I want.

B:

Well,
I didn't remember that he had such to do with
the

HMJr:

Atty. Gen.

Biddle:

HMJr:
B:

grand I read then over at the time very

Hello, Henry, you called me last night - I WAS out.
Yes. Francis, are you in your office?

was
carefully, jury minutes, and I felt that
he entirely too lenient
with
the vt tnesses at the time.

Yes.

B:

HMJr:

I wondered if you could have somebody look through
the original
investigation of United States Attorney
Carr
of Los Angeles.
B:

HMJr:

HMJr:

Who?

Carr 0-a-r-r.

He was the attorney. H. tried that before the Grand
Jury and I looked through ay records and we had the

Well, I know Charlie very well. I think he hasn't got
very good judgment - he a little impetuous, but
would doubt whether it was in that direction.
After that I asked you people whether you wouldn't
change it to New York, which you did.

B:

Yes.

HMJr:

Cahill then tired it in New York.

B:

Yes. Well, I'11 look at it. I would think that that

B:

Iwant.
know his very well. In what connection did you
HMJr:

B:

HMJr:

B:

HMJr:
B:

would not be ay view. My view would be that his

oh, see.
And we went through our original files when he was
trying a case in Los Angeles for us.
Yes,

And I was dissatisfied,
Yes.

HMJr:

On the way he conducted the grand jury proceedings.
B:

HMJr:

Yes.

And, I've

Now, could you tell no, Henry, the type of position
B:

what you said. However I'll have some one look over

it and I'll give you a ring about it.
HMJr:
B:

HMJr:

For Deputy Commissioner of Internal Revenue.
Yes.

Would you call me yourself?
Certainly.

If you don't mind.

B:

Certainly, yes.

HMJr:

Because as I say

B:

Well, I'll call you personally, Henry.

HMJr

If you don't mind.

B:

HMJr

B:

HMJr:

judgment was not always very good, but not 60 much

Well,
he has been recommended for a position in the
Treasury.

Oh, certainly. Very good.
Thank you.

105.
June 25. 1945

4:22 P.M.

104
June 25, 1945

HMJr:

Ted.

Mr. Ted
Gamble:

Yes, Mr. Secretary.

5:00 to 6:30 P.M. on Sunday, June 24, I had

HMJr

Monnet From at my house. A lot of things have been going not.

Jean I don't know whether my people know about it or

I have a very attractive and very forceful lady

G:

on want and a meeting and I want Hass to set up the statistics

here of by the name of Mrs. George L. Bell. director
the Washington office of America United.
Yes,

I showing the flow of goods from this country to other countries,
and how they are being paid for.

for They've the 4th tied of up July. about every organization in America

I just made a tudy of the whole coal situation. from
who has that the cable la going out over the weekend

HMJr:

G:

also want to get hold of Mr. Potter from Ickes' office Monnet
Yes.

tells me Truman which is going to set up the of

in the Saar production to know

President and the Ruhr. I don't know whether anybody

HMJr:

coal office knows about it, but I certainly ought is

And I was suggesting that she might come over
seeon
you
because
she is offering to coope rate with and
us
the
4th of July.
G:

in my it. After an hour and & half what he boils down month
what about they need is another million tons of coal per in

Wonderful.

would give a half a ton of coal to every family

which I I don't know whether my Treasury people

HMJ r:

And she's got about, as I say, every national

are France. on top repeat of it or - not. but I certainly want to be Informed

0

about what is going on.

ization in America except well, I don't know organ- what

on
Woods.
sheBretton
has overlooked,
and they were very helpful to us
G:

over
and,
Fine.
Well,
HMJr:
G:

We shall be delighted to have her come

Could you see her now?

Yes, air.

HMJr:

Well, I'll have John bring her over.
G:

Fine.

HMJr:
G:

HMJr:
G:

HMJr:
G:

And he'11 leave her in your very good hands.
Fine. Well look forward to seeing her.

Is that all right?
That's perfect.
Thank you.

All right, sir.

0

PRECISION TRADE MARK MICROSTAT MICROFILM ROLL NO

106,

25th June, 1945.

Thank you for the kind thought which inspired
you to send me with your letter of 19th June the
copies of the full proceedings in the House of
Representatives on the Bretton Woods plans. We on

this side shall be very interested to be able to
study the complete record.
o

Joan success

The Hon. Henry Morgenthau, Jar.

PRECISION

MICROSTATI

TRADE MARK

MICROFILM

ROLL NO.

108
-2-

107 grenius

Hold Until

Delivered.

world. Five times within the memories of some persons now living,
the Germane have waged aggressive war: against Denmark in 1864;
STATEMENT OF BERNARD M. BARUCH

Austria in 1866, France in 1870; against the world in 1914 and

BEFORE MILITARY AFFAIRS COMMITTEE

again from 1933 to 1945. This must be made the last German war.

of UNITED STATES SENATE

Defention Unfounded

By itself, no German settlement can be enough. If this

Mr. Chairman and Gentlemen of the Committee:

is to be a sure peace. we must be prepared to 800 the peace through

I an honored by your request to appear before you.

with an international organization to maintain common unity among

Your esteemed Chairman, in his letter of invitation, described

the Allies, with a determined preparedness including universal

the objective of this Committee's inquiry as "the elimination of
Germany's economic potential for military aggression."

military training, with an as-long-as-it-takee occupation of
Germany, with the judicious use of our great productive power,

No more important question ever will come before you

and a living faith in our democracy strong enough to give the
world the moral leadership in progress towards greater freedom

than this one - of how to prevent the revival of Germany's war0

making might. It is the heart of the making of the peace; it 10
the heart of the keeping of the peace.

and steadily rising living standards that America has stood for

since its creation.
The defeatism that prevails in the minds of some is un-

What is done with Germany holds the key to whether

Russia, Britain and the United States can continue to get along.

justified. At the close of any great war there are always some
who despair of the future. It was that way after the last war.

It will affect profoundly the jobs and livelihoods of everyone,
everywhere, for none of the economic problems of the peace can

We have only to learn the leason of these two world wars and work

be solved except in the light of German reparations policy and
the measures taken to demilitarize Germany's traditional war

at the peace and we need not fear what the future holds in store
for us -- a new cave age of bomb shelters or prosperity and security

economy.

for ourselves and our children.

Is it possible to control and transform a nation of
more than 60 million persons, with an economy as intricate and
efficient as that of the Germans?
I believe it can be done. I know it must be done.
C

Germany's Third Try

It will not be easy. But if not done, we face the
certainty that Germany will make a third try to conquer the

Bold Lendership Needed

The time has come to and piecemeal peacemaking and to

write the peace in Europe as an entirety. In this total peace$

making, America should move forward with a positive program of
bold leadership.

110

109
O

To the United Nations we can direct a converted

O

It is important that we think of the condition of

"Areenal of Democracy" to aid in establishing a new peaceful

the peoples involved in the WAT. What are the hopes and fears

economic equilibrium with increased numbers of jobs and steadily

of the people in Russia and England? In the countries completely

rising living standards for all.

overrun by the Germans, many have lost faith in government, in

Don't Overpromise

themselves -- in everything but force. Seared and acorohed,

We cannot do this by promising more than we oan deliver.

they do not know where their next meal is to come from; how

they will be able to make & living in the future. Not only

We can by organizing priorities of production for peace -- so
that our vast productive capacity is directed to where it will

physical but great psychological lesions will have to be healed

do the greatest good.

in the peacemaking.

In return, we need ask only that the terms of the

All these people look to the United States as the

peace square with the American conscience. Which is not to say

one great untouched reservoir of productive resources in the

that we - or anyone else - can have all we want.
0

entire world. We have no problem of physical reconstruction yet,
C

Strategy of Peacemaking

these people must be made to realize, we cannot do all they

Effective handling of this productive power assumes

would ask of us and survive ourselves. They must relearn selfreliance. With wisdom we can use our productive capacity to

a strategic, positive concept of the peacemaking, knowing what
we must have and what we are ready to yield on, where American

lead the way for these countries to help themselves 80 that

interests lie and how they can be harmonized with the interests

together we can implement one another's security.

of others. We must not find ourselves thrust into the position

To Russia we can show the means of making hereelf 00

of seeming to have no program other than to object to the

strong she need not fear Germany; and this while permitting her
to reduce military expenditures, leaving more for lifting the

proposals of others or, by failing to move decisively, to drift

living standards of her heroic people.
Expanding trade for Britain

to exercise leadership the peace will be shaped by other forces.

into complications. We must realize that unless we are prepared
A vacuum does not long remain unfilled.

To Britain we can show the way to expanding world
markets, steering her away from an economic war that could only

be disastrous to her and the world.

To unify all of the many peace problems into one whole,
6

integrated with the Pacific war, all governmental agencies dealing with these matters must be streamlined under a top group

PRECISION

TRADE

MARK

MICROSTATA MICROFILM

ROLL NO.

112
111
-6-

Germany do we want to end up with? Will the United Nations ask

-5&

for reparations which require the rebuilding of destroyed German
factories and which compel Germany to work at full-tilt, thue

acting as a focus of decision for recommendations to the President.
I speak of a council because with matters of such profound in-

again becoming highly industrialized and a menace to the world?
Or is German war-making industry to be curtailed and if so, what

portance, the many different viewpoints should be examined by
the best collective wisdom our nation can muster.

level of industrial capacity can safely be allowed her?
It is not enough to answer 've want an economically

No International Logrolling
Our peacemaking must rise above any and all questions

Germany. This program should be sufficiently specific -industry by industry -- so all of the occupying nations know

weak

of partican politics, above any pressure group or vested interest
-- whether on the right or left, at home or abroad -- above any
individual's desires for kudos or headlines.

they have agreed to the same thing. It should be put into
writing and made public. Until such a program is given common
acceptance, the basis for peace in Europe will be lacking.

We must be alert not to slip into the temptations of

C

international logrolling, of handling conferences as if they
were sere political conventions, of writing peace agreements as
if they were political platforms to mean different things to
different men. If the stakes of war are mortal, the stakes of

We Want A Sure Peace

O

Any effective approach to the German question, it
seens to me, must begin by recognizing one inescapable fact -there is no blinking a thorough overhauling of Germany's economy,

peacemaking are life-giving and they require methods and thoughts

for the simple reason that there is no "normaloy" to return to

of heroic stature, worthy of the stakes.

in Germany except that of war-making.

The German Problem

Whether one wants to be "nice" or "harsh" to Germany

At Yelta, an excellent beginning vas made by the major

makes no difference. War must be displaced as Germany's chief

powers on the German problem, covering in the main the more
immediate measures for Germany's occupation. The need now is

business.

to fill in the Yalta agreement in detail and to enlarge it to
settle definitely Germany's future.

be effective? will they diearn Germany in a way to bring unity

will the measures taken be thoroughgoing enough to

to the great powers? Those are the issues.
I have not thought in terms of a *hard or a "soft"

Is Germany to be occupied in four zones for a certain
period of time and then restored as a whole or is the occupation
O

to be the preliminary to a lasting dismemberment into lesser

parts? How long is the occupation to last? What kind of

6

peace. I seek a sure peace.

-B-

mind -- security against Germany - I believe we can

Therefore I recommend:

arrive at full understanding with the Boviets. If it

Bettle German's Future

is not possible, the sooner we know it, the better.

1. The earliest definite settlement of what is to be

All Agreements Public

done with Germany.

5. This agreement with Russia - as well as agreements
with other nations -- to be in writing and promptly

Break German Dominance

2. Economically, this settlement break once and for all

made public in full detail. This has been a People's
War. Let it be a People's Peace.

Germany's dominance of Europe. Her war-making

potential must be eliminated; many of her plants
and factories shifted East and West to friendly

General Staff for Peace
6. Tighten our peacemaking machinery here at home to

countries; all other heavy industry destroyed; the
C

Junkers estates broken up: her exporte and imports
strictly controlled; German assets and business

give us the effect of a General Staff for Peace,
charged with drawing up a master plan for the peaceO

making so America can exercise the leadership which

organizations all over the world rooted out.

is her heritage.

Priorities for Peace

Free Look-Bee in Europe

3. Through priorities for peace to the peoples Germany

7. America's role in dealing with Russia should be one
of tolerance and fairness. Cooperation is a two-way

tried to destroy, to build up the strength of the
United National in both Europe and overseas while

street. I would like to see this simple rule laid

reducing Germany's overall industrial and technical

down: what we permit the Ruesians to do, they

power. Only when such & new equilibrium is estab-

permit us to do. There should be free look-ass
for all the United Nations throughout Europe.

lished will it be safe to re-admit Germany to the
family of nations.

More Recognition for Russia

Full Boviet Agreement

8. The United States should use her offices to persuade
those nations who still refuse to recognize Boviet

4. That this German settlement be used as a basis for
comprehensive, all-embracing agreement with Russia
on the major peace probleme. By tackling immediately

and forthrightly the question uppermost in the Russian

6

Russia to do so.

TRADE MARK

MICROSTAT

MICROFILM

-100

O

to Statism -- so we can provide jobs for allt Shall we
settle the shooting war only to plunge into economic war?

Security above Reparations

9. Reparations should be fixed at the maximum within
Germany's capacity to Day, consistent with security

Haise Living Standards

13. Raising human standards all over the world must be a
bulwark of postwar economic policy. I would insert

and not to underout living standards by forcing exports.
Russia and other countries are entitled to labor

into all financial and economic arrangements we make,

reparations, particularly if they will include in
their labor battalions the principal war makers - the

a denunciation clause giving us the right to terminate
any agreement which results in lowering of wages or

Nazis, the Gestapo, Junkers, the General Staff,

lengthening of hours -- an undercutting of human

geopolitikers, war industrialists, war financiers -

standards.

leaving the ordinary peasants and workers.

Determined Preparedness

Long Occupation Vital

10. To must ready ourselves for a long occupation of

Germany -- as long as it takes for her spiritual
and economic rebirth.
Supreme European Council

11. Create a Supreme European Reconstruction Council to
coordinate the many aspects of European reconstruction
with the German settlement, reparations and other
problems.

Positive Foreign Economic Policy
12. Develop &_positive American foreign economic policy

bringing tariffs, monetary agreements, foreign credits,
cartels and all other economic matters into a coherent
whole which will meet this one decisive test -- how to
preserve the American free enterprise system in a

world drifting to cartelizations of various kinds -

0

14. Finally, we must #00 the peace through with speedy
ratification of the United National Organization and
with a determined enduring program of preparedness.

including universal military training, adequate stockpiles of strateric FAT materials. unflagging intensive
research, and the many other things indicated by A
modernized mobilization plan designed to convert our

nation in quickest order to the conditions of any
possible war in the future.
The logistics of war and the potentialities of yet unheard of weapone for destruction are such we must shorten the lag

in any future war mobilization or risk defeat.
Peace a Painful Process

There is no use talking about peace unless you are ready
to do what needs to be done to make it -- and maintain it. The

TRADE MARK MICROSTAT MICROFILM ROLL NO.

117

118

-12-11-

No falling for *dummy* contrivances. If necessary to make sure

program I have outlined will entail many painful adjustments. I

that these properties really change hands, I would set up a

cannot see how we can afford to do less.

corporation to finance such transfer.
Formula for Private Property

The cost of two German world ware -- an estimated 25

million killed; and millions more left maimed and crippled, home-

Enemy assets in each country should be used to make

less and emaciated; the twice-repeated devastation of Europe; the

restitution to nationals of that country for properties lost or

destruction of hundreds of billions of dollars in painfully

damaged in enemy countries. In the United States the value of

accumulated wealth; the wastes of four generations whose normal

German properties taken over by Congress would be pooled and from

lives have been dierupted by the enemy, with the aftermath of

this fund Americans with property in Germany or her satellites

this war still to roll over us and our children -- the terrible

would receive restitution. Anything left after these claims are

cost of total war demands that we now resolve to accept no terms

net would be turned into a common pool to pay for necessary German

but unconditional peace.

imports, with the balance going as reparations. This will make

After the last var, the victorious Allies acted as if
3

they were determined to forget the plainest lessons of the war.
In contrast, the German General Staff set about systematically to

C

remedy the mistakes they had made. As a result, the German war

machine for World War II was far more efficient, its mobilization
more ruthless, yet better organized. We know how such closer the
Germane came to winning; how much greater an effort in lives,
time and treasure was required to beat them.
Recover Secreted Assets

When defeat became certain, many of Germany's Junkers,

Nazi leaders and war industrialists sneaked abroad assets of every

type as reserves for that day in the future when they could try it
again. German business abroad has traditionally been an instrument
of economic and propagandistic war. These assets and organizations
C

should be rooted out and taken over -- everywhere. No focus-pocus.

possible de-industrializing German heavy industry even where
American or other foreign-owned plants are involved.

I want this to be a just peace -- not one of vengeance,
This program does not mean the destruction of the German people.

They would have to suffer a comparatively low living standard for
a time -- but nowhere as low as what they imposed upon enslaved
Europe and not much lower than the standards which they assumed,

to give Hitler and the General Staff the stuff to attempt world
enslavement.

Heavy Cost of War

The immediate, emergency problem of feeding Germany is

a most difficult one. Still it should not affect the program here
recommended. The heavy industries which need to be removed from
Germany produced gune and munitions. Consumer goods industries

- ROLL NO
120
119

-14-

know that Germany will be unable to go to war again.
Great care should be used in authorizing the rebuilding

-13-

0

of German industries, especially heavy industries. It will be
easy to permit many industries to revive on a basis of expediency
because of present urgent needs, and later find them reestablished

can be revived to a scale that will meet Germany's own domestic

needs. How much food will be available in Germany will depend in
great measure on the Germans themselves.

to stay.

There will be shortages all over the world -- even

The argument is raised that Germany is the industrial

here. With whom shall we share? who -- in justice -- should

giant of Europe and that de-industrializing her to any extent

get the highest priorities? The Germana or the peoples they

would have disastrous economic effects on the reat of Europe and

ravaged?

the whole world. There 10 no denying that Germany has dominated

United States of Europe

Europe economically. so she did militarily. Nor is there any
denying that this domination has been the ruin of Europe and the

Unchaining the German people from a war machine which

has consumed an easy one-half of Germany's total substance should

ease their adjustment. Eventually, purged and reorganized, and
C

0

left to that country's people? In Poland? Rumania? Hungary?

the Europe around her made strong, Germany will be able to take

Greece? Jugoslavia? Austria? Italy? France? Holland? Belgium?

her place with her neighbore.
The new equilibrium of industrial strength in Europe

Norway? Denmark In Germany herself?
Cave Age versus Prosperity

might take the form of a United States of Europe -- a United
States of Europe in which Germany would be one of several peaceful

To accept the view that the restoration of German

industrial dominance in Europe is inevitable -- something we can

equals, not the dominating war organizer.

do nothing about -- 10 to resign ourselves to the return to a
new cave age.- We might as well begin to put our factories

Piecement Controls Fail
A number of other proposals for less drastic control of

and plants underground.

Germany has been proposed -- as placing her heavy industry under

As a result of controlling Germany, great economic

international trusteeship or limiting the control to a few socalled *key industries." As temporary aids to the occupation
authorities, such proposals have some morit. They fail completely
to provide a basis for lasting peace. Only by permanently reducing
Germany's over-all war-making potential in relation to Russia,
Britain, the rest of Europe and the overseas nations can we

world. Where has German economic influence been felt and smiles

benefits will flow to all of the United National It will open
t

expanded industrial opportunities to them and agricultural and
other products which Germany will not use, will be taken up by

TRADE MARK

MICROSTATI

MICROFILM

BOLL NO.

122

121
-16-15-

nation which has undergone such experiences is bound to be
seourity-conscious to a very high degree.

other countries. Britain, which after the war will be confronted

To illustrate the point, I quote from the introduction

with a grave need for increasing the volume of her exports to

to a book I wrote at the close of the last var, "The Making of

pay for food and raw material imports, will fall heir to many
former German (and Japanese) markets. Instead of trading

the Reparations and Economic Sections of the Treaty",
"From wantonly devastated France had not departed
the fear and inherent hatred of the enemy who but
a few months before had pierced almost to her heart
the traditional enemy who had brought upon her the

with Germany, the United Nations will have more trade with one

another. More jobs and more business will permit the United

bitter days of 1870. With the world war already
history, the shadow of the Prussian still hung
over the Republic. France was fixed in her deter-

National to pay part of the war's costs out of higher wages,

or or both
greater was

mination to erect an impregnable wall. economic

increased profite and greater tax revenues.
For at least five and possibly seven years there

invasion. geographical, This, in against or lesser future measure German

the attitude of the other Allies.

will be an enormous over-consuming demand for everything -

raw materials, manufactured goods, food, clothing, housing,

transportation, machinery and capital. If the peace soon to
be written permits sen to look forward to the future with hope,
not fear, prosperity of unpredictable length lies before us.

$

Allay Soviet Fears
How to insure our working with Soviet Russia 10 a

:

If "Russia" were substituted for "France", this
quotation would apply equally well to the present situation
in Europe. Nor would France's experience after Versailles
lessen Russia's concern over her security. At Versailles,
France did not obtain her "impregnable wall". Instead she was
persuaded to place her reliance on the League of Nations, which

difficult problem, which has been preplexing many people of

we in the United States, who had put it forth, then refused to

late. I have tried to ask myself what would I think if I were

join. Is it then 00 surprising to find the Russians shying
from placing their first reliance for the security they are

a Ruesian?

Uppermost in my mind - if I were a Ruesian - would
be the almost infinite suffering endured from the Germans during

the past thirty years. In World Tar I, Western Russia use
overrun and looted. In this war Russia was twice ravaged, as
the Germane went in and again as the Germane case out. Any
O

We Failed the League

determined to gain on peace machinery still unteated and whose

predecessor failed? Is it so surprising to find Russia insisting on what her officials regard as more realistic security
measures?

The occupation of Germany will be difficult enough at
best. In the absence of common policy as to the long-range

PRECISION

TRADE MARK

MICROSTAT

MICROFILM

ROLL NO.

124

123
-18I

-17-

changes in our country as we grew from thirteen colonies on

the Atlantic. When we recall that it was nearly ten years
after the Revolution was won, before our thirteen states

fate of Germany, the Soviets are bound to question Allied moves

as dictated by a desire to rebuild Germany into a buffer against
Russia. In turn, the Western Democracies will suspect Russia

could agree on a Constitution for ourselves alone, I an not

of seeking to communize Germany. The Germans can be expected

dismayed that more was not done at San Francisco.

to resort to every imaginable trick to foment discord among the

Must Understand Boviete

Relations with the Russians may continue difficult

four occupying nations. They will play one nation against the

for a time, not only in Europe but on other fronts. Again I

others, one zone against the next. hoping to break the common

point out, we should not be surprised that Soviet suspicions
have survived our fighting together against the common enemy.

unity of the Allies, so controls will be permitted to lapse,
giving her a chance to recoup, as after Versmilles.

When one reviews recent world history, one finds considerable

Support Eisenhower

cause for suspicion between Russia and the Western Democracies --

General Eisenhower, in my judgment, is ideal to head

on both sides. After the Red Revolt in 1917, the Tearist powers
cade three major attempts to reconquer Russia, efforts largely

I

our occupation in Germany. His deputy Lt. Gen. Lucius Clay is
another excellent man, with whose work I an quite familiar.

armed and supplied by the British and French. The deepest

have every confidence they will handle themselves effectively,
with firmness and tact. Recently General Eisenhower described

significance of the Munich pact was the exclusion of Russia.

It is not that all of Russia's acts were justified but it is

himself 0.8 the "executor not policy-maker" in Germany. Give

important that we understand the Russian point of view.

him an agreed upon policy. Don't handicap him.
While on the subject of Russia, I would like to add

Ruesia Must Cooperate Too

On the Russian side there must be equally sincere

this general observation I have no fear of the spread of
Bolahevism in the United States -- jobs and higher living
standards are the proven anti-toxine. I have stressed the

efforts to understand us. The Russiana must appreciate that

refusal of Boviet authorities to permit free access to the
countries of Eastern Europe has a most adverse effect on American

importance of lifting wage and hour standards all over the

world. It in crucial if only to keep to a minimum the disruptive effects of the inflation already loose in the world.
And as living standards within Russia improve, the atmosphere
C

there should lighten, and some practices which strike us unfavor-

ably are likely to disappear. I an mindful of the tremendous

publie opinion and will jeopardize any program for the reconstruction of these countries. Another cause of suspicion has
1

been a tendency for the Ruesians to act unilaterally in many
countries. Such actions irritate us less because of our interests

PRECISION

TRADE MARK

MICROSTATA

MICROFILM

ROLL NO.

125

126

-19-20-

0

in those countries than because we feel a moral responsibility

Confusion about Cartela

to those peoples which we cannot shirk. On our part we must

This Committee has asked that I discuss cartels.

shift our peacemaking machinery into high gear and avoid delays

First, as I see it, we should determine just what we mean by
a cartel. The Germane employed cartels as an instrument of

which may prompt unilateral action.
The pledged word kept is the best antidote to sus-

economic warfare, which was what they did with every aspect of

picion. Above everything else, there must be the most meticulous
observance on our part of all our obligations with the Soviets,

the German economy. Soviet Russia is an example of a completely

cartelized state -- only one buyer, only one seller -- the

written or implied, while insisting firmly that they do the

government. Within the British Empire, trade preferences or
sterling bloc restrictions can accomplish the same effects as

same. By doing our homework before going to conferences, agreements can be free of ambiguity.

cartels; so can import and export quotas, compensatory pay-

Before the war, business interests in this country

ments, currency depreciations, wage reductions or a lengthening

acquired the greatest respect for the manner in which Russia
0

0

kept all contracts and observed all credit arrangements. Our
simiration has been increased by her incomparable military

established for the purpose of advantage to those engaged in
then but these advantages can be obtained in many different ways.

accomplishments during the war. It would be tragic for the
Boviet at this point to permit doubts of their motives to mar
this splendid record -- tragic for both them and us -- since
it would react against all who want peace.

Are all cartels bad? Or are there good cartele as
well? Is all competition good, no matter how destructive in
result? Shall we return to the unrestricted jungle law of tooth
and fang? We have legislated for both sides of the argument.

There are many detailed aspects of German de-militarize-

We have anti-trust laws and we have laws and commissions which

tion and reparations not dealt with here which can be covered

seek to restrain competitive practice.

in the discussion. The public statements of Messrs. Pawley and

Some Competition Bad

Lubin, our reparations commissioners, indicate a clear grasp
of the issues. Whether the reparations agreement will have to

be ratified by the Senate, I do not know. If so, the Russians
and British should be told that now.

of hours. The last two are more disintegrating. Cartels are

In stabilizing farm prices, our government year after
year approves cartel-like practices and I think you gentlemen

will agree with me that it is a good thing. I have always felt
0

that in any area where competition becomes so disruptive as to

(

hurt the general good, the government was duty-bound to correct

RECISION

TRADE MARK

MICROSTATI MICROFILM

ROLL NO

-22-

127

Registration Not Enough

-21-

Will the State Department or any other agency that is

O

set up to handle such registrations know which agreements are

the worst effects of unbridled competition.
With some ray materials not produced in this country,

in the national economic interest and which are not? Do we
have enough of a positive foreign economic policy in this

we may find cartels forcing us to pay higher prices. Should

country?

our government use its influence to 000 that our manufacturers
are not squeezed, particularly where materials vital to our

This question goes beyond patent matters. Are

defense are involved? We can protect ourselves somewhat by

American businessmen to be encouraged to invest abroad and to

keeping in reserve our stocks of these strategic materials.

widen their exports and are their interests to be protected by

Patenta Mean Kooa-How

the government or disregarded? What if we grant government

credite to a country like Boviet Russia? What becomes of little

Foremost in the minds of the Committee, I gather, 10
the relationship between German, other foreign and American

O

another government? Under the Bretton Woods agreements are

you will find that Americans have improved upon the processes

loans to be made to countries which may evade the agreements
through cartel-like methods?

C

which they obtained through these negotiations. Should the
Americans not have bought those patental If that 10 the desired

Bounded Policy Needed

I do not want to seen to leave you in confusion on

policy, it can be put into effect simply by prohibiting the use
of those patent processes in America. This would force the

this matter What I as trying to get across is that there

things manufactured under those patents to be produced outside

has been too such discussion of this question without regard to
the part it plays in the broader picture of the need for a

of the United States without benefit to our economy or increas-

coherent American foreign economic policy, which we still lack.
Every report from abroad indicates the different

ing our own know-how.

One proposal is that all international business

nations of the world are becoming more -- not less -- cartelized --

agreements entered into by American firms be registered with

a business act taken in good faith in one year could be accused
$

business if it has to face an import and export monopoly of

manufacturers in the use of patents. In most instances, I think

the government, eay, the State Department Any businessman
should welcome such A las since it would free him of danger that

against him years later, possibly under changed international
conditions.

128

cartelized in many different forms, especially as to foreign

:

trade. How free will the economy of any European country be

after this war? What if certain industries in these countries

129
-23-

are nationalized? What then becomes their position and how

do we adjust ours to it? Suppose a United Nations registration
of all cartels were suggested? What would that cover?
Keep our Leadership

In making my recommendations, I have sought only to

stimulate action so that we will exercise the leadership which
is ours. I would not want to see that leadership which we have
held for 150 years now lost to others or wasted through disuse.
A vastly better world lies ahead if we use the intelligence and gifts of nature that have been bestowed upon us.
We can live alone. Be sure of that. Let us then encourage
0

and help those who live with us to live our way -- not to copy
our way in detail -- but to stand with us on the broad base of
expanding human dignity and freedom.

SPECIAL

130

TREASURY DEPARTMENT

INTER OFFICE COMMUNICATION

o

INTER OFFICE COMMUNICATION

DATE 6/25/45

DATE

TO

TO

Secretary Morgenthau
FROM

FROM

E. B. Fussell

Bretton Woods

on this He also is sending us some

1,700
80

copies of the utile

50

Church Leaders

124
220

219

71

first is in chicago

128
7

Negro Organizations

66

National Committee Members

78
30

Total

7,015

a

O

12 copies

116

8

Selected Individuals
Professional Organizations
Men's National Organizations
Women's National Organizations
Youth Organizations
Patriotic Organizations
Labor Organizations

6

State Bankers Associations

Religious Organizations
Veterana' Organizations

Fussell is sending MO a memo

100

12

Federal Reserve Banks

Secretary Morgenthau

That was the original idea and there was discussion
that they wouldn't. I would like to find some out.

4.000

Business A Industry Committee for

Mrs. Klots

Patman's statement to each County Chairman in War Bonds?

(Approximate figures)
War Finance State Chairmen and State
Publicity Men
College Presidents

June 25,1945

I want to find out from Fussell - did he send Wright

Congressman Wright Patman's "Tribute to Hon. Henry

Morgenthau, Jr. was mailed to the following:
War Finance County Chairmen

131

TREASURY DEPARTMENT

SPECIAL

132

TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION

DATE June 25,1945

TO

FROM

Mrs. Klotz
Secretary Morgenthau

will you find out the list of persons to whom the
statement by Congressman Wright Patman was mailed? If

there were any left over, I would like to mail a few to
friends. I surely want to mail it to my own immediate
family. Please speak to me about it. 1 think the person
who knows about it is Ed Fussell.

MICROFILM

TRADE MARK

ROLL

NO.

133
(Not printed of Government expense)

Congressional Record

PROCEEDINGS AND DEBATES OF THE
less republica relatively

Let no one think of the present Secre-

largely due to

Treasury

the

of

Idealist

Ubress

Intent

the imminence of war in Europe
to might become

endangering the United
demonstrated as early as

or REPRESENTATIVE

Wednesday June . 1345

In that year the impending de-

PATMAN Mr. Chairman,
direction of the Bretton Woods
Mr.

of the French franc held

sponsible for this opportunity to build
soldd economic foundation for world

of ETAYS trouble If the devalua.
should have set off . new International-exchange war. the French
structure

might

that

Job

his

military

Henry Margenthesi Jr. the Socretary of

half

have been to march

the United States Treasury He has

but

the United States should prepared
meet any eventualities

largely due Secretary Mtr-

tooled

the

obliga-

by Treasury Department
attack
country

this

tripartitie

mids

mination of the policy of International

customary
rupply

Belgium

largets
the

of

rapidly were intensitied by
the fact that Germany girding for was
of segrension Insugurated virtual

nomic reign of terror. using restrictive

economic

and

political could have been develcoed along this moorlary cooperation, the Powers mish well
been curted and this terrible war

prevented Unhappils, there was

established trade relations and

enamic cooperation must underline politi-

be possible to free
volume

the

nations

the

world

pan-

urent

military bases for war against the
United States

Some may say that such reasoning

much In the category of what mists
But there can certainly be no
disputine the solid evidence of facts and
firstes

cal cooperation and must provide solid
foundation for any enduring place He
awaited the prepitious time for bringing
of

early that through International

and

their

able to establish in our own hemi-

term

matter

war

financrecord

to

large of war materials
Secretary Margenthan realized very

Chita
meet

and Hiller and Munolini might have

machinery

Sicretary Margenthau remained however, constant in his knowledge that

and discriminatory exchange controls

Mar-

realistic

problems were launched Bat
for these programs Junan micht have
crushed China in relatively short order

us

were unsble to maintain the value of

their world trade declined

which

to

that there had been the

Countries

countries

American

stabilization

The decade of the earth to

Secretary

of

helping

of

rated under Becretary

result of the depression was period

day

that
the

and

Pacific

morriary and financial cooperation
the Treasury Department image-

Atlantic

the

to

.

Baland

and

require

the

of

europeales

the

Poland

on

critical

what

=

before

of The purpose of

The Bretton Woods program for the
International Bank and Fund is the cut-

of

1830's

place

their

was largely due to investigations

the

exerction

latter

fac-

advance

historic
AUGHS

the States Orrat Britain

during his decumbercy than any
Sceretary of the Treasury with

The

per-

aircraft

well

Regurrit's

would

This crasming that

with exception: be has done

mounting

American

on

American

that

with Bille or

is the history of the United

disorder.

United

the

serve

the thought be could take France

held that position longer than any other

serious

goals

realiza

deep

to years preceding the outbreak of
World War IT was outstanding in his
recognition of the necessity of that

by riots and Hiller even with

and world progress I refer to

starry-eyed
distant

States of America and its people

weakened

be

would complete without
to the who is primarily

only

record

Socretary Morgenthan's keep

HON WRIGHT PATMAN

upon

in

SPETCH

of

Secretary of the Treasury

is

Tribute to Hos. Heary Margentian, Jr.

CONGRESS, FIRST SESSION

79th

as

United States
of America

.

CISION

has

point.

uned

gether and the Bretton Woods Confercame as the recult of his untiring
efforts and unflagging

10a advice has followed

He

TRADE MARK

MC
CONGRESSIONAL RECORD

2

CISION

to the letter. It is to his credit that he
has used sound financing at all times
and that he has opposed such plans
the forgiveness of $8,500,000,000 of taxes
due. when Income taxes were placed

basis It is unfortunate
that In this matter . past Congress failed

to heed his advice But his leadership

today. And but for the start that was

from dides their daily the healthily and with

made long before war clouds hung over
the world this Nation would never have

who - What - or to help Our plan

been able to distribute its bonds to widely

to make effective generally the economic refeguards that have been estab.
listed

is due to his careful planning that the
great expansion in the Federal debt has
been achieved with stable Interest rates

Inc every war loan to date will : confident be matched is the Might

far lower than have ever been achieved in

any previous war. If you who hear me
with think back to the 416-percent rate
which prevailed during World War I and

contract this with the 1%-percent rate
prevailing today. yes will need to forthen argument on this point
As . result this country is saving spproximately $4,000,000,000 . year.

This fact is not merely . tribute to See-

petary Margenthes's was record. IN
names about as the result of careful
planning predent management of the
Nation's fiscal affairs in time of peace,
plus intelligent development of new ideas

for the benetit of the Government and
- people

Arrangements for was financing are
case in point. Back in 1935 when United
States Bastnes bonds were first offered to

the public, there was no threat of war.
But it seemed to Secretary Morgenthau

that a would be . good thing for the
Government to have the national debt

distributed as widely as possible and
that = would be . good thing for the
people to encourage their thrift, and
their interest in National Government
bondholders

We called them "Baby bonds then
But the Baby bends of 1935 and succeed

ing years ETTN into the Defense bonds
that enabled this country to finance HA
preparedora program and after December 1. 1341, they became the was bonds

that are held by 85,000,000 Americans
650425-12138

to other securities attractive to - classes
of Investors is an attempt to states this
question 1 FBX think of no other single
way in white - many people - become
partners of their Government is lacing this

The people of this country recognize
what has item done and what is being
done And their record in

has been preeminent at all times And

Dry day. letters - to the from people

Beventh Drive, now is progress

The people know Sicretary Morgenthan is right not only because they see
the results of his policies, but because
this know No philosophy 21 is the philearphy of Thomas Jufferson. of Andrew
Jackson of Alreham Lincoln of Frank-

in Recervelt of Harry Truman Them
men knew the people They trusted the
reasoned informed judgement of the pro-

ple And so does Henry Morgenthan It

1 hardly need to remind you of the
presture that was to evident. early to
the war. for system of compulsory say-

Ings But Secretary Morgenthau was
adamas upon this large He wanted
people to Invest their savings in Governbonds not under compulsion but of

their free will-breases they wanted to

emergency

Some people in this country today are
assing another side of Socretary Morgen-

than a is extite is keeping with to
trust in the people as . whole that be
should be shocked at the discovery of

mainfactors If in quite in keeping with
his determination to protect the Interette of the millions of mm in uniform.
the $3,000.00 individual tampayers and
the 85,000.00 bendholders that he has
declared unrelenting was upon the black
marketeers, the rocksterry and the other

war profiters who see is this terrible
conflict only as opportunity to AMAS
personal wealth and dodge their taxes
: predict stem Justice for these TAX
evaders, because I know the spirit that
animates Sceretary Morgenthau and I
know. too what delight be takes in administrative efficiency. in accomplishing

results whatever he undertakes

a in perhaps . long cry from the
tripartite accord of 1134 to the campaign

win the war and because United States
bonds were the world's best and states

against tax eventon and some of my

investment And Secretary Meegen-

treaters may say there is title connection between war bond campaigns and

than's reasoning on this use is to NO.
alficant of the philosophy guiding all his
actions that I quote from what he said

back in 1941 when be first asked an.
thoristics from Congress to borrow from

Bretton Woods But wast to point out
that the record of . man provides the
best yardstick to measure his stature

I point to the record of 0:cretary

the protect public through a deferent

Morgenthes because a is an outstand-

trues bood campaign The Secretary
said:

Inc recent Me has foresors developmenta on occasion after occusion He

There FEDER is the country today - whitening dasire part of meatly OTHER
man women child to make acces direct

has seted promptly and effectively He
NEW long BED. the seconity for . stable
economic order if the world WM to enjoy

and tangible cistribution to the national

peace Today we have an opportunity
to take advantage of his foresight his

from We caghs them - of
that which

planning his window

2135

134

25 June 1945

June 25, 1945

Secretary Morgenthau
Mr. Luxford

Dear Ed:

The San Francisco Conference is
triumph. You handled some

difficult situations
agreat
extremely
great and with
intelligence, patience good
humor.

The result is a very hopeful out-

You wanted me to remind you that in our publicity

relating to the Elliott Roosevelt matter we should
emphasize that nothing in Hartford's return disclosed
Elliott Roosevelt's name and that, therefore, the

look for organized and purposeful peace.

Treasury had no notice whatever of Elliott Roosevelt's

I give you my most cordial congratulations.
Sincerely,

part. This, to my mind, is of key importance in

(Signed) Heart

C

demonstrating that the Treasury was not soft-pedaling

the matter because of Elliott Roosevelt's interest.

The Honorable Edward R. Stettinius

Secretary of State

HEG/mah

AFL:ehb

25/6/45

RECISION

TRADE MARK

MICROSTATA

MICROFILM

ROLL NO.

131
136

June 25,1945
June 25,1945
Mr. Gamble
John Pehle

Secretary Morgenthau

Have a look at the letter which came in last week
Chester Bowles in which he talks about cooperation

on between the Treasury and OPA. and

let whether there is anything in be

from enforcements me know I it should should Read it

particularly familiar with, also whether answer

It. Get the letter from Mrs. Klots. the uther had been

Secretary Morgenthau

These last two cooling machines which you had sent
down to New York for ne would you please Inquire whether

they bring in fresh air from the outside or do they simply
cool the air in the FOOD and recirculate it? The machines
give off a peculiar odor and I had a very bad headache from
then and I wonder If that is from the machine because they
don't bring in fresh air from the outside. I would appreciate
It If you could get to that information today. Thank you.
to
Heyp
The machine is called a Monarch. Omable talked
1/2545

RPRECISION

TRADE MAR

MICROSTAT

MICROFILM

138

June 25,1945

Mr. Gamble

Secretary Morgenthau

T have been pleased to note that the Kansas City Star

is carrying a lot more news on ar Bonds. I want to

compliment you and whoever your representative is in
Kansas City on the good job they are doing now. File

ROLL NO

TRADE MARK MICOMO MM

ROLL NO.

140

PLEASE TRANSMIT BY WIRE.

June 25, 1945

139
Sent to Mr. Latta at the White House

transmittal to the President

MESSAGE FOR THE PRESIDENT:

Pleased to inform you that we are announcing
tonight for Tuesday morning's papers that we have sold

over $20 billion of War Bonds so far.
With kind regards,
Henry Morgenthau, Jr.

$

in

RECISION

MICROSTAT

G.U.S.PAT.ORK MICROFILM

ROLL NO

TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION

DATE June 25, 1945

Secretary Morgenthau

TO

FROM

Mr. Gaston

I attach a draft of a letter to Forrestal, which is

not to be mailed but delivered personally by Waesche. The
bill sets a post-war authorized strength celling of 3,500
officers, 1,400 warrants and 30,000 enlisted men, which
will enable Coast Guard headquarters to go ahead and make

on pro-

some plans for reduction and for taking on the enlarged
work of air-sea rescue and aids to navigation, princIpally
Loran stations, a new type of navigational aid. The actual
of the Coast Guard in personnel in any year will
of strength course depend appropriations rather than on this
posed authorization.

Waesche WIS over discussing the matter with me today.

The air-ses rescue work will undoubtedly attain very considerable importance. Present ideas are to combine it with
weather observation. Thirteen weather observation stations
are now being maintained, which require something like

4

fifty ships. Waesche's idea is to use the Liberty type

of ship and to equip each one with one or more helicopters.
They now have 8 considerable number of Catalina flying boats
taken over from the Navy for use in rescues from shore and

in fact they are taking pilots under training out of the

water pretty frequently along the coast.

I expect to discuss soon with Clayton and Waesche the
possibility that Coast Guard may be called upon to take
over some international rescue and navigational aid functions.
If this should develop Coast Guard would probably need more

men than are provided for in the bill attached, but It will
be a good idea to get something moving.

0

142

143

June 26, 1945.
The Menerable

JUN19 1945

The Secretary of the Treasury

My dear Mr. Secretary:

My dear Mr. Secretary:

I have received your letter of June 19 with
which were transmitted a copy of a proposed bill
"to establish the permanent military strength of
the Coast Guard and for other purposes and copies
of proposed letters of transmittal to Congress.
I

become

There are transmitted herewith a copy of a proposed bill "To establish
the permanent military strength of the Coast Guard and for other pur-

posse", together with copies of proposed letters of transaltial to
Congress explaining the pargese of the proposed bill.

note that it is provided that the bill shall
effective on the date of the termination

of

the present wars and that the enlarged personnel to
be authorised (a total of 3500 commissioned officers,
1,400 chief warrant and warrant officers and 30,000
enlisted men) is based on personnel requirements
to carry out augmented post-war functions, including

air-sea rescue, operation of direction finder stations,
and operation of new electronic aids to navigation.
The proposed bill has ay complete approval and
Treasury Department will be glad to cooperate with
the
you in any way you may desire to forward Its enactment.

Your courtesy in submitting the bill for our
consideration is greatly appreciated.
Sincerely,
(Signed H.

The proposed bill provides that is shall be effective on the date of
the termination of the present ware. Since at that time or shortly
thereafter it is expected that the Coast Guard will be returned to the
jurisdiction of the Treasury Department the bill is of primary outcom
to the Treasury Department, It is proposed at this time .. that proper
planning can be cade for the peace time activities of the Coast Guard,

In this connection, attention is Levited to the Report of Board of

Visitors of the Coast Guard Academy co posed of Representative Gordon
Canfield, Chairman, and Sensions George L. Radeliffe, Edward V. Robertson, W. Lee O'Daniel, and Thomas C. Hart, and Representatives Joseph E.
Talbet, Ralph Daughten, Eugeno J. Keogh, Chase G. Foodbouse, and Oliver

F. Meichel, members, and Captain Ellis Reed-Hill, USCG, Secretary, from
which the following is quoted:
"The board understands that Coast Guard headquarters
has developed a postear plan which has been approved by
the Navy subject to such changes as subsequent stands may

dictate. It in recommended that legislation necessary to

effectuate these postwar plans with respect to personnel
and functions should be introduced and enacted at the
earliest possible date." (91 Congressional Record, June
12, 1945, P.

The authorised strength of the Coast Guard provided in the proposed bill
is based on personnel requirements to carry out the functions to be
assigned pursuant to the post ver-clans for the Coast Guard is addition
to its normal peace time functions. These include air-sea reseue, opera-

tion of direction finder stations, and operation of new electronic aids

The honorable

The Secretary of the Navy

to navigation, functions which are considered necessary to the post-war
naval and commercial interests of the United States.

PRECISION

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0-1-014

The Honorable

The Secretary of the Treasury
The Hoperable

on the proposed legislation are requested. advice The proposal se to

Your not views be submitted to the Bureau of the Budget for President until

will its relationship to the legislative program of to the recurs prompt action

The President of the legate
sirs

There is transmitted berewith . proposed bill "To catablish the
your on this answer proposed is received. bill an early Since reply it is would desired be greatly appreciated.

Very truly yours,
61

damental

permanent military strength of the Cosat Guard and for other purposes".

The purpose of the bill is to Ga the pomeone peace time strength
of the Coast Buard. It provides authorization for thirty five handred

commissioned officers, fourteen hundred shief warrant and warrant officers,

and with thousand enlisted sen. (1 though 11 is provided in action ?

of the proposed will that it will not before effective will als neathe

after the termination of the present ware, 11 is most espential that 11
be anothed at this time - that preper planning can be made for the
peace time activities of the Cosat Guard. It is necessary now to plan

the curriculum as the Coses Cuard and schedule admissions of
cadet. at the - to provide the trained officers wis will perform
the est duties of the Goost Guard. It is also desirable to effect

to

. planned transfer of Lise person ant officers and - of the service

Incl.

the normal peods Line duties of the Cost Guard, transfer 14 cesable

servitting reserve personal to perform duties incident to the remaining
special wartine functions of the Conet Guard during the period when such

functions are bein teminated.

The limite on the personent military strength of the Cosat Guard established by the proposed bill have been determined on the boats of

detailed plane for the post-sur duties of the Goost Guard. These dities
include the preser pende time functions of the Coast Geard sush as
minitime law enforcement, protection of the autome revenues, protection

of life and property from Us perila of the see, contucting the Here
Allantie iss potrol, and establishing and maintaining al da to navigation.
The plans also provide for certain applifiestion of these prower functions
and for the undertaking of new related functions wide will be performed
by the Const Guard. These include air-oss resour, operation of direction

(Inder stations, and operation of new electronic side to navigation.

The performance of these functions by the Coast Guard is provided for
denabilization and post-war plans for the peace time functions of the

Coast Guard and are related to its general duty to maintain . state of
military readiness to operate with the Navey in Line of war. These

-2Return to 6-7
CONG (L)014

by

PRECISION

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(

(L)

CG-014

functions are considered - to Use post-war navel and commercial
interests of the United tates.

Authority is provided by the proposed bill to appoint commissioned
officers is the Coast Chard fre among the chief warrant and warrant
officere and enlisted nen of the regular Coast Guard, temporary
commissioned
Dureas
former
the
Guard
Coast
inserve, namers
the
officers, waters

MEMORANDOM TO ASSISTANT SECURITARY GASTON

of

Subje Proposed legialation to establish the post-war military

of

of Marine Inspection and Navigation, and licensed office of the United
tates Earthant Marine. It is provided that persons comulasioned from
these sources must be found by the cerebry of the Treasury to be

strength of the Coast Guard

1.

mentally, sorally, professionally, and pigmienlly malified. they will be
appointed in grades appropriate to their qualifiestions and may be assigned

to general or special duty. It is intended to commission caalified persons
free these sources to fill the officer needs of the Cosat Guard. It is not

intended, however, immediately to fill the entire authorised complement

the secretary of the Treasury, with its enclosures consisting of
draft of processed bill To establish the permanent military strength
of the Coast Guard, and for other purposes" and copies of letters of
transmittal.

by such appointments. The complement will be medially filled over from
.

period of years by such appointments and by the regular graduates

2.

the Cost Guard leader. Until such Line, 11 is planned . retain

sufficient subjer of of flaure of the Reserve on assive duty to carry
outthe
during
authorised

the

functions

of

the

Coast

Guard.

Except

possibly

demobilization period, the number of much serve officers on active duty
along with the regular and temporary officers of the Cost Guard will DIVER

exceed the total complement authorised by the processed will.

A

is will be appreciated if you will lay the bill before the Senate.

I - forwarding herewith by special assenger . letter dated

19 June, 1945, from Mr. Forrestal, Secretary of the Kavy, addressed to

This processed legislation is of primary interest to the Treasury

Department and, as reading of Mr. Forrestal's letter and its enclosures
will show, it is important that prompt action be taken by the Treasury
Department in replying to Mr. Forrestal's commission.
After you have read the letter and enclosures, please hold then
on your desk and I will come over and discuss the matter with you in

3.

. day or so.

similar bill is being uncomitted to Line House of Representatives.
R.R. KAESCHE

Very truly yours,

Igel.

/

Return to 8-7

Return to 8-7

Lt.Courtr. Ideurry

Coast Guard a Legal Div.

Killimb

I

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-

NOTE

Strength as of Kay 31, 1945

TO

Commissioned Officers, 11,040
Chief Warrant and

Warrant Officers
Xalisted nen

1,633
150.240

Total 171,612
Strength as of November 1. 1941

Commissioned Officers,
Chief Warrant and

Varrant Officers
Inlisted nen
Total

d

793

910

22.234
23,937

RECISION

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A BILL
To establish the partment military streagth of the Goaat Guard,
and for other purposes.
be 10 enected by the Senate and House of Representatives of the

Stated States of America in Controlla That the total
of regular commissioned officers (both permanent and temporary) on

the active list of the Coast Guard (exclusive of thom holding a runk
by virtue of office, of ohief warrant officere and of additional members
as authorised by 1 shall not expood three thousand five hundred,
distributed in grades in such propertions as the Secretary of the
Treasury determines the moda of the Coast Guard require, but mishia
the proportion provided by law.
SEC. 2(a) The President is hereby authorised to appoint, by and
with the advice and consent of the Senate, commLesioned officezo in the

Coast Guard in grades appropriate to Unip qualifications, as determined

by the Secretary of the Treasury, from (1) Chief warrant and warrant officere and ellisted
new of the regular Coast Guards

(2) Temperary cominstoned officere)
(3) Members of the Coast Guard Reserves

(4) Members of the former Bureau of MarLee Impostion
and Nevigation, Department of Commerce, who were

trensforred to the Coast Guard by Executive Order
No. 9083, dated February 28, 1962 (7 P.R. 1609),
as mendedy and

2"

(5) Licensed officers of the United States Merchant
Karine

as the needa of the Coast Guard say require, and as are found by the

Secretary M be mentally, morally, professionally, and plignaically qualified.
officers commissioned under this section shall be commissioned for general

duty or special duty in accordance with their qualifiestions. A person
commissioned to perform special duty in accordance with Mia qualifications

shall be examined for promotion only with reapeat to those qualifications
whi eh pertain to his specialty.
(b) Each appointee under tide section shall take precedence

with other officers commissioned in his grade under this section as the
Secretary may determine, and with other officers in his grade in accordance
with Line date of Ms commission in such grade in the regular Coast Guard.

ELC. 3 The total number of regular chief warrant and warrant
officers (both permanent and temporary) on the native list of the Coast
Guard shall not exceed fourteen hundred.

sec. 4(a) The President is hereby authorised to appoint, by and
with the advice and consent of the Senate, as chief warrent officers of
the Coast Guard such of the persona included in subsection (a) of section
2 as the needs of the Coast Guard may require and as the Secretary finda

to be mentally, morally, professionally and physically qualified.
(b) Under such regulations as he may isaue, the Secretary is
hereby authorised to appoint na warrant officers of the Coast Guard such

of the persons instuded in subsection (a) of section 2 as the needs of

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the Coast Guard may require.

(e) Each appointee under this section shall take
precedence with ohief warrant and warrant officers appointed under this
section as the Secretary may determine, and with other chief warrant
and warrant officers in accordance with the date of Id.e commission or
warrant in the regular Coast Guard.

SEC. 5 The total number of enlisted persons (both regular and
temporary) on the active list of the Coast Quard shall not expeed thirty
thousand.

SEC. 6 Until each Line as the number of commissioned officers,

eldet warrant officers, warrant officers, and enlisted men (both regular
and temporary) of the Const Guard shall be adequate to meet the needs of
the service, the Coast Guard is authorised to employ on setive duty
personnel of the Coast Guard Reserve in such numbers that the totals of

commissioned officers, ohief warrant and warrant officers, and enlisted
ml, regular, temporary, and reserve, will not exceed the totals authorised
by this Act.

SEC. 7 This Act shall not take effect until eix months after the
termination of the HAFF in which the United States in DOW engaged as
proclaimed by the President or such earlier termination date AS the
Congress, by consument resolution, may fixs Provided, That the permanent
military strength of the Coast Guard herein established may be temporarily
exceeded for the period required for the release of Coast Guard personal

- Neval duty and their demobilisation 11 not completed by the effective
date of Lide att.

153

153,
152
o
Stateof New York

KERNAN AND KERNAN
COUNSELORS AT LAW

Court of Appeals

THOMAS

UTICA,N.Y Thursday

CHARLES PHILLIPS

36 Test 44th Street

Iring Likman

New York 18

My Dear day dohn
Referring t S telethin will of

June 25th, 1945

Personal and Private
The Honorable Henry Morgenthau, Jr.,

yesterday, v t by 121 The drom, about

Treasury Department,
Washington, D.C.

when from we abouting send at m the - condition

office the Secretary,
Dear Henry,

I enclose a letter I have received
0

O

cannel

The question a + Comego is different + and

from Mr. Kernan. I an sorry that I do not know of
any person whom I could recommend with any degree

have 7 requested Lif has not her

of confidence.

close to affair need juliy It my had

Sisale joins me in love to Sisale and

There, however, when v my TLT VTHL his

yourself.

te hane and legal a. gun any task, 4 would

Affectionately,

any

d has what it

& Then words There would the has divided
Into my were regards as always
0

Sincerely

traine Haman

copy

154

Kernan and Kernan

Utica, N. Y.

Counselore at Law

Thursday

My dear Judge Lehnan:

Referring to our telephone talk of yesterday,
I neglected to say that the person, about whom we were
speaking, served at one time as Corporation Counsel.

The question as to courage is difficult to
answer, because my acquaintanceship has not been suffi0

ciently close to appraise much quality. It may bear
thereon, however, when I say that I think him to be honest
and loyal, and if given any task, he would do his utmost
to accomplish it.

In other words, there would be no divided loyalty.
With my warn regards as always
Sincerely,

IN Warnick J. Kernan

156

Veners. I. G. Alk and E. Arnold

155

Secretary Morgenthau

TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION

0

DATE June 25,1945

Secretary Morgenthau

TO

FROM

Mr. Coe FC

I want you to know that I appreciate
your fine work in connection with the
recent agreement with the Alien Property
Custodian concerning the disposition of
German and Japanese assets.

These two men in the Legal Division, working closely with
Foreign Funds Control, did a bang-up job on this Executive Order.

Mr. Alk is now in the Philippines but for his and Mr. Arnold's
record I hope you will consider something like the attached note.

O.K.

Hajp

MLHoffmanier 11 June 1945

24 June 1945

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158

157
June 25, 1945
DRAPT

MEMORANDUM FOR THE FILES
TCP SECRET

Subject, traft Telegram from the President to the Prime Minister
Concerning Phans II Lend-Lease

On June 25 the Secretar harded the attached draft telegram to
Mr. Peans of the State Department telling him that he did not intend
to send this over formally to the State Department but that Mr. Beans

might instead give it to Mr. Grow with the information that this was

the type of telegram Secretary Mergenthau thought should be sent to
Frime Minister Churchill in response to his message of May 28.

Previously I had explained to the Secretary that - understood

that and Tinace were now disc ssing this matter and

that officials with whom se

THLEGRAN TO PRIME MINISTER CHURCHILL FROM PRESIDENT TRUMAN

This is in reply to your lessage No. 57 of May 28.
We shall of course ORTT cut in full the understanding reached
butween you and President Hoosevelt at the Quebec Conference.

The ar Department officials concerned with the lend-lease progras understand this and I as confident that there will be adequate
appropriation
Chiefs
of Staff.to carry out the decisions reached by the Combined

Westre. the State Clayton Department had been conferring
had told a the matter use out of their hands. I said we and a draft
ready but had not cleared it with Mr. White or the Secretary. I also

showed alternative wording for the proposed telegram

confident you have

which added the Secretary the phrase an "as I an will and wideh would

served to recind the Prime Minister that he too had made certain undertakings at Quebec. The Secretary said he did not think that these words
should be added.

In the course of the conversation the Secretary repeated to Mr. Peans
his objections to the telegram which had been drafted and to the failure

of those concerned so furnish us with full copies of all the corrnsnondence
and of the incoming telegram when 11 reached then. in also mide it plain
that he had liked the reply which Judic Pinson had sent to Secretary
Stimson on this matter under date of June 13, are attached.
Frank Coe

Draft telegram handed to by Secretary Mergenthan, June 25, 1945.
June 21, 1945

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160

159
TOP SECURIT

TELEGRAM TO PRIME MINISTER CHURCHILL FROM PRESIDENT TRUMAN

(

I have gone into the question that you raise in your messare (No. 57)

of Var 28 in regard to lend-lease during the Japanese Yar. - intend to

furnish lend-lease during the Japanese War in accordance with the general policy
discussed between you and President Roosevelt at Cuebec on September 14, 1944,

The shall, of course, carry out the understandings reached

and that was the basis for the discussions between American and British
representatives in Washington in October and November 1944 in regard to

between you and President Roosevelt as the Custee Conference

Lend-Lease requirement for the first year following the defeat of Germany.

In the light of the anticipated war strategy lend-lease will be furnished
on the basis that will permit a partial and equitable reconversion in the

as I - confide 1 you will.

United Kingdom, and plans have been worked out here for your representatives

on the CPRD to make available full information on the British reconversion
program to American officials responsible for the administration of land-lease.

You, of course, realise that the policy I have indicated does not
necessarily mean that either the military or the non-military program for
the coning hear will be equal to the lend-lease requirements as estimated
in the meeting of last October and November Those estimates were subject
to charging strategic demands as well as to supply considerations and considerations of procurement and allocation, and to the provision of the
necessary funda by Congress. I have requested Congress to appropriate funds
that

will

possible

make

land-lesse

deliveries

to

the

British

Commonwealth

in accord with the spirit of there earlier understandings, and I an confident
that land-lease will continue to be a powerful weapon in bringing the war to
a speed and victorious conclusion.
In connection with the foregoing, it has come to my attention that the
Critish cold and foreign exchange holdings are now considerably higher the

was anticipated at the time of the Phase II discussions. I do not wish

unwillingness

of

your

Government

to

make

payments

leads

to

solitical

:

to propose reopening the Phase IT discussions on this account. However,
would like to request that your Government relax its position with respect
pomitting dollar payments on certain items, particularly those where the

criticism

in the United Status. For example, it would be of considerable and stance if
your Government relaxed its restrictions on dollar parents for the proceeds
of U.S. Government property sales in the Middle Kent and elsembrey if the

U.K. continued to take its share of the burden of the military relief and

UNERA programs in Errore: and if dollar payments were allowed on other items

which arise from time to time in our relationships. I unre that you provide
this flexibility in the long-term interest of both your country and mine.
State
CPT

Tar

IMARIZ

Protect

L-C

LP1PWetters00
6/20/45

Alternative virsion rejected by Secretary, June 25, 1945

0

Draft telegram veteed by the Secretary June 25, 1915

GA

to

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162
SECRET

TOP SECRET

19 June 1945
The Henerable

PARAPHPASK GT A MISSAGE SKIT DT - FROE MINISTER TO 110

The Secretary of State,

PRESIDENT ON MAY 28th, No. 57

Washington, D.C.

distressed to have to bother you with this telegran when

our Vr. Secretary:

I an other graver matters are pending. Out machine has come to
so a standstill many CD the subject and it is felt on all sides here that the

This acknowled 00 receipt of letter of 9 June 1945 free Mr.
James A. Maywell to General E.S. Greenbaug inclosing draft of

satter should be referred by of to you.

the proposed cable from the President to the Prine limister in

I act President Roorevelt at Cuebec in September 1944 we In both

response
to tids
the Prime
comment on
treft. Minister's cable of May 28, and requesting

initialled Then at agreement about Lend-Lease of er defeat worlded of Jersany. out with

Yesterday I received from the Director of Far libblissing and

accordance Administration with by that the agreement Keynon Sinclair a detail Vission. ed plan was It is on this basis your that

our production plans have been made.

Reconversion a Jesser dated 13 June 1945. a copy of which is attached.
The proposed cable appears to the Har Department to be consistent with

that your ar Department has sold OF people in Washington

the direction contained in that letter. If the cable is to be sent,

they I now are hear expecting so large out in their forthorning draptically appropriations ourfor that United States Air Corps that
as to us agreed must last be Astumn. Those
requirements
or supplies
schedule

of

it is believed that its accuracy would be improved by making the

second sentence read as follows:

the

requirements tailet below more of course subject to subsequent modification that our in require-

"in intend to furnish lend-long during the Jackress Sar in

in strategic situation. I an hopeful reduction

manis discussions between our respective Chiefs people

accordance with the general policy discussed between you
and President Hoosevelt at Cuebee on September 14. 1 44,
and that was the basis for the discussions between American

not have told that principles your predecessor and I agreed to Ter Department

and tritish representatives in Hashington in October and
November 1944 in recard to land-lease requirements for the

light as of agreed changes last tutuan can nom be reduced but details of staff of which will

(

depend upon been completed before - 31st. learnhile hope your at Cueben

can be particular that appropriations river your

first year following the defeat of Germany."

still will be stand enough and to in provide for our needs as finally marked out between us.

It should be noted, however, that the ar Departments requests

for appropriations for military lend-lease were arrived at, and
have been presented to the Congress, under polinies considered appro-

printe by the Joint Chiefs of Staff, which contemplate, among other

things, the furnishing by the Far Department of cel those materials

which are not available to, and cannot otherwise be provided by, the

Critish innire on the prexise that the Empire will maintain its

forces for the WAT against Janan to the fullest possible extent from

its own stocks and production.

Pdo polic is not in accord with the implications of the proposed
cable. the Congress It na for be funds necessary, for the therefore, specific purpose for the of THE carrying Department out to the request

direction contained in the letter of 13 June 1945.

Sincerely yours,
Secretar of Mar.
0

Inconing telegram from the President

C

Letter from Stirmon to Grew conterning Vinaco letter.

163

OFFICE OF NAR MOBILIZATION AND

Washington 25, D.C.
June 13, 1945

7th Mar Loop Down Dank

Ky dear Mr. Secretary:

Bar Finance Division

Your letter of Hay 15, 1945, with reference to the . guirments
of the Uritial impire for was material for the period following

Treasury Department

Washington 25, D. C.

Sp. Telease "3-5"

VE-Day, was the subject of a discussion held in my office on June 4,
1945, with Under Secretary Patterson, Mr. Crowley, Mr. Clayton and no.

It VIS agreed that the tentative principles emunciated in your
letter were not broad enough to cover the understanding renched between

the late President and the Prime Unister at Quebec.

Henry Corporthan New will held the apotlight on the

In general, is was agreed that, in accor ance with those understandings, lend-lease should be furnished on a basis which would permit
proportional and equitable reconversion in the United Kingdom. It
was further agreed that the requirements estimated in the meetings hold

personally interview . just-arrived veteran of the Cidinass

Such estimates, however,
in sent October requirements
and are
always subject to

bettle during the program brondesat evor the tutual

November 1966 should be accepted as the basis for pre-

(

RESEARE FORDAY AND AND JUSE 25 - AND LADIC LISTING
WASHINGTON, N.C., Juine 22, - Secretary of the Treasury

change in the light of strategic dorands and supply considerations.

*Spotlight Tenda* program Dednesday June 27th, shop be

Zetwork from 9:30 to 10.00 No. DIT.

I assume of course, that the Ser Department's budget requests
appropriations adequate to fulfill those commitments.
sincerely yours,

(Signed) Yred M. Vinson
Director

The Honorable

The Secretary of Var
Washington 25, D.C.

Letter from Vinson to Stinson on Phase IT.

⑉

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165
June 25, 1945

Dear Alan:

I an giving this statement out this after-

noon for tomorrow morning's papers.

As you most likely know, I am going on the
air again Wednesday night, and I wonder what you
would think of the idea of our using the three
minutes' time to say something about seeing this
war through rather having me Interview another
0

soldier.

After you have read the press release, I
would appreciate receiving a telephone call from

you.

Sincerely yours,
(Signed) H Marcenthau, JA

Mr. Alan Barth,
The Washington Post,
Washington, D.C.

MPRECISION

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166
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
C

DATE 25 June 1945
President Truman's Vo 16 Record as Senator, 1935-1944
TO

FROM

Secretary Morgenthau

Against

For

J. W. Pehle

1935

1. Repealing income tax publicity.
2. Social Security Act.

At my suggestion, Mr. O'Connell had prepared a
statement of President Truman's voting record as
Senator, 1935-1944 This statement is attached and

I an sure you will find it of interest.

President Truman WB-8 a member.

$4,880,000,000 to $2,880,000,000.

1936

3. Bonue for veterans.

2. Frester-Lenke farm mortgage-inflation bill

4. Flood control financing entirely by Federal
Government.

Also attached are a memorandum on statements of
President Truman on post-war taxes and excerpts from

a report of the War Contract Subcommittee of the
Senate Committee on Military Affairs, of which committees

1. Reduction of relief appropriations from

1937

5. Extension of Reciprocal Trade Agreements Act.

3. Restricting tariff reductions under reciprocal trade agreements.

b. Continued subsidy of farm interest rates.

4. Increasing surtex on individual income
over $6,000.

5. Shelving President's plan for Supreme

I am sending copies of these documents to the
interested persons on the Treasury staff.

Court reorganization.

1938

Instrul

7. Taxing federal tax-exempt securities.
1939

8. Government reorganization plan.
9. Renewal of President's currency-devaluation

7. Allowing TVA to issue $100,000,000 in

powers.

Attachments

bonds to acquire private power facili-

10. Proposed $1,615,000,000 public works program.

ties.

11. Increased federal contribution to old-age pensions.
1940

12. Extension of reciprocal trade program.

6. Increasing Treasury price for newly mined
domestic silver to 77.57 cents.

8. Senate veto power over reciprocal trade
pacte.

SION

TRADE MARK

-213. Lead-Leese Act.

1941

14. $7,000,000,000 Lend-Leese appropriation.

15. Continuing stabilisation fund and President's
power to devalue currency.

16. Price Control Act.
17. Freezing Social Security payroll taxes for 1943.

1962

9. Increasing corporate income tax rate
from 40 percent to 50 percent.

10. Proposed
limitation of profits on war
contracts.
11. Prohibiting sales of Government-owned

wheat below parity prices for corn.
12. Tax exemption for State and city bonds.
18. Rescinding $25,000 salary limitation.

1943

13. Paid advertising of war bonds in small

19. Extending Trade Agreements Act to 1945.

newspapers.

20. Psy-es-you-go tax bill.

21. Continuing National Resources Planning Board.

22. Exempting unions, farm co-operatives and other

tax-exempt organizations from filing financial
reports.
23. Overriding vete of 1944 revenue bill.

1944

14. State control of unemployment insurance
benefite (George plan).

15. Reconversion Act (George bill).
16. Suspending 10-cente-e-pound tax on

colored oleomargarine for duration

of war.

17. Reviving food stamp plan for low-Iscome
groupe.

18. Congressional control of TVA funds
(McKellar amendment).

TRADE MARK

MICROSTATI

$

MICROFILM

ROLL NO

O

-3
1945

a

PRECISION

In 1945 Mr. Truman voted only once. Then, as Vice President, he broke a tie and defented
proposed limiting amendment to the Land-Lesse extension bill. Purpose of the amendment was to
eliminate
presidential power to carry out postwar Lend-Lease deliveries under contracts made during
the war.

MPRECISION

MICOM

MICROSTAT

TRADE MARK

ROLL NO.

171
170
Statements of Harry S. Trussa

Mar Contract Termination

Posteer Taxes

From Third Annual Report of Special Committee Investigating the National
Defence Program, March 4, 1944:

From Third Annual Report of Special Committee Investigating the National
Defense Program, March 4. 1944:

"If taxpayers are provided with the means for coming out of this war

a financially sound condition, it any not be necessary within the first
materially.
taxes
reduce
hostilities
censation
after

in

months

18

to

of

the

There is something to be said for beginning DOW to consider reduction of

our national debt in the years impediately following the var. Even if it
should be possible to make such an immediate postner tax reduction, however,

. provision could be inserted in the proposed emendment which would prevent
any windfalls to texpagers receiving the proceeds of postwar expense bonds.
The proceeds, to the extent that they are not used for purposes deductible
as expenses under the then current tax law, could be subjected to tax at the
same rate at which they would have been taxable in the year in which they
were earned."

*It is obvious that some method of handling termination problema on

an over-all basis rather than a contrect-by-contract basis is vitally
needed. It is obvious that there are problems arising in termination

which cannot be solved economically by asthestical formals, and perhaps
cannot be solved at all except by the use of sound business judgment. There

is obviously much to be said for vesting discretion in termination officials,

who are experienced in business and financial matters, to make lump-mum

allowances on at least the smaller contracts perhaps on all individual contracts for 85,000, or less, or perhaps even on those for $10,000, or less.

Such a procedure should go . long may toward the goal of quick settlement of

termination problem which all authorities have agreed is vital to industrial

solvency at the end of the war.'

From Third Annual Report of Special Committee Investigating the National
Defense Program, March 4. 1944.

Full Employment and Prosperity

*Particular attention must be given to the problema of subcontractors,

From an address before the Society for the Advancement of Management, New

York City, Dec. 3, 1943:

who otherwise may suffer the full brunt of cancellations without the benefit
of shock absorbers devised to protect the prime contractor."

"To sun up, the Comittee of which I - chairman has bad many discussions, public and private, with leaders of Government, industry and

labor. From those discussions it is quite apparent that we have everything
necessary with which to create the world's greatest prosperity,
but that
wenow."
taken
should
are

faced

with

certain

specific

problems

on

which

action

be

Renegotiation

From an address before the Industrial Conference Council, Sept. 24, 1942

(See also attached excerpts from year-end report of Ver Contracts Subcomittee)
Government Aid to Business

From Third Annual Report of Special Committee Investigating the National
Defense Progrem, March 4, 19441

*It will be difficult if not impossible for private banking to provide

sufficient working capital soon enough. It will, therefore, be necessary
for the Government to formulate plane to supplement private banking. ...
*Every effort should be made to induce the corporations to obtain

their working capital through the investing public and not by lease free
a Government agency."

From an address before the Society for the Advancement of Management, New

York City, Dec. 3, 1943:
"To the extent necessary, and only to the extent necessary, the Governnext should supplement private banking shere private banking is not able to

do the job, but should not try to supplant it or to place the Government in
control of business.

"In a opinion, the Government mast insist upon renegotiating contracts,

but we on confine it to a renegotiation of price because of autual mistakes
on cost octimated."

From Third Annual Report of Special Committee Investigating the National
Defense Program, March 4, 1944:

*The argument about whether renegotiation should be 'before taxes or

'after taxes has been great teapest in teapot. If we remember that the

besic purpose or renegotiation is to control prices of war material, it is
obvious that the tax liability of a particular producer is completely beside
the

point.

Prices

aust

be

determined

either

by

free

and

open

competition

in the absence of competition, by determining what costs are proper, as

indicated by results obtained by efficient producers, and what profits con-

stitute fair reward for the effort and remults obtained by the particular

contractor.

or,

(

PPRECISION

TRADE MARK

MICROSTAT

MICROFILM ROLL NO

173

172
Excerpte From the Year-end Report of the

-3-

Mar Contract Subcommittee of the Senate

Committee on Military Affairs, Part III. .
Lemi-Lesse

The report refers to existing post-aur legislation and as to the

adequancy thereof has the following to any

From Third Annual Report of Special Committee Investigating the National

"In addition to the three industrial demobilization

Defence Program, March 4, 19441

laws, a number of other poet-ane measures have been enacted

Before authorising Land-Lense, the Congress expressly requested and
received assurances that Land-Lense assistance would be extended only

during the y-eighth Congress. We have enected a G. I.

bill of rights. But its provisions are not yet fully sde-

where the recipient was fully utilising all of its own resources. Such

quete to meet the needs of returning soldiers and sailors.

resources, of course, include foreign-held American securities and foreignheld securities which control besic FOR materials abroad."

Although TO have provided for loans to State unemployment
compensation boards, we have done nothing to increase coverage under uneaployment compensation and old-age and survivors

insurance, to liberalise benefits, or to provide for health

Reciprocal Trade Agreements

insurance. We have passed legislation to provide for
miscellaneous assortment of flood-control and rivers and
harbors projects, but have postponed action to develop the
river basins of our country in courageous and comprehensive
fashion under . Missouri Valley Authority, an Arkansas River
Authority, and similar agencies in other arean. We have done

From a debate in the United States Senate, March 26, 1940:

"The present Administration is 1934 took the load in world commarcial
relations in an intelligent and practical manner and placed the adjustment

little in the preparation of a post-war tax program, on the
promotion of foreign trade, or in the adjustment of freight

of tariff duties in the hands of the most competent set. available for the
purpose, sen beyond the reach of political logrolling and tariff lobbying

rates that discriminat against industriel activity in the

at the expense of national welfare."

South and the West. We have passed road bill but have delayed action on post-mix airporte. To have not come to grips
with the problem of monopoly and international cartels, To
have not yet mapped out post-set policies on the fundamental

Inflation

C

questions of labor relations, ages, and prices.
From Second Annual Report of Special Committee Investigating the National

"As accured against the background of our economic
needs, the post-vas laws that have been enacted add up to

Defense Program, March 11, 1943:

very little. The balance sheet shows that the Seventy-

"The Administration's avored determination to hold down both wage and

eighth Congress never case to grips with the problem of
providing an economic substitute for war production.

increases offers the only hope of avoiding an infiction which would

price war costs trenendously and leave both agriculture and labor facing
increase severe deflation when the war ends. The success of any such policy must

The report also refers to the first point in the economic bill of

a rest upon equitable treatment so that 11 will obtain the support of all

rights" of the President's annual 1944 message to Congress, "The right

groups and individuals.

of useful
job in the industries, farms,
or
andand
to reumnerative
the President's

October ulnes
of of he
the mentioned
Nation" in which
or shops,
address orclose
in
1944
theChicago
necessity
of providing

to 60,000,000
productive
jobs to assure full employment. Commenting upon
that
goal the report
continues:

Senate Subcommittee Print No. 12, 78th Congress. Former Senator
Trussa SAN a member of the Subcomultee, whose chairman use Senator
Marrier.

.

SPRECISION

TRADE MARK

MICROSTAT

MICROFILM

ROLL NO

174

-2-

-3-

"As yet, unfortunately, TO do not have in America an
to provide 60,000,000 productive jobs.

The report sets forth, for purposes of consideration and discussion,

out

Nor 'adequate will such program' progres develop of thin air. The right

the dreft of a full-employment bill which is the predecessor of the

to job is not self-enforceable. It onn be translated into

pending

reality only through the joint action of the people of our
country--business, labor, agriculture, and all other groupsacting through the medium of their duly elected Government.

In short, the so-celled right to job is meeningless

figure of speech unless our Government estimate responsibility

for the expension of our peacetime economy so that it will be
capable of assuring full employment.

"The fight for full employment is a twofold battle.
"On the one hand, the Government auct do everything in

its power to stimulate increased opportunities for employ-

ment in private enterprise. This 10 the mejor front.

"On the other hand, to the extent that privite enterprise
cannot by itself assure full employment, the Government must
take such meesuree an any be necessary to fill the gap.
After streading the necessity to maintain . high post-war gross
national product, and referring to some estimates of $200,000,000,000
as being necessary for full production and employment, the report
continues

"In the opinion of your subcommittee, the question of

what level of gross national product se should sin at is .

direct concern of the Government. lie believe that the Govern-

ment should calculate the total of all investment and other
excenditures by consumers, by business, by State or local

government, and by the Federal Government- needed to provide
jobs for everybody.

FE believe that the Government should give full and
complete opportunity for an expension of business investment

and that it should promote increased consumer expenditures.

"The believe that, to the extent that non-Federal expenditures do not provide the necessary total, the Government
must develop an investment and expenditure program to make

up the deficiency.
Only in this very can to be sure of providing an economic

substitute for war production. Only in this any can .. pro-

tect our economic structure from collapsing when the fresework
of war contracts in withdrewn."

0

0

175

FEDERAL RESERVE BANK

of New York

June 25, 1945

CONFIDENTIAL

Dear Mr. White:

I as enclosing our compilation for the week ended
June 13, 1945, analysing dollar payments and receipts in of-

ficial British, French, Canadian, and Australian accounts at
the Federal Reserve Bank of New York.

Very truly yours,
o

H. L. Sanford,

Assistant Vice President.

The Honorable Harry D. White,

Assistant Secretary of the Treasury,
Washington 25, D. C.

Enclosures 2

RECISION

TRADE MARK

MICROFILM

MICROSTAT

ROLL NO

177

TREASURY DEPARTMENT

OFFICE OF THE SECRETARY

June 28, 1945

CONFIDENTIAL

Received this date from the Federal Reserve Bank of New York,

confidential information of the Secretary of the Treasury,
for the
13, 1945, aboving dollar dis-

compilation for the week the
British ended Empire June and French accounts at the

Federal bursements Reserve out of Bank of New York and the means by which these ex-

penditures were financed.

119

RECISION

MICROFILM

MICROSTAT

MARK

Strictly
Wook Ended

AKALYS15 or BRITISH AND FRENCH ACCOUNTS

(In Millions of Dollars)

Confidential

June 13

(CALE CERTRAN (b)

BANK

CREDIT

BANK OF ENGLAND ( MITISH GOVERNMENT)

DESITS
Gov's

Expenditurgs

$1,197.7

151.0

5.5

155.1
253.0

1,116.6

61.4

835.9

1,369

50.4

80.7

56.5

7.4

99.5

54.7

25.9

%.J

19.9

127.5
45.5

November

21.8

1,276.8
916.7

125.9

300.4

1944

September
October

1.193.7

13.2

7.7

0.5

57.4

Debita

(e)

866.3 (1

38.9

308.3

LOT Dear. (-)
in $ Punds

Total

Total

(d)

(e)

095.3(0)

391.0

8.6

30.1

18.5

4.4

14.1

10.3

1.0

9.

171.9

2.9

-

1.0

55.5

94.5

1.0

53.

73.3

1.0

-

Fourth

35.0

705.4

312.7

904.8

First

416.2

1,072.3

$1,235.6

407.4

3.4

(d)

3.9

223.1

1.792.2

to

(c.

16.7

280.9

$7203.0

20.9

Credit

"KRANDAL

52.0

170.4

05.6

order

(orginial)
274.0

1,356.1

1,828.2
2,189.8
1,361.5

$1993.2

Third

Credits

-

Second

Debits

1,166.7

Gold

or Decr.(
in Funda

-

First

1

Total

Other

-

Six Years (g)

Proceeds of

Official

Net Incr. ()

Net Ince.(+)
Other

-

PERIOD

Transfers

50.2

1.

56%

21.9

December

21.2

94.7

1945

148.9

rewards
March

98.7

(5.0)

Auril

18.6

May

39.5

18.9

31.3

54.2
Sing

1938

123

19.

11.
36.5

2.6

0.7

2.3

19.1

17.4

19.3

June

July

August
Week Ended
3.6
6.47

May 33, 1945
May 29, 1945

10.5

9.6

4.1
1.6

June 23, 1945

5.5

5.2

9.9

0.6

0.3

0.3

16.2

O.

S.S

6.4

9.9

4.8

58.5

58.5(1)+

54.7.
1.1

52.1
See

attached

95.9
6.2

sheet for

0.2
16.1
41.2
5.1

footnotes

Outbreak of War

1940) 190.6 million

England

through
(through

England

through June

England

(since March

Pranou

2.9

1.1

June 6, 1945
Average Weekly

24.6

30.T
30.1

June

1940) $27.6 million

Reports and Analysis Division

1940 to March 12, 1941) $54.9 million
(1941)21.5

million

"

RECISION

TRADE

MARK

MICROSTAT

MICROFILM

REG.U.S.PAT.OR

ROLL

A

Strietly
Week Ended

ANALYSIS OF CANADIAN AND AUSTRALIAN ACCOUNTS

(In Millions of Dollars)

Reports and Analysis Division

Food instrall Lan Government)

EDITS

COMMONWEALDI B.NK OF MISTER

CREDITS

D THIS

Transfer from official
Proceeds

to

First
Second

Debite
323.0

16.6

525.8
723.6

Firth

649.3

Sales

AA

412.7

20.9

8.7

1.4

123.9

162.0

246.2

525.5

566.3

198.4

2.2

723.6

958.8

47.1

170.4

1.0

848.1

958.3

38.1

0.1

76.

21-8

and

52-2

35.

91.6

0.3

26-5

An

8.7

1945
35,1

TO

1.6

22.2

16.7

107.2

57.6

74.3

235.2

197.0

155.1

859.0

283.3

298.6

253.0

50.8

on

50.3

31.3

10.0

3.9

56.5

-

OS

TAX

101.1

2.6

104.3

84.4

3907

11.1

Other

Sales

4.9

62.9

49.8 212.2
41.9 200.4
287.7
45.6

17.2

18.3 9.9.0

95.0 5.0
200.4 3.4
287.7 - 10.9

3-2 did

2.3

27.4

27.4

Cruditain@into ()

30.0

55.5 M

34

Dear. (-)

Other

Gold

Tot

21.3...

1.0
1.0

() or

of

AA

40.5

50.6

2.9

Total

Credital Debits
31.3
85.5.1

61.4

Official
British

16%

5.1

5.6 21.8

5.6

3.0

1.9

-

103,9

64.4

May

Deer. (-

Other

VO.D

February

Parch
April

() or

17.36

1944

January

(Credito
504.7

A/C

4604

460.4

Your

Third

L/C

For French

For Own

Gold

Total

Others
Debit
306.4

-

Mar Years (a)

British

Britte

Net Incr.

Proceeds

Net Incr.

EAT

of

official
Total

DE Transfers
ITS

CARD (and Canadian Government)

OF

PERIOD

Confidential

June 13. 1945

FOR

19.9

15%

10.1

10.1

0.6

B

1.1

8.3
an

are

August

11. THE

0.3

0.3

9.0

C

6.2 million.
8.9 million
10.1 million
13.9 million.
16.1 million

Second year of WITH

Third year of war
Fourth year of war

Fifth of war
of var

(through

OF

OR

12.

June 13.

1945)

3.8
10.5

5.3

Average Weekly expenditures for
First year of WIT

Sixth

9.0

32.7

8.9

2.1

3.2
2.1

of

-

May 23, 1945
May 29. 1945

33.9
33.0

2.1

0.5

3.2

4.2

6:3

-

Week Ended

0.5 1.61.0
4.7

OR

(a) For monthly breakforms sec tabulations prior to: April 23, 1941; October 8, 1941;
October 14. 1942: September 29. 1943: September 6. 1944.

year.

(b) Reflects changes in all dollar holdings payable on demand or naturing in one

(c) Includes S 1.4 million deposited by War Supplies, Ltd.

chartered

and 8.5 million received from New York accounta of Canadian in one

(d) Reflects net change on all dollar hold payable on donand of naturing
year.

banks.

PRECISION

MICROSTAT

TRADE MARK

MICROFILM

ROLL NO

(a) Includes payments for account of British Ministry of Supply Mission, British Supply Board, limistry of Supply Timber
Control, and Ministry of Shipping.

(b) Estimated figures based on transfers from the New York Agency of the Bank of Lontroal, which apparently represent the

proceeds of official British sales of American securities, including those effected through direct negotiation. In addition

to the official selling, substantial liquidation of securitie 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 Morgenthau, total official and private British liquidation
of our securities through December, 1940 amounted to 8334 million.

(c)

Includes about SBS million received during October, 1939 from the accounts of British authorised banka with New York banks,

presumably reflecting the requisitioning of private dollar balances. other large transfers from such accounts since October
1939 apparently represent current acquisitions of proceeds of exports from the sterling area and other accruing dollar

receipts. See (k) below.

(d) Reflects net change in all dollar holdings payable on domand or naturing in one year.
(o) For breakdown by types of debits and credito see tabulations prior to March 10, 1943.
(f) Adjusted to eliminate the effect of $20 million paid out on June 26, 1940 and returned the following day.
(g) For monthly trenkdown 500 tabulations prior to April 23, 1941; October e, 1941; October 14, 1942: September 29, 1943; September 6, 1944.
(h) Transactions for account of Caisse Central do La France E'Outre-Mer included for first time in wook ended December 6, 1944.

(1) Includes S 15.6 -Illion apparently representing current and accumulated dollar proceeds of sterling area services and morohandisu
exports, and $40.4 million in connection with the expenses of our arned forces abroad.

181

TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION

CONFIDENTIAL

DATE June 25, 1945

Secretary

TO

Industrial production declines
Due largely to ourtailments in munitions industries,
aggregate industrial output showed a further decline in
Kay and the FRE adjusted index of production for the month
dropped to 227 from 231 in April. The index now stands
20 points (about 8 percent) below the war-time high attained in the fall of 1943. (See Chart
Reflecting slackening activity in the shipbuilding
and aircraft industries, the important transportation
equipment component of the index continued to decline
in May, and dropped 4 percent below the April level. Likewise the machinery industries showed a further noticeable
reduction. Nondurable goods output, however, was unchanged after allowance for seasonal factors. Minerals
output in May was only moderately lower, despite a sharp
drop in anthracite coal output caused by work stoppages
prior to the conclusion of & new wage agreement. On the
other hand, crude petroleum output during the month rose

ongenthau

Mr. Hear

FROM

Subject:

The Business Situation

Week ending June 23, 1945.
Summary

Industrial production: Due largely to declines in war industries,
aggregate industrial output in May showed a further recession
and the FRB adjusted index of production dropped to 227 from
231 in April. The indez now stands 20 points below the wartime neak reached in the fall of 1943. Nondurable goods output in May WES unchanged from the previous month after allowonce for seasonal factors. Minerals output declined only
moderately, despite a sharp drop in anthracite conl output
due to labor troubles.

Factory employment continues to decline

Employment: Factory employment showed & further decline of
236,000 in May with 80 percent of the declin occurring in
C

the munitions industries. Aside from the munitions industries,
only the textile and apparel industry groups ahomed declines
of more than 10,000 workers, and even these decreases to n
large extent were seasonal. Labor restiveness has increased
recently, with the number of strikes in progress rising considerably since V-E Day.

Reconversion: The WPB has fixed passenger car production at
approxiantely 242,000 units in the last half of 1945 and

449,000 units in the first quarter of 1946. Production
cuotas sessigned to individual producers in the last half of
1945 range from approximately 95,000 for General Motors to
8,000 for each of the 6 assllest producers. The Ford Motor
Company has protected the quote allocations, which it
asserts would confine its operations in the last half
this year to less than 10 percent of pre-war output.
Prices: After advancing to a new war-time high at the beginning
last week, the Dow-Jones futures index later declined
appreciably, due largely to a drop in grain prices. Rye
futures dropped sharply as margin requirements were doubled
of

by the Chicago Board of Trade.

Cost of living: The BLS cost-of-living index in May rose 0.7 percent to n new war-time high, 29.8 percent above the June 1939
pre-war average. Food costo rose 1.6 percent to the highest
level since mid-1943.

to a new record high.

$

Factory employment in May showed a further drop of
236,000, with 80 percent of the decline occurring in the
munitions industries. The largest decrease was in the
transportation equipment industry which employed less
than 1,800,000 workers in May as compared with more than

2,600,000 at the war-time peak in November 1943. Although outbacks in aircraft and tank production have
been contributing factors, two-thirds of the decline
from the 1943 peak has been accounted for by the shipbuilding industry. Outside the munitions industries,
only the textile and apparel industry groups showed declines of more than 10,000 workers in May, and even
these decreases to a large extent were seasonal.
Labor troubles in the anthrocite coal industry out
mining employment last month, while civilian government
employment showed no change. However, gains occurred in

all other major groups such as trade transportation
etc., partially offsetting the drop in factory and mining
employment. Nevertheless, total nonagricultural employment was 150,000 less than in April and more than 1 mil-

lion lear than in May 1944. (See Chart It should be

noted, however, that since May 1944 the arned forces have
shown a net increase of nearly 1 million.

184
183

-3-

O

Labor restiveness again in evidence

still too low in relation to operating costs.

(

Labor restiveness has increased recently, with the
number of strikes doubling since V-E Day, according to
the Department of Labor. Many of the strikes have devel-

Steel sorno prices strengthen

oped over relatively trivial issues. Although labor

After declining moderately for about 2 weeks after
V-E Day, steel scrap prices later steadied, and during
the past week slightly rising tendencies were noted.
a result the Iron Age sorao composite rose 8 cents to
$19 per gross ton. thus scoring the first advance since
V-E Day. Meanwhile the volume of new rated orders for
steel is reported to have increased somewhat, and considerable uncertainty continues to exist over the amount

disputes have occurred over a wide area, Detroit has
been one of the industrial centers most seriously of.
fected. Numerous juriedictional disputes have developed
in that city causing work stoppages at Ford, Chrysler
and Packard plants among others, and concern has been
expressed over the resulting threat to the reconversion

activities of the automobile industry.
In addition to the loss in employment due to strikes,
outbacks in war contracts are expected to increase idleness
at Detroit in coming months. During the past week the MOUC
director at Detroit predicted that unemployment in the area
would be at least 80,000 by September as compared with
30,000 on June 1. However, a leading CIO official promptly
challenged the estimate and predicted that 140,000 would be
idle in the area by September 1 if current trends continue.

As

of steel which will be available for civilian production
in the third quarter.
Automobile production quotas announced

The availability of steel supplies has been the
principal determining factor in the formulation of reconversion plans for the automobile industry. Last week
the WPB announced that authorized passenger car production
would total 241,916 care in the last half of 1945 and
449,102 care in the first quarter of 1946 Production

Steel operations recover
c

to the slackening in steel operations. Moreover, according
to the American Metal Market, there has been a tendency to
reduce overtime operations in order to reduce costs, as
steel producers contend that ceiling prices on steel are

quotas were assigned to the various passenger oar producers, which for the last half of 1945 range from
95,096 for General Motors to 8,000 for each of the 6
smalleat producers.

Unauthorized work stoppages have also been in

evidence in the steel industry recently and have been
a factor in the decline in steel operations in recent
weeks Output at the beginning of last week WILD scheduled
at only 86.8 percent of capacity, which 10 the lowest
level touched since early last February when severe
weather conditions curtailed output. Scheduled operations

While production quotas for the biggest producers
were determined largely by the rate of manufi oture at
the time manufacturingwas discontinued in 1942, it was
decided that a production quota of less than 8,000 care
in the last half of 1945 would not be feasible for any
one company. Consequently the smaller producers in
the initial stages of reconversion will have a larger
share of the total market than previously. As might be
expected, the larger producers are reported to be dissatisfied with the quotas, and the Ford Motor Company
has registered a protest with the WPB. The Ford Company
asserts that under the quotas announced its dealers in

during the current week, however, have recovered to
91.5 percent of capacity, due primarily to settlement

of labor disputes. (See Chart .)

Despite outbacks in was contracts, the NO director
at Pittsburgh recently reported a shortage of .000
workers in the area, with three-fourths of this number
being needed in the basic steel industry. Pig iron production is said particularly to have suffered from n
lack of manpower. It is reported, for example, that one
of the blast furnaces of the Carnegie-Illinois Steel
Corporation which WILS ready to resume operations last
April actually was not able to get back in production
until June 8 due to a lack of workers. In addition to

the last half of this year will receive only 4 care per

dealer, whereas dealers representing some of the smaller
producers will receive many times that number. Similarly

the mannower shortage, the advent of hot weather has contributed
0

186

-6-

A

-5it is contended that Ford will be operating at less than
10 percent of pre-war output while one smaller producer
will be operating at nearly 100 percent, and another at
15 times pre-war output.
Railroads confronted by heavy traffic burden

C

The end of the war in Europe has failed to ease the
heavy war-time traffic demanda on the railroads. on the
contrary, the railroads in the western part of the country entire
are now confronted with the heaviest demanda of the
war. During the past week the director of the ODT indioated that embargo restrictions may have to be imposed on
certain types of civilian freight shipments when the peak
military shipments to the West Coast occur.
Indicative of the sustained high level of railroad

traffic, the first 87 Class I railroads to report for

May showed a rise of about 1 percent in the operating
revenues over year-earlier levels. Furthermore, freight

carloadings in the first half of June were slightly

above the corresponding period last year.
The prospect of a further extension of the war-time
upsurge in railroad traffic undoubtedly has been A

Higher food prices raise cost-of-living index
The BLS cost-of-living index rose 0.7 percent in
May to a new war-time high, 29.8 percent above the June
1939 pre-war average, as food costs rose 1.6 percent to

the highest level since mid-1943, Increased retail
prices for potatoes, apples, onions, carrots, and
spinach were chiefly responsible for the rise in food
costs. The index of clothing prices continued its
steady upward trend, rising 0. percent for the month,
while costs of other consonent items held practically
unchanged. (See Chart 6.1

Some relief seen in fate and oils supplies

factor in the recent strength in railroad securities

the gain in April, the latest month for which figures
are available, was only 2.5 percent. (See Chart 4.)

quantity will be obtained from the Philippines this year,
according to the Bureau of Foreign and Domestic Commerce,
which will increase our supplies of coconut oil. Estimates
of imports this year, according to the Bureau range from
& conservative figure of 30,000 tons to an optimistic
figure of 100,000. Because of the destruction of crushing
mills there is expected to be no imports of o conut oil
from the Philippines. The handling of copra procurement

Commodity prices weaken

Led by a sharo break in rye futures. the futures
markets lost part of their recent gains last week after
reaching new war-time high on Monday. (See Chart
The selling movement chiefly affected the grain markets,
and wheat futures lost 5 cents for the week. Cotton
held about unchanged.

Rye futures decline 3 to 5 cents a bushel on

Wednesday as margin requirements for rye were doubled

by the Chicago Board of Trade, apparently with the object
of discouraging speculative activity. An extensive

L

The BLS all-commodity index in the week ended
June 16 remained unchanged at the previous week's level,
and was 2.2 percent higher than in mid-June last year.

The tight situation in fate and oils, which led to
cuts in allocations and increases in ration points in
May shown some possibility of partial relief by the
beginning of next year as result of recent developments,
although the outlook 10 not yet clear.

with second-grade railroad bonds now standing close to
the highest levels on record and railroad stocks only
moderately below their 1937 peak. Net railway operating
income, (earnings after taxes but before fixed charges)
after running behind the previous year's levels throughout most of last year and the first 2 months of 1945
has since moved above year-earlier levels. However,

0

speculative interest appears to have developed in the
rye market in recent months of rapidly rising prices.
The volume of trading in this minor commodity has
recently been nearly double that in wheat, and the
open interest in rye futures last week exceeded that
in wheat. with no price ceiling, rye prices have
risen far above parity to the highest levels in 20 years.

It now appears more hopeful that copra supplies in

will be under direction of the new1 y-formed Copra Export

Management Company, a private corporation which will be
financed with Government funds.

187

-Under an agreement concluded last month between

and the United States Commercial Company, oils an

Argentina supply of18
linseed
oil to
and
expected
becertain
ande edible
Nations, chiefly for relief and

in Europe, in exchange for shipments
had necessitated the burning of
have snaller heat values. Under
USCC will purchase Argentina's entire
ment, oils, oil in that to which the Argentina. country this vegetable 1945 agree- and

and increased purposes the United
other products
available
rehabilitation
Previously
the
shortage
of of fuel fuel oil to

1946 surpluses of the specified products, to be values. exchanged

for fuel oil according to their relative fuel

No improvement in the lard situation 18 immediately the

eight, although the abnormally slow beginning of

expected in seasonal increase in hog slaughter apparently the

indicates that farmers are holding their hoge off
market for heavier feeding, which would mean an increase
in lard yield. The 1945 spring pig crop, as estimated
last week by the Department of Agriculture, totalled
about 51.7 millions as compared with 55.4 millions last Howand with the announced goal of 55.0 millions. of
year the fall crop 10 expected to show an increase
about ever, 4.0 millions over last year, based on farmers'

reported intentions, making the total crop about equal
to the 1944 figure.

TRADE MARK

MCROSTATE MICROFILM

8

o

0

F.R.B. INDEX OF INDUSTRIAL PRODUCTION REVISED
1935-39-100 Seasonally Adjusted
1939

1940

194

1942

1943

1944

1945
PERCENT

PERCENT

275
275

250

250

225

225

200
200

175

175

150
150

125

125

100

100

75

.

RECISION

:

1939

Office leader)

75

1940

1941

1942

1943

1944

1945

C-349-0

TRADE MARK MICROSTATI MICROFILM

NON-AGRICULTURAL EMPLOYMENT
1940

1941

1943

1942

1944

1945

EMPLOYEES
Milliess

EMPLOYEES
Millions

Monthly
45

45

40

40

35

35

Total Non- Agricultural Employment
so

so

25

25

20

20

Factory Employment
15

15

10
10

5

5

0

.

.

o

PRECISION

1940

1941

1942

1943

1944

1945

one

C-604

RECISION

MICROFILM

MICROSTAT

e
0

STEEL INGOT PRODUCTION
PERCENT
PERCENT

Percent of Capacity

1943
100

100

<1944
90

90

1945
1940
80

80

70

70

60

....
JAN

--

II

+++
FEB

Office of the Secretary of the Treasury

MAR

APR

MAY

JUNE

JULY

AUG

SEPT

OCT

NOV

+1

60

DEC

Source American Irea and Steel Institute
C-532-A

MICROFILM

MICROSTAT

C

RAILROAD EARNINGS
Net Railway Operating Income." Class I Railroads
DOLLARS

DOLLARS

Millions

Milliese
180

180

1942
160

160

40
140

120

120

1944
100

100

so

80

60

60

1945
40
40

A/935-39 Average
20
20

o

o

PRECISION

JAN

FEB

MAR

APR

MAY

JUNE

JULY

AUG

SEPT

OCT

NOV

DEC

"Earnings after ***** be before interest and other Flood charges
- the Serverary International

C-483-8

PRECISION

MICROSTATA

O

0

COMMODITY PRICE INDEXES IN U.S.
1945
MAR

FEB

DEC

APR

out

JULY

PERCENT

PERCENT
104

Delly

(Moody)

stoll
103

267
OF

264

26
100

258
"

255

December

252
97

249
24

244

Commodity

Futures

95

24

2404
93

237
"

234

9:

23:
so

228

...
JUNE

125

FEB

OCT

..
JULY

as

MICROFILM

MICROSTAT

BOLL NO.

0

O

COST OF LIVING AND SELECTED ITEMS
June 1939-100
1939

1940

1941

1942

1944

1943

1945

PERCENT

PERCENT

160

160

Food
150

150

140

140

Clothing
130

130

Combined Index
120

120

Household Furnishings
and Miscellaneous
110

110

Rent Light
and Heat

100

90

.

RECISION

:0
1939

Office Secretary

1940

1941

1942

1943

100

:

1944

90

1945

forces ALA
0-413-C

DEPARTMENT

INCOMING

OF

INCOMING
TELEGRAM

DEPARTMENT
OF

STATE

DIVISION OF 144

CENTRAL SERVICES
TELEGRAPH SECTION

ELEGRAM

STATE

DIVISION OF
CENTRAL SERVICES
TELEGRAPH SECTION

DIVISION OF

O

CENTRAL SERVICES

PLK-35

PLAIN

1945 JUN 26 AN 9 12
Landon
DC/L

Lisbon

RS-136

Distribution of true

roading only by special

arrangement. (SECRET (7)

Dated

Dated June 25, 1945

LIAISON

Rec'd 4 p.m.

June 25, 1945

Rec'd 7:35 Pall.

Secretary of State,
Washington.

Secretary of State
6397, Twenty-fifth

Washington
JUN 28 1945
DC/

1368, June 25, 6 Pell.

LIAISON OFFICE

JDC 447 FOR SCHWARTZ FROM BIELE

Salazar personally approved admission 500 refugee

children ex-concentration camps American Brit zones
selected nonsectarian basis with understanding Joint

FOR DEPT VRB AND EARL HARRISON

Sir Herbert Emerson, director Intergovernmental
Committee. Refugees, circulated memorandum to members
executive committee June 21 recommending that travel

facilities for members of staff IGC be extended by
member GOVTS in line with precedent and model provided

will guarantee maintenance and ultimate emigration.

by UNREA council at its first Atlantic City meeting.

Jewish agency will reserve 300 certificates. Advise

Memorandum contains following resolutions which will

when you wish matter pursued further.

be presented next meeting executive committee IGC which

BARUCH

MRH

will probably be hold before middle July *(1) that the
director be authorized to issue to officials and employees
of the Intergovernmental Committee on Refugees for use

when travelling on official business a document identifying the official or employee and requesting in the
name of the International Committee on refugees that all

appropriate facilities be granted to the bearer' *(2)
That all member governments give full recognition to such
documents

OF

TELEGRAM

STATE
O

O

DIVISION OF 197
CENTRAL SERVICES
TELEGRAPH SECTION

INCOMING

DEPARTMENT

PLAIN

CC-185

Lisbon

-3- #6397, Twenty-fifth, from London.

Dated June 25, 1945

docurents and instruct their diplomatic consular

Rec'd 9:45 p.m.

customs and excise services and any other services which

Secretary of State,

may be concerned to recognise such documents as entitling

Washington.

the bearer to all appropriate facilities" "(3) That in
respect to passports and visas the member GOVTS shall

1363, Twenty-fifth

accord to the officials and employees of the IGO the
same treatment 0.0 in accorded to the officials and

WRB 423. FOR HIAS,425 LAPAYETTE STREET,
FROL DAVID SCHEETTEER HICE

Received dated fifteenth and seventeenth two

employees of comparable rank of their own or other GOVTS"

following cables from Birgan. First one, inform Doctor

*(4) That all member GOVTS take the necessary steps to
0

grant all appropriate and possible priorities for the
travel of the officials of the IGC on official business
and where appropriate to allow GOVT robates for such

Kahum Goldmann Warhaftig Szczupakiswicz "our sixty friends
O

extremely needy asking help. Kalmanowicz Pat familian

travel" *(5) That the member GOVTS make any necessary

receiving regular support except Usivry Graudens Dorbekirtr
Ilutowicz". Second one, Tiffenbrunn asks brother how

arrangements with the director for the application of

Beeri Chavazcleth Hashoron Nathania. Cable immediately

the foregoing recommendations". Department's instructions

whereabouts family Poland. Inform Doctor Nahum Goldmann

respecting foregoing resolutions requested urgently.

150 Heluzin and friends leader Doctor Parnes coming 1939/40

WINANT

from central Europe asking relief. Inform Lider
Landsmannachaft Michel Ivensky Bertl Dworetzky "Lider

WTD

friends here needy asking help. Signed Rabbi Cyperasts ju

Budin Czertok". Dobekircr asks Kantorovicz Burnstrin

Poalcision private relitf. Loon Ilutowicz needy asking
Jacob ApenshJak influence Bernard Elelitov relief.
Please keep us informed.
RB

BARUCH

198

C

CORRECTION

June 25, 1945

NS-1280

Distribution of true

ronding only by special

errangement. (SECRET V)

In anble from Bern 3287, June 22, 2 p.n. for MRB
change serial number to 3286.
DIVISION OF CENTRAL SERVICES
CSB

D

ROLL

TRADE MARK

-2-

June 26, 1945 194

10:45 A.M.

0

Dr. B. W.
Leonard:

tell his about the arrangements about getting
down and getting back. He said he would sort of
like to fix 11 he could. He could leave La Guardia
about five thirty and be here about 7:30.

HMJr:

I see. On Thursday.

L:

On Thursday.

HMJr:

I see. 5:30.

L: (cont.) I certainly wouldn't
HMJr:

L:

HMJr:

L:

HMJr:

Yeah, well, Doctor, I'm not going to go up to the
farm while things are the way they are. mean I
just couldn t rest up there.
I see.
So

L:

Well, that's between the two of you.

HMJr:

Yeah, but she told se last night that you thought I
ought to go, see. But would be very unhappy up
there this weekend until I see better what 18 going

He asked me to ask you to call him and make the
arrangements about the definite time of his coming.

to happen.

I'll do that.
L:

All right, if you will be unhappy,you had better stay

L:

Directly.

HMJr:

I'11 do that.

HMJr:

I think so.

L:

All right.

L:

All right, I'll see you later.

I'll do that.

HMJr:

Thank you.

L:

Bye.

HMJr:
C

L:

HMJr:

Things are going along all right. She had a good
night and she checked all right this morning.
Well, what are we going to do from now until Thursday
to keep her quiet?

L1

Keep her quiet?

HMJr:

Yeah.

L:

Well, we'll use the mild sedatives we have there - the
at night.

medinol
HMJr:

Yeah.

L:

And I told her this morning in not too direct a way

HMJr:

Well, we

L:

I think she will take it all right.

HMJr:
L:

that this thing meant more bed rest.

All right, doctor.
She 18 insisting on your going up to the farm this
weekend. Well, now, frankly if she is doing all right,
I think it wouldn't be a bad idea if you did it.

Joo

here.

RECISION

MICROFILM

MICROSTATA

TRADE MARK

June 26, 1945
12:10 P. M.

ROLL NO

-2-

201
0

HMJr:

L:

Hello.
HMJr:

Dr. Robert
Levy:
HMJr:
L:

Hello, Henry. I's sorry to hear about Elinor.
Yeah, it is a shame, isn't it?
It certainly. It looks as though she might inherit
a mild extension. I would like very much to defer
this until Thursday for two reasons first of all,
because I think at the end of that time, or at least
before then you could get another cardiogram.

HMJr:

HMJr:

Right.

L:

Certainly it would be easier for me.

HMJr:

Well, I don't see

L:

Apparently her condition is good and there is no
urgency about it.

HMJr:

No urgency.

L:

Well, I could - I think probably the simplest thing

would be to go down on the Congressic Thursday
and come back on the night train.

L:

HMJr:

I can get you a bedroom, OF...

L:

You see you can get on that train by ten o'clook.

HMJr:

L:

HMJr:

L:

Or if you want to fly back after supper. Let ne work
on it, may If

is on time.

HMJr:

L:

Yeah.

L:

I think I would know him.

HMJr

Well, he will be down there to ment you.

L:

At the gate.

L1

HMJr:

Yes, it gets in about 6:20?
Yeah, you don't save an awful lot because very often
these planes don't leave on time - they are sometimes
a half an hour to an hour late in leaving.

I'11 have a car and the chauffeur will have a handkerchief tied around his left arm, see? Hello?
Is he that colored fellow?

HMJr:

On which?

Five o'clock on the Eastern Airlines. There is a
plane around five o'clock.

Well. I'll plan to come down on the Congressional, and
I'11 have ay dinner on the train and then I can meet

Leonard there, say by half past eight - if the train

L:
L:

Well, I think probably the best thing 18 to go back
on the night train, if I can get a bedroom.

HMJr:

Well, I can do that, or I can try to get you a seat
there is a plane leaving at 50 clock on Eastern Air-

lines.
L:

I will get you a seat on the Congressional. When would

you want to go back?

HMJr:

HMJr:

I'11 do it.

Yes.

and possibly another count. We'll get more ideas
8.6 to just what the extent of this thing 18.

L:

I personally, if I was ooming down, I would take
the Congressional.

Operator: Dr. Levy.
HMJr:

202

HMJr:
L:

At the gate. I'll buy the ticket and have it delivered at your office - the railroad ticket.
Yeah. I think it is just as easy to come back on
the night train. I mean that will save the element
of uncertainty of flight.
I'll get you a bedroom going back.
That will be fine.

And I'll have the tickets delivered to your office.
All right.

HMJr:

well look forward to seeing you.

L1

Thank you. Bye.

Well, then, why don't I just take the Congressional?

MPRECISION

TRADE MARK

June 26, 1945
2:24 P. M.

203

204
M:

HMJr:

Hello.
HMJr:

Mr. David

Miles:

Hello, Mr. Secretary.

HMJr:

Hello, David.

M:

How are you today?

M:

HMJr:
M:

HMJr:

Oh, 0. K.
HMJr:

M:

HMJr:

How is Mrs. Morgenthau these days?
M:

Just fair.

HMJr:
M:

HMJr:

Mr. Secretary, I hate to bother you with this
thing, but I've got Philadelphia bond trouble.
Philadelphia what?

M:

Bond trouble.

HMJr:

Bond?

M:

M:

HMJr:
M:

Bond, why?

Tomorrow night there is supposed to be a concert
given by the Philadelphia Symphony Orchestra for

M:

a Bond Drive.
HMJr:

Yeah,

Well, that is his job over at War Bonds.
Well, I'11 talk to him.
To keep the Union happy.
(Laughs)
Hello?
Ieah.

And he has done a swell job on it.
That's right.
Why don'
don' you?
you call up Lawrence Houghteling. You know
him,

Yeah.

HMJr:
M:

Look, we've got a very good san that handles all of
this stuff for us. You know Lawrence Hougheling.

HMJr

M:

HMJr:

It i an't anything that

HMJr:
Yeah.

Yeah.

And tell him what it 18 all about.

Right. I will.
And if you don't get satisfaction, let no know.

M:
M:

HMJr:
M:

Yeah.

HMJr:

Well, you
Lawrence, and if you don't get satiefaction,
callcall
meup
back.

Now, somebody came in from Philadelphia today to

see me and tell me that your man Seeton up there
insulted somebody or other, and so the Philadelphia
Symphony arowd aren't going to play.

HMJr:

oh, for heaven's sake.

M:

And they are going to substitute a Jass band, and

this man is all upset the Union is all upset.

HMJr:

Righto. Well, I think everybody wants - they think this
worn out.
fellow
has gotten a little bit temperamental, he is probably

The Union cleared it. and it was advertised and
they' ve sold two million dollars worth of bonds.

They think they are going to get a black eye.
Well, let me -- look

M:

HMJr:
M:

You bet.
Thank you.

Righto. Thanks

MICROFILM

MICROSTAT

TRADE MARK

ROLL NO.

June 26, 1945
3:00 p.m.

H.M.JR Yes.
INTERNAL REVENUE

MR. ATKESON: And I have had two or three conferences

Present: Mr. D. W. Bell
Mr. C. S. Bell
Mr. Pehle
Mr. Gaston
Mr. Haas

Mr. Trey
Mr. Woolf
Mr. Wenchel

Mr. Atkeson

Mr. Oliphant

Mr. Tickton
Mr. O*Connell
Mr. Sherwood
Mr. Nunan

with Mr. Hans and Mr. Tickton, and as I reported to you

yesterday, We have made what we think is considerable
headway in the matter of developing schedules necessary

to carry that out. Now, no are not too positive, of

course, as to just how far we should go. The big thing
is to tie in as closely as possible to the present operating
methods from the standpoint of gathering statistics, in
order that we might be fortified with a lot of background
material that we have today, which we think you would be

interested in. So, I think it's a question, if you let

me suggest, of leaving the thing with us for a few more days
so that we can, with Mr. Nunan and Mr. Haas, come to some
final agreement as to what additional data may be needed
to meet the program, and I personally feel, and 1 think
Mr. Hass does too. that We have a fairly good understanding

of your objectives and doing everything we can to

C

H.M.JR: All right. who said Internal Revenue is
short of manpower, huh? (Laughter) I said, who said
Internal Revenue is short of manpower?

MR. NUNAN: You can start to recruit here.

H.M.JR: Look, Commissioner, I have a little agenda

here. The first thing is the question of statistics,
huh?

MR. NUNAN: Yes, sir.

H.M.JR: will you tell me where we stand, please?

MR. NUNAN: After I left last week, I talked to
Atkeson, whom we proposed to appoint as head
Mr. statistics. I asked Mr. Atkeson to come over here Mr. this
afternoon to tell you what he has talked over with
Haas, and just what the situation is, Mr. Atkeson.
MR. ATKESON: Mr. Secretary, Mr. Haas prepared an

outline of the type of statistics that be thought was
along the line you were interested in.

develop the program to meet that.

MR. NUHAN: Mr. Secretary, before Mr. Atkeson finishes
may I say I understood from Mr. Atkeson last week it will
be & rather simple procedure if we can submit to you
once a month the additional taxes that are being collected

as a result of this drive. However, if we're roing to

have to break them down to say that thousand dollars
cane from the food industry, or two thousand dollars came
from some 0 ther industry, that that's going to be a
little more difficult and complicated and a little more
burdensome to the Collectors, officers, and Internal
Revenue service. If it's satisfactory to you that you
know the difference or the results of this drive in
dollars and cents rather than where it's coming from,
that's going to be more simple procedure. Is that right,
Mr. Atkeson?

MR. ATKESON: Yes, the business classification.

as to it, that is, the business in which the income tax-

payer is engaged. does complicate the thing very

materially, but We have been trying to simplify that,
but under the present, that is at the moment, there has
been no agreement other than the business classification

PRECISION

TRADE MARK

MICROSTATA

MICROFILM

ROLL NO.

208

207
-4-

-3has been originally suggested, and If you could waive

that, and I might say this, the point at issue is this:

In the case of the income tax returns audited in the
Revenue Agents' offices, which from & money standpoint
constitute probably three-fourths of the money, We can
get the business classification very easily, but in the
case of the income tax returns audited by the Collectors,

it would be a rather difficult proposition. That

represents only about five percent of the money, but
as Mr. Haas points out, the large number of retail
food stores, for example, will be found among the returns
audited by the Collectors, and the picture from a purely

statistical might not be so good. So. It's

a of how you you need

H.M.JR: Plus the things I asked for yesterday?
MR. ATKESON: Yes, sir. We are working, Mr. Secretary,
with Mr. Hass on the progress reports. You asked yesterday
in connection with the progress reports in order that you
might be able to tell the backlog In any Agent's office.
H.M.JR: Yes.

too minute

MR. ATKESON: Well, we have pretty good figures today
on that, even though we don't have it on the four-week
basis you indicated. We have it on a quarterly basis,

H.M.JR: Well, in t he first instance, let me get
the figures, and then if subsequently I want it broken
down into various classifications of industry, I'll

much difficulty cone there, I think. I asked you a
ago to give us just a few more days to develop those

MR. NUNAN: Fine.

H.H.JR: And get the gross figures, and then If
somebody wants to know how much is alcohol and how much

is food, we'll talk about that later.

MR. NUNAN: That will be a great help to us if you
break it down that way. We'll start immediately.

H.M.JR: I like to be helpful.
MR. NUNAN: All right.

H.M.JR: Now I take it, Commissioner, you are-MR. NUNAN: Mr. Atkeson is going to head that
department. He's going to take charge of that.
H.M.JR: Wonderful.

MR. NUNAN: In talking to him the other day, he
said If we have to break it down that the work Involved
$

charge.

really question standpoint badly think would
this picture by industrial or business classification.

ask for it. Let's get the thing started.

o

might prevent him from doing it, but as long as you
have asked for what you have, Mr. Atkeson can take

but we could around to the four-week basis without
schedules.

H.M.JR: That few more days sounds very reasonable.
While I'm here, I've got this memorandum from
Charles Bell, signed by the Commissioner and Mr. O'Connell,
which I have okayed. (Indicates attachment A.) The only
thing I haven't okayed, Charlie, is the memorandum from

ne to you, one page and before I do that--I'll do it.

but I do want both Mr. O'Connell's and Mr. Nunan's initials
on it. (Indicates attachment B.)
MR. C.S. BELL: Yes, air, I cleared the memorandum.

H.M.JR: But there's no indication that they have

initialed it. Now, if they will initial this top

memorandum. I did add a word there. I put in "O*Connell",
but if O'Connell and Nunan will sign that top page, it's
all right with me.

MR. C.S. BELL: All right, sir.
H.M.JR: It sounded very good. Now the other thing

210

204

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-5want to contaminate some of you people.
MR. NUKAN: Do you nean you want me to leave?

(Laughter)

MR. D.W.BELL: That was quick.

H.M.JR: That was very quick. I read in the New York
Tribune of a plan to look for unreported dollars among-I don't know what it was--receivers of tips, and waiters.
Fifty agents have been put to work entirely on black-market
incomes. (Quotes from article in the New York Herald
Tribune, June 21, 1945, Attachment c.) drive concentrated
on those service trade workers--maiters, taxi drivers,
barbers, manicurists and beauticians--whose tip incomes
have doubled and tripled during a war boom was reported in
Newark by Robert Smith, chief field deputy for the Fifth
New Jersey District. Such tip-receivers, and so forth-I think you'll agree with me, Commissi oner, that before we
go after these babies, we better go after some of the
fellows from one hundred thousand dollars up.
MR. NUNAN: Smit is in the Collector's Office and
probably he got some of the Deputy Collectors, who are
not in the high class Revenue Agents, to make a drive on
this, but that can be stopped. That was done on his own.
MR. O* CONNELL: I'd like to raise a question there.
It seems to me that there's . place--it may be a matter

only of emphasis, but we've got thousands of Deputy
Collectors and other people not properly equipped to
handle complicated tax cases involving one hundred
thousand dollars of income, but they have work to do.

Their job is a matter of routine checking of al the

lower grade income people, and I don't think we ought
to reverse the emphasis to stopping the doing of that
kind of work.

H.M. JR: I don't want to read about it in the papers.

I can't tell-0

MR. NUNAN: I think that's right.

MR. GASTON: I think it's a good idea that you

should read about it in the papers. I think it's

a

we have to discuss, one other thing, and then we get
into very parified atmosphere--politics, and I don't

good idea that some of the people who have quite considerable income from that source should get the idea
we are looking for that, too.

H.M.JR: I respectfully differ with you.
MR. GASTON: I add my respects, and we '11 continue

to differ.

MR. D.W. BELL: They are even after taxi drivers, too.
H.M.JR: Excuse me, that's where OPA fell down on

their nose and haven't got over it yet.

MR. O'CONNELL: May I add one thing?
H.M.JR: Sure.

MR. O'CONNELL: I don't know whether it adds anything,
but it may be a matter of emphasis. It seems to me we
should at some point stop thinking of this drive as an
interim drive on black market operations and people having
one hundred thousand dollars of income. As long as we have
high tax rates and high incomes the enforcement problem
in the Bureau with respect to all taxes is going to be
greater than we ever had before, and it seems we should
not discontinue-walthough, admittedly as a matter of
emphasis, I don't want to see a lot of publicity on small
profit,--I don't want to keep the Revenue service from
attacking problems on all fronts.

H.M.JR: Certainly, if Mr. Nunan has people that

can do that kind of thing, and have the time all right,

but I want the emphasis placed on the big fellow, and
when I pick up newspapers, with all due respect to Mr.
Gaston, I want to read about the big fellows. Now, I
inherited from my predecessor in this office. and the
Attorney General, the bootleg thing, and they batted their
heads against the wall all through the bootleg era, going

after little fellows, and all they got was a lot of

agents shot in woods, and they got somebody with a five

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(

or ten gallon still, and fellows living in the WaldorfAstoria got away with murder. So, I'd like to see-I want everybody to do everything they can. I agree
with Mr. O'Connell, there's a three hundred sixty-five day
job for a good many years to come, but as far as the
newspapers are concerned, I would like to continue

H.M.JR: Well, of course, you and I don't
on that. I think we have to talk first, because agree by the

time it gets around to indictments, it's only the

United
States
and the Department of Justice,
and
they
forgetAttorney
we exist.

to

stress the big shots. Are we all right?

MR. O*CONNELL: I just don't want to have these
people all stop work.

MR. O'CONNELL: I know, but at some point--

H.M.JR: But if the Commissioner agrees, I'd
like you to have a little meeting with him, with
Feltus and Fussell, and start right. I don't

MR. NUNAN: Of course, Mr. Secretary, on that I had
or two letters from some Collectors asking about
one publicity, and I wrote back and said that the drive
was emanating from the Treasury and any publicity that
should be given to it should come from here. How this
statement went out I don't know.

let him be there one who knows public relations
and advise with the Collectors and do i t gradually,
work it up. How about that, Nunan?

H.M.JR: I'm glad you raised that. I'd like you to
try possibly raising the ban on that. If we could pick

one good man in the important places, each place, New York,

would rather have it come from here, the way you have
been giving it, because you're going to get more
you're going to be surprised to read, I don't care who
the man you put in.

the Collector at New York or the Collector at Chicago, 80
that we get good publicity. I think we have got to let
these fellows talk.

H.M.JR: will you think It over? I'm not pushing.
I don't
want
themhere?
to feel they couldn't talk. You think
it's
better
to come

where, New York or Chicago, and pick a good man care and

MR. NUNAN: If you want it,it's all right. I

Chicago, somebody that has some judgment, who could assist

MR. PEHLE: I noticed in one letter that came in
there's no local publicity, and the cause for that is there
are no local people giving it out.
H.M.JR: Joe, can you arrange this week end a
that Fussell could sit down with the
little Commissioner meeting with the idea of possibly either designating

somebody in each of these more important offices, and
then maybe of a little work sheet to guide them-- what
we would like, you see, what they would like to follow--

Feltus is very much interested In this too.

MR. O*CONNELL: Looking ahead a little, the best
publicity we can hope to get, and that she 1d be almost
entirely local, would be the good effects that come
out of reports of indictments and convictions.

MR. NUMAN: Yes, then you can control it.

H.M.JR Suppose you have a little talk and come

back and see me again.

MR. O'CONNELL: Good.

H.M.JR: Anything before we go into parified

atnosphere?

MR. O'CONNELL: On the statistical thing, I should
have reised it before, it's a minor point and relates
to statistics generally in connection with revenue
statistics and Atkeson's position. Blough is generally
responsible for, and has a great interest in, the type
of statistics on income that come out of the Bureau.

213
10

-9-

MR. C.S. BELL: It's in there enough for the Bureau

of the Budget to identify it. (Laughter)
I don't know how close he has been to this operation;
I gather not very close. I want to be sure no changes
made in the Bureaus collection of statistics would out
across anything he has interest in. He has no interest

in progress statistics, but you know his field. In
addition, Roy is very anxious, and rightly so, that he not

be deprived immediately of the assistance Mr. Atkeson
has been giving him and other people on the Hill on the

Tax Bill. That's most urgent in t he next two or three
weeks.

MR. NUNAN: Mr. Atkeson said he could handle this

if it wasn't a breakdown and still do this.

H.M.JR: Was he on the Tax Bill? I thought it was
getting your appropriation.
MR. O'CONNELL: Oh, no, the Tax Bill.

MR. NUNAN: As a matter of fact, he's our general
utility man and does a good job any place.
MR. ATKESON: We service theDivision of Tax Research

in Mr. Blough's office in respect to all financial data

he needs from tax returns in connection with formulating
the tax program.

H.M., JR: What did we get out of the House Appropriations
Committee?

MR. C.S. BELL: Sixteen million three hundred thousand,
with a blank check for next year.

H.M.JR: Isn't that what I asked for?
MR. KLOTZ: You got everything you asked for. Did
you see Kluttz this morning?

H.M.JR: Yes. I smelt Charlie Bell. it snelt good.
MR. D.W. BELL: Did they put the blank check in the
report.

H.M.JR: All right. Well, now, I want Mr. Gaston,
Pehle, O'Connell, Commissioner, If you are interested.
Dan you can stay.

MR. D. W. BELL: All right. I don't know what it's
about, but I'll stay.

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Attachment A.

TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION

DATE June 23, 1945

Secretary Morgenthau
FROM

Charles S. Bell

Subject: Current Plans for

Internal Revenue Expansion

In addition to the steps already taken and reported to
you in earlier memoranda, Commissioner Nunan, Mr. O'Connell
and I have agreed to the following procedures for expediting
the development of a top notch law enforcement organization
in the Bureau of Internal Revenue.
PERSONNEL PLACEMENT
#

Instructions have been issued to Collectors to release
five men each to the Special Agents, Intelligence Unit, in
their respective districts in order to form a nucleus of
trained personnel for the expanding investigative service.
These instructions will be supplemented by directions to
release an additional number of experienced deputy collectors
who are acceptable to the Intelligence Unit and deserving of
promotion.

Similar instructions will be issued to Supervising Agents
in Charge, Alcohol Tax Unit. Further, experienced Revenue
Agents who have shown special interest and aptitude for investigative work shall be transferred if mutually agreeable to the
Revenue Agent in Charge and the Special Agent, and approved by
the Bureau.

The transfer of these men, with the exception of Revenue
Agents, shall be made without prior approval from Washington,
and the Collectors shall be automatically authorised to promote

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from within to fill vacancies thus created and to recruit
locally to fill zone deputy collector positions at the
entrance level.

In making these transfers the transferred employee shall,

if otherwise entitled to the privilege, be transferred with
reemployment rights on the Collector's Office.
Concurrently with the recruitment of new personnel,
qualified Revenue Agents and Special Agents shall be pronoted in accordance with the Bureau's promotion from within
policy.

The previously established ratios for stenographic and
clerical employees shall be controlling at this time and
all offices are to be instructed to recruit accordingly.
SUPERVISION

In connection with the enlargement of existing and the

establishment of additional field offices, supervisors will
have to be developed and assigned to construct these offices.
Sufficient intermediate supervisors must be developed rapidly
in order to maintain an acceptable standard of production
and st the same time provide adequate supervision and on-the-job

training for the new recruits.
For the most part, the supervisors should be selected
from existing personnel in the Special Agents' offices. Consideration should also be given to the best qualified employees
transferred from the collectors' offices. Procedural instructions, directing the special agents to carry out such plans
will be prepared and released to the field.

a

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26

TRAINING

The training of new recruits and newly appointed supervisors shall be developed by Mr. Elmer Irey, with the concur
rence of Commissioner Numan, The existing facilities of the
Coordinator's Office and the Bureau of Internal Revenue shall

be utilized for this program and it will be carried out in
each of the Special Agents' districts. The training program
already under way in New York City will serve as a pattern

for the other Districts. In the event . given district has
no personnel available or qualified to carry out the training
program, arrangements will be made to provide training
specialists from Washington or other Districts.
CHARACTER INVESTIGATIONS

Character investigations of all new recruits shell be
the responsibility of Mr. Elmer Irey, and instructions will
be issued to the District Coordinators immediately, outlining
the new type of streamlined investigation that is to be made.
SPACE AND EQUIPMENT

With the exception of 25 cities to be covered by the
Treasury Department's space control staff, authority to lease
space and purchase equipment subject only to post approval
by the Bureau shell be greated each Special Agent, Intelligence
Unit, and each sevenue Agent in Charge, Income Tax Unit, as

well 8.8 Collectors. This authority small be conditioned by
the prevailing ratios employed by the Bureau

Procedural instructions implementing this authority will
be prepared immedietely. If possible, present recommendations

of the Agents for the establishment of field offices in certain
cities will be approved immediately Lo expedite the establishment 9. the offices.

&

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217

WORK LOAD PROGRAMMING

The Bureau will take immediate steps to survey present
operating procedures with a view toward making such changes
in organization and methods as may be necessary to channel
and distribute the work of the Bureau in harmony with the

expansion of respective offices. In this respect it is
agreed that the tentative expansion quota set may be subject
to change during the next few months.
INSTRUCTIONS AND DIRECTIVES

All policy directions regarding personnel, organization,
space or equipment snall be promulgated over the signature
of the Commissioner of Internal Revenue, with the advice and
concurrence of the General Counsel and the Administrative
Assistant to the Secretary.

Concurred in:
Commissioner of Internal Revenue

General Counsel

Approved:

Mayouthan
Secretary of the Treasury

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Attachment B.

TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION

DATE June 23, 1945

TO

FROM

Mr. Charles S. Bell
Secretary Morgenthau

During the next few months I think that you oan be of
special service to as and the Commissioner of Internal
Revenue if you arrange to devote a large portion of your
time to the administrative problems connected with the
Revenue lan enforcement expension.

douth o'comull and

Specifically, I want you, with Commissioner Nunan's con-

currence, to advise and assist in putting into operation
adequate procedures for recruiting, training, distributing,
promoting, and transferring persons engaged to work on this
drive, You should give the Commissioner every assistance
possible on problems of space, office equipment, and related
administrative services.
I went you, Hr. O'Connell and Commissioner Nunan to
examine thoroughly the present organizational setup in the
Bureau of Internal Revenue, including the possible need for
top administrative personnel. The three of you should submit for my approval such plans for changes as you may agree
are necessary to schieve maximum effectiveness in this canpaign, and for the permanent improvement of the Bureau,

I am detaching Mr. Elmer Irey from his other duties to
assist, temporarily, you and the Commissioner in carrying
forward this special program of work.

OKIONS.

ging

geer

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Attachment C

Herald one Tribune
JUN 21 1945

Tax Men Look
For Unreported

Dollars Here

Federal Agents Expect
Uncover Huge
Delinquent Income
The

219

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221

June 26, 1945

4:20 P.M.

HMJr:

220

Hello.

Hello, Mr. Morgenthau.

HMJr:

Speaking.

Mr. Morgenthau, Mrs. Mellen.

HMJr:

I be able to get them up . little bit, but
I know. The woman was down
She
was
going
made mightoffer.
don't that
today
will and
talk beback
she toto
in- her

M:

Mrs. George
Mellen:

M:

Yeah. In that the best you can do?

HMJr:

husband and whether there enthusiasm

creased or lessened I can't tell you.

HMJr:

No, I haven't had anybody else. I tried, but have as I
say, people who want large places are apt to
their plans made before this.

Yes,
M:

I have some people who would be interested in taking

M:

over the Cotuit House.

HMJr:

Yes.

Unfortunately, they don't want to pay but $1500,
but we don't have many people coming along looking
for large houses right now and thought I had
better let you know about it. The desend for the
large houses 18 almost evaporated. People make their
plans ahead of time, you know.

M:

HMJr:

Ahuh.

HMJr:

to Mrs. McLeod.

HMJr:

From when to when?

M:

What was that?

interested.

HMJr:
M:

HWJr:

M:

HMJr:

HMJr:

M:

HMJr:
M:

HMJr:
M:

They want it for the season?

Well, July let to September 15th. I mean you weren't
planning to use it at all were you?
Well, I didn't know whether I could maybe get up there
for a couple of weeks in the Fall or not.

HMJr:

they don't want 11 after the 15th of September.
No that's -- I forgot that your - when I was talking into
th them the first time that your lease went they
October so I told them September 15th. So
wouldn't expect it after that.

Now we want to make it perfectly clear that I will
be in no way responsible while they are the tenants.

They will.

M:

Yeah. Well, I'm going to talk with them tomorrow and I

I'll see what - if I can get then up a little bit,

will.
HMJr:
M:

(

I'll leave it in your hands, but I think that if

HMJr:

Yeah. They want it from when
July let to September 15th.

It is quite a drop but it is better than nothing.
That's true. Well, see what you can do, Mrs. Mellen.
I'll leave it in your hands.

I know, they will understand that and, of course. will
oh. they will take over all the utilities, and they
pay you all in one payment.

M:

Well, I told them September 15th, and I looked up
afterwards and found that your lease went to October 15.
That's right.
And that would give you a month there.

Well

All right, Mr. Morgenthau.

M:

M:

HMJr:

Yeah.

And I haven't been able to get anybody else at all

M:

And I'm sure it's a family that would be acceptable

M:

Have you had anybody else?

See what you can do.

I will.

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-3HMJr:

of them made their plans by now.

HMJr:
M:

222
223
June 26, 1945
4:20 p.m.

Thank you.

as I say, it's too bad. but of course, people
But,
are going to have a large place like that most
who

M:

ROLL NO.

All right.
All right, thank you.

HMJr:

Thank you.

M:

Goodbye.

BRETTON WOODS

Present: Mr. White

Mr. Luxford
Mr. Pehle

Mr. O'Connell

Mr. Feltus
Mr. Bernstein

H.M.JR: Hello.

Well, I got a very quick report from Joe O'Connell
from the Hill.
MR. O'CONNELL: It was very quick because there

wasn't much to tell you. Harry and I went down to

see Senator Wagner and Tobey about the points you
discussed this morning about the extension of the
Stabilization Fund. Neither of them seemed to have

very such interest in it and the only thing got
out of it was that they were quite hopeful that
this was . pretty good chance of getting the bill

passed by next week, and they didn't see any particular
reason for attempting separate legislation for the
Stabilization Fund, although I had difficulty knowing
whether Wagner was focusing on it at all.
MR. WHITE: It was the first time I had seen
Wagner so almost certain of the passage that there
would be no trouble about it.
MR. O'CONNELL: That was the only encouraging

thing about it.

MR. WHITE: But he left the thing a little in

the air whether they would raise the thing Tuesday,
because it was the day before the Fourth of July.
Tobay thought they might preferably wait until the
following Monday, and he did not say definitely
but the assumption was they were going to have
It

Tuesday, begin the discussions Tuesday.

225
224
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O

H.M.JR: He can't push Wagner into this?

MR. *CONNELL: I think if I can reach Barkley on
the phone before the end of the day--they have been tied
up on conferences on the OPA bill all day. It seems with
Barkley we could have a little more hope of success in
giving the thing a push, and this Fourth of July business
Is ridiculous. The fact that the majority of Congress
won't be here the Fourth of July isn't any reason for
not introducing the bill and starting discussions on the third.
MR. WHITE: One thing is Senator Wagner has an hour's
speech, and I think he probably is going to be reluctant

MR. O'CONNELL: Tobay can.

MR. WHITE: It was Tobey who suggested not having it.

MR. O'CONNEL: That's the trouble, but Wagner didn't
seen to pay much attention to that.

H.M.JR: Is there any use in my calling Biffle?
MR. O'CONNELL: No.

to talk to five Senators.

H.M.JR: Why not?

MR. O'CONNELL: He can talk on the third.

MR. O'CONNELL: The one person to call, and Harry and

MR. LUXFORD: Everybody is going home and they want

I agreed I would do it when could reach him, was

MR. WHITE: However, that is uncertain.

H.M.JR: I don't mean on stabilization, just on
where the bill stands. I haven't talked to Biffle
in week.

to be home on the Fourth of July.

H.M.JR: Is it a good speech, Bernstein?

Barkley.

MR. BERNSTEIN: It is a good, dull speech. It's

MR. WHITE: There is a little danger now. Wagner
might think you are going over and beyond him.

H.M.JR: Do you think it would do any good to

MR. PEHLE: Isn't everything going all right? Why
don't you leave it alone?

what he wanted. (Laughter)
call Tobey?

MR. LUXFORD: It's going very well.

MR. WHITE: Not Tobey, Tobey is all right. I think
Barkley is the man who--

H.M.JR I was thinking if Wagner made a speech on
the second, I might remind Tobey of the last Fourth of
July oration he made at Bretton Woods.
MR. WHITE: Wagner reminded him of it.

H.M.JR: But there is no chance of getting Tobey
to do it again?
MR. O'CONNELL: Tobay will make . speech all right.

H.M.JR: I don't know if you boys are right if it
is going to be . week from Tuesday.

MR. O'CONNELL: The thing is good. The thing I
thought you were worried about was the Stabilization
Fund.

H.M.JR: There is one thing, but I thought of Biffle.
MR. FELTUS: When are they talking about recessing

for the summer?

H.M.JR: Wagner won't know if I call Biffle.

227

226
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D

MR. O'CONNELL: I don't see what you could get
from Biffle.

MR. WHITE: Biffle might tell Wagner you called him
to find out about this thing, and the fat would be in
the fire.

MR. FELTUS: Biffle will play ball. Ask him not

to mention it to Tegner. He 1s politician.

MR. WHITE: Mr. Feltus. Wagner is getting very primedonnish. The least word--today, for example, he said something.
MR. BERNSTEIN: If they don't take it up Tuesday,
why do they have to wait until the following Monday?
Why can't they do it Thursday?
MR. WHITE: There won't be anybody there after

Thankegiving--after the Fourth of July. (Laughter)

0

They are going on a long week end beginning Tuesday.
MR. LUXFORD: They won't be here Monday.

MR. FELTUS: Biffle started his Fourth of July
vacation today.
MR. WHITE: They can get the votes, but they might
vote on the amendments. That's the danger.
MR. O'CONNELL: That's only an assumption.

H.M.JR: The thing I an worried about is this may
get into a tangle with San Francisco.
MR. WHITE: Could be.

MR. LUXFORD: On the other hand, you don't want

word to get out that Morgenthau is insisting they
don't take their Fourth of July holiday, because
that would make them and.

H.N.JR: You fellows don't give me credit for any
common sense.

MR. LUXFORD: I said you don't want word like that
to get out.

H.M.JR: No, all of you. I didn't just mean Luxford.
MR. WHITE: There is . representative of the Mead
Committee--

MR. LUXFORD: I'll give you . little credit. (Laughter)
H.M.JR: Just a soupcon. That's French for dann little.
MR. HITE: I never heard of that.
MR. BERNSTEIN: S-o-u-p-c-o-n, but it takes a little
longer to say. (Laughter)

H.M.JR: Well, anyway, I find you all very dull.
(Laughter) If you weren't all very polite, you might
say, That makes it unaninous.

MR. O'CONNELL: It doesn't seen there is any chance
that San Francisco will go ahead of Bretton Woods if
we take next week and the following week. San Francisco
doesn't get here until next week.

H.M. JR: If you fellows don't worry, I am going to
worry.

MR. PEHLE: Then we can say we told you so.

H.M.JR: That doesn't help.
MR. WHITE: Something we might have to worry more
about is the Mead Committee is meeting tomorrow, and

they propose--their representative was here and they are
informing us--to talk to us, and they propose to go

(

229

228
-6-

0

(

MR. LUXFORD: Yes, until after Bretton Woods.
into the question of exchange rates, who determined

H.M.JR: I agree with Luxford.

then, what was the basis of it, why the difference of
opinion, and 80 on. They have got quite . few questions.

MR. WHITE: We have to do some awfully fast work if
that's the case.

MR. FELTUS: Who is?

MR. O'CONNELL:IsitanExecutive Session?

MR. WHITE: The Mead Committee, and they have already

picked up a lot of stuff.

MR. WHITE: An Executive Session.

KR. PEHLE: Who is their representative?

MR. LUXFORD: They will approach you out on the
Floor. You don't know what the rates are.

MR. FELTUS: Rudy Halley.

H.M.JR: Who will take this over and try to get it
postponed? those baby will it be?
MR. WHITE: I wouldn't even know how to go about
that, because Senator Head--this is a mall part and
they want a report.

MR. WHITE: I don't know.

MR. PEHLE: Halley will play ball.

MR. WHITE: It isn't a question of his playing ball,

it's the Committee.

Biffle could handle Kilgore

is
members and is
in it. You can find out what is on

MR. PEHLE: Do they rely on investigations or--

one MR. of FELTUS: the top ranking going Mead, very from and active him.

MR. LUXFORD: Postpone it until after Bretton Woods.

I will find out, if you like, but if It is Ferguson
who is doing it--Kead is a lot weaker person than
Ferguson, and Ferguson is running away with that

MR. WHITE: It was postponed until tomorrow, but they
have got . lot of other items on the agenda. They want
to know all about surplus property, and they are disturbed
about the evaluation of lend-lease in reverse, and so on.

Committee.

H.M.JR: Boys, put your heads together. I think
it would be very unfortunate if we had to testify.

Now, I agreed we could have somebody there.

H.M.JR: Who is that?

MR. WHITE: It is an Executive Session. They say

it isn't to testify, it is just a conversation.

MR. WHITE: They want Treasury, State, and FEA.

MR. PEHLE: Who more you going to send up?

H.M.JR: Whom did you nominate?

MR. WHITE: I was going up.

MR. LUXFORD: You would get into a fight about what
the rates would be before Bretton Woods is through.

MR. O'CONNELL: Not exactly. The sessions have been
pretty well handled, and they haven't sounded--

That's the kind of thing Biffle ought to be able to
pull us out of.
MR. WHITE: Do you want to postpone it?

1

TREASURY DEPARTMENT

230

INTER OFFICE COMMUNICATION

-8MR. LUXFORD: You let them cover . fight between
War, State, and Treasury.

0

DATE 26 June 1945

TO

FROM

Secretary Morgenthau
Mr. Luxford

MR. WHITE: They already know the Treasury opposed

an increase in rates from seventy-five to fifty In
North Africa, that me started with seventy-five and
fifty was imposed. Now, I an sure that I could--

Apropos of my report to you yesterday on

MR. LUXFORD: Why fan it?

Burgess' testimony before the Senate Banking &

MR. WHITE: No.

Currency Committee, I am attaching today's

H.M.JR: Look, suppose you fellows adjourn to somebody

newspaper reports.

else's office and talk about it. But I think it would be
too bad, and I would like to talk to Feltus on another

The interesting thing is that all of the

matter.

Good afternoon.

newspapers headlined Burgess' testimony as

indicating the ABA will accept the Fund.
QOL
Attachments

PRECISION

TRADE

MARK

MICROSTAT

MICROFILM

The New York Times.
JUN 26 1940
C

SWITCH TO ENDORSE

WORLD BANK PLAN
American Bankers Also Accept

Fund but Suggest Medify.
ing Bretton Woods Plan
WASHINGTON June 25 in
The American Bankers

ROLL NO.

232

PRECISION

TRADE

MARK MICROSTAT MICROFILM

ROLL NO.

233
The Journal of Commerce
JUN 25 1945

Burgess Drops Opposition to Monetary Fund
ABA President Calls for
Safeguards Rather Than
Delay to Senate Body
(Marces Journal of Commerce

RECISION

TRADE MARK

MICROSTAT

MICROFILM

THE - SUN
JUN 26 1945

IA.B.A. SHIFTS

ON BRETTON
Now indorees Monstary Agree
ments With Certain Changes

MICROSTAT

MICROFILM

REG.U.S.PAT.OFF

ROLL NO

The Washington Post
JUN 26 1945

ABA Amends Bretton Stand,
Asks Funds Be Provided Now
Press

the

"

The American Bankers Associa- House of Rege voted
its lativesapprove
has

tion, changing an earlier position at He the Senate should

-

Indereed the Bretton Woods more make the additional "clarific ations

tary agreements yesterday with be outlined and issist
uponStates
them .
United

provise for certain changes Previ

conditions

of

bership in both fund and bank

only had opposed portions of the colleague of Burgers - ABA

plan outright

presi

who

W Randolph Surgeon ABA great deat Hemingway the Mercantile Commerce

dent. suggested that the same Bank Trust Co. of SL Louis take
board directors should govern the immittee the United States

both the probosed should extend Great Britain credit

international eliabilization fund tide through the transition pe

the $9,100,000,000 International ried from war to peace. life 4H

bank for reconstruction and reha
bilitation

net name any amount

Senator Thomas ID. Okia.) ..

Burgess Initially had represented peared before the committee to at

ABA opposing the fund, center vocate two proposed amendments

of most of the opposi to the Bretten Woods plan. one
However,
Banking

agreements
Senate

told

authorize the Treasury to mint $35
another

allow

the "fund" - well - the use its surplus all
and

would be fessible with -

from

Declaring that the
fund

the

to

payment of the Ameri
subscription to the proposed
poin. containing an
gold need only be theo

advances"

character
from

needs

be experated requirement Thomas declared. rather

member nation purchasing actual circulation
The
leader

change

be

hand

Burgess

show

and

a/m

they

de

praised

the plan of 44 member

of

within

playments

make

months

refered

to

TRADE MARK

w

PRECISION

agree

said
the

his

Nation

the

ames

Senate
quests

"on

pound

basis

Ather

paper

MARK

New York I Telegram
JUN 25 1945

ABA Ends Opposition
To Monetary Fund
that

-

PRECISION

de

Randolph
the

TRADE MARK

MICROSTAT

MICROFILM

NO. U.S. PAT. OFF.

The / Sun
JUN 25 1945

BANKERS REVERSE
ON BRETTON WOODS
Washington June (A.
American Bankers

=position
reversed
today its
recommending that Con
greas posipone effect of the pro
posed 600.000,000 International
fund

W. Randelf Burgers

of.the said

it is "feasible" go ahead

the fund as the twin the M.
100,000,000

Woods

the
in

PRECISION

of forty-four

Mr.view
had
the
fund

to

Committee
Banking

Senate

day that changes
House

has

legislation

Mr

questioning
Ohio),
fund
distine

that
for

fund and and had

tion to favor its
This

Senator

led

Barkley

Ky

A.S

A.

Burgess

Mr.

statement
amendment

House

had

partly" clarified the short
character advances made

member nations from the fund
He advocated clearly stated
quirement that members making

purchase of exchange from the

fund agree to repay with eigh
mentha

that they
do

"This condition should not be

subject to Mr Burgess
Federal

the

other

banks

definite

turly

suggested

Burgess
that

and

the

fund

directors
of

the

spelling

two

lold

ROLL NO

PRECISION

TRADE MARK

MICROFILM

MICROSTAT

ROLL NO

THE WALL STREET JOURNAL
JUN 26 1945

Burgess Calls Fund Feasible
The

Senate Group Proposes
Silver-Be Given Role in

World Monetary Fund
Bloc Seeks to Tie Drive for Recogni

tion of This Metal to Bretton
Woods Pact

bloc

WASHINGTON
undertook

monetary

Bretter
Senator
told

its

RECISION

TRADE

MARK

MICROSTAT

MICROFILM

ROLL NO

Herald Tribune
JUN 2c 1945
1

E

Burgess Urges
Safeguards for
Monetary Fund
L.B. A. Head Approves in
Part Bretton Woods Plan

Hearing in Senate

RECISION

MICROFM

MICROSTAT

TRADE MARK

June 26, 1945
2:37 P. M.

ROLL NO.

240
241
$

HMJr:

HMJr:

Hello.
B:

Attorney

HMJr:

Gen. Biddle: Henry.
HMJr:

Yee, Francis.

B:

I've looked at the file now on the man that

B:

Henry, you called se about - Charlie Carr. Do you remember?
HMJr:

Very well.

HMJr:

c

summary - I've also talked to Matt Korres and two

B:

My three of the other people. My summary is about show

or this. I don think there is any evidence to

B:

was Black or lax,or not on his toes I out think there. an

HMJr:

I that don he think he is a top-flight lawyer.

abler lawyer would have gone into this thing more

HMJr:

Yeah.
B:

I know Carr quite wellgood
personally,
little I think impulsive he is a judgment,

B:

man quite of vigorous, moderate but not very well, technically, 6-

quipped for a really important position.

HMJr:

HMJr:
1
B:

I see.

HMJr:

That 18 about my summary. In other words, I think a
you can trust him as an individual, but not as
lawyer, 10 you see what I mean.

B:

HMJr:

B:

Well, how about his judgment

HMJr:

I don't think it 18 very good, Henry, frankly.

B:

HMJr:
B:

B:

But told me what it was for, and I personally,

if I you were in your shoes, would hesitate a good deal.

Well, I have already told President Trusan I didn't

already told the President that I didn't

Fine.

But it is the question - if the President raised it,
which I don't think he will, I wanted to be able to
say,
"Well,
isn't Just ay opinion. If I can say,
*It's also
Mr.this
Biddle's."
Sure, sure, go right ahead.

But I about
don't it.
think that Mr. Truman will say anything
more
Yeah. Well, you are perfectly free to do that, Henry.

That's
anybody.

all -- but, outside of that, I won't say it to

Fine. Righto.
I'm coming to your reception tomorrow.

Oh. that's lovely. I'm delighted. How is your lady,

Not at all well.
oh, dear. She was better for a while.

HMJr:
B:

HMJr:

want him.

Yes.

Well,
I've
want
him.

B:

B:

B:

Henry, there is no reason-if talking to the President.
use my name all you like, but I just don't want it
come back and to go back to Carr one of ay assistants- to
Uni ted
know
whatStates
I mean.Attorney- he'd say I'd block him. You

HMJr:

This, of course, is most confidential.
I know, I understand.

And I wanted to see if I could get any

Henry?

Ahum.

HMJr:

HMJr:

B:

But there is considerable pressure on me, you see?
Yes,

Yeah, but since Friday she isn't feeling well at all.

Well, give her our joint regards. I'm awfully sorry.
I'll do that. Thank you.
Bye.

June 26, 1945
11:46 A. M.

-2-

242

Yes. I think that is a wise thing. So for the

01

present it would have to be off.

Will, you are the darnedest fellow I ever saw.

HMJr:

Mr. will
Clayton:

HMJr

What's the matter, Henry?

C:

HMJr:

you want to see ne on the drop of a hat.

HMJr:

So it is off.

(Laughs)

0:

Yes,

As President Roosevelt used to say You sound as
though you had anto in your pants.

HMJr:

And come September and I have an itching foot I

C:

Yes, well, it, of course, might be possible in August.

HMJr:

Not the way he talked.

0:

Not the way he talked.

HMJr:

No.

C:

Now, Henry.

HMJr:

Not the way he talked.

see

(Laughs) Well, I've been trying to get over to
for a week and they had me on the Hill

C:

you all the time one committee or another,
practically I've just been running my head off. I had an aoand engagement with you once and had to break it on

count of something up on the Hill.

HMJr:

Well, what's on your mind?

Well, I really can say it on the telephone. You re-

C:

member you called as up at home one Sunday.

HMJr:

Yeah.

this Three-Power thing on
dent on
will probably
arrise, and
with no. As that seems be

HMJr:

C:

HMJr:

Yes.

C:

HMJr:
0:

HMJr:

HMJr:

I don't know - I don' know what he had in mind, but

C:

Really?

HMJr:

Yeah.

Well, since I talked to you the President he
Oh, yes. me definitely to stay in the country while
and asked the Secretary of State are out of the country.

Because with the two of them out, I'm the next.

C:

Yes. Well, that is a very natural thing.

HMJr:

So he asked - subsequently to my talking to you

said, @Please to stay here. And then he said heart

he when he nomes back I can go anywhere that my
desires.

Well, I - they usually never last over two weeks, do
they?

and in the I've cards, got to be in London on the 7th of August

at the UNBA Council.

London and be there about the end of July or first
of August, and then on the 7th the UNRA Council
starts it's meetings.
Well, do you think the Three-Power will be over that
mon?

after economic that, questions or two men that account of to some

take one I wouldn't be able to do the other,

think I'll take & little trip.

Yes. I think from that conference I will go to

C:

Not ago. Well, of course, I have been thinking
long the matter but it developed just a few days
about that I probably will go with the Presi-

C:

Well, he asked me to stay here.
Yes, I know.

C1

Well, either I can't talk to you for a week, or else

HMJr:

243

C:

he said to me September for some reason or another.

Well, I just assumed that
Two weeks, eh?

That two weeks would be the limit, but I may be wrong.
But what I was going to say to you is that we probably
will have -- want to have in London in the first week
in August if I can get there at that time - some talks
on a pretty high level there about post-war commercial

244
C

C:(cont.)

policy etc. And there's sure to arise some question
about Britain's need in the transitional period.
Yeah.

HMJr:
0:

HMJr:

HMJr:
C:

HMJr:
C:

HMJr:
C:

HMJr:

C:

HMJr:

Yes.

C:

I see.

HMJr:

And I was wondering if you wouldn't like to let
Harold Glasser go over there as soon as I cable you this
when I can arrive. It may be, as you say, that
thing will last on into August. I don't know.
Well, I've got a first-class man there now - Taylor.
Taylor.

C:

HMJr:

He's right there.
Ahuh. Our fellows all seemed to like Glasser very
such, and 1 like him too. We get along fine.
Ask them about Taylor.

Ies, all right. What 18 his name?
Bill Taylor.
Bill Taylor.
He is really sort of Financial Attache there, and he

C:

HMJr:
C:

HMJr:

HMJr:

C:

Yeah.
Sometime - do you expect to be here right
along for the next two weeke?

HMJr:

Yeah.

0:

HMJr:

HMJr:

Yeah.

C:

And to discuss with you some other aspects of

HMJr:

has a formal position on the European advisory COD-

I'm
not
busy, I've got nothing to do - just give me
a
day
. notice.

mittee.

C:

I see.

HMJr:

But I can't do these drop of the hat business like
you'd like to.

C:

But really, Henry, I didn't want to take any of your
time this morning, I was just going to drop in to say
to you what I said to you on the telephone.
I called you up a couple of days ago after
called up to congratulate you on the fine work you've
done.

And then he used to sit here as Treasury representative
with McCloy.

McCloy knows all about him.

And gets along very well with McCloy, and he gets along
very well with Winant.

HMJr

C:

Yes.

And when Kilgore went over there he said of all the
people over that came before him, Taylor made the best
impression.

C:

Well, sometime soon I want to make an appointment

with you to sit down and go over this English position.

HMJr
C:

So he is really pretty well posted.
A11 right, I'll check on that.
You check on Taylor.

Yeah.

C:

Yeah.

HMJr:

oh, yes.

C:

And then we loaned him to Judge Rosenman when
Rosenman made his trip.

Senator Kilgore?

C:

(Laughs) All right.

Well, nobody told no.

Yeah. I left word there - the day after the Trade
ITreaty
was. passed that I wanted to tell you how pleased

Well,
are117
awfully nice. It really was a great
victory,you
wasn't

-5HMJr:

C:

HMJr:

C:

246

It was a wonderful victory - I know how hard you
worked at it.

TREASURY DEPARTMENT

Gee, we sure did work, and it shows that public
opinion is behind us because we never could have
got by these pressure boys and minority selfish
groups except with the strength of public opinion.
I tell you, if you want to come over Thursday and
have lunch with me, I'd be delighted.

DateJune 26

C:

Secretary Morgenthau - Confidential

TO

FROM

1945

Randolph Feltus

Excuse me just a minute - let ne look at ay calendar.
I've got an engagement, but I'11 break it, - at what
time?

HMJr:

247

INTER OFFICE COMMUNICATION

You have no doubt noticed A persistent recurrence

in the press of the rumor that you will retire after
completion of the Seventh War Loan Drive This is
added
to all dope stories having to do with Stettinius
and Ickes.

One o'clock.

I'11 break it and I 11 get my papers together and
I'll be there at one o'clock.

HMJr:

You tell her you'll see her some other time.

C:

Yeah, (Laughs) O. K. Thanks very much.

HMJr

O. K.

C:

Bye.

HMJr:

Bye.

It a quite possible that Stettinius and Ickes,
or one of them, will resign soon. If that happens,
it will add credence to the rusor about your resignation.
I recommend that you announce one or more pro-

grass or projects which will involve you closely and

D

personally for some months after the Seventh Var Loan.
18 made clear that in December you will do 80and-so
and in February
such-andsuch as Secretary
of
the Treasury,
the rusor
can be scotched
If such announcements are made, I can have a

couple of columnists and commentator argue that your
position is solid 8.8 indicated by your program.
If possible Truman's endorsement of the announced
progras should also appear. Ve can plant a question
or two at his press conference to take care of this.
I know there is no need for me to point out how
the uncertainty caused by this rumor can affect the
morale of your staff and the cooperation of other
government
departments and the public in Treasury
programs.

Rt.
1

248

-2-

26 1945
viewed the Internal Revenue laws as being general

and impersonal in character, to be applied to all
without discrimination. That basic principle will
govern the handling of this case.
Sincerely yours,

My dear Senator:

In your letter of June 20, 1945 you ask
several questions regarding the John Hartford-

Jr.

Henry

Elliott Roosevelt loan transaction.

This matter has been the subject of
discussion with Congressman Doughten, Chairman
of the Ways and Means Committe of the House of
Representatives and Senator George, Chairman of

the Senate Finance Committee. In these discussions It was agreed that the Bureau of Internal
Revenue would complete a thorough investigation
as soon as possible and submit its findings to the
Congress through those Committees. The Bureau is
proceeding diligently to that and.

Honorable Raymond E. Willia
United States Senate
Washington, D. C.

The Senate Finance Committee as you know,

is authorised by law to obtain from the Treasury
and to disclose to the Senate information from Income
tax returns which I an not otherwise privileged to
disclose. I an confident that your interest and mine
in the vigorous and impartial enforcement of the
Internal Revenue laws will best be served by proceeding regularly with the full development of facts in
this case for transmission to and consideration by
the appropriate Committees in the Congress as is now
contemplated.

In view of some of the observations in your

letter, I think I should state that the Treasury
Department, during my administration, has always

TJL:JJO*C:a:mv

United Dates Senate
COMMITTEE ON NAVAL AFFAIRS

June 20, 1945

Innorable Benry Morgenthau, Jr.,
Secretary of the Treasury,

United States Treasury Building,
Washington, D. C.

Dear Mr. Secretary:

I have followed TOTY clorely the disclosures
and statements regarding Elliott Roosevelt's $200,000

Ioon from John Bartron', prefident of The Great AAP
Ten Company's At the time, I have noted your
intention to put on 10,000 new enforcement agents to

work to what you have terned startling income

tax evenions. Further, I understand, you have called

upon the banks to report to you any INTERNAL tr executions.

An THE both realize, the disclosures relating

to Elliott Foorevult and Mr destinum with Join Hurtford,
plus the long period that elapeed letrero the Inc
claimed the Image deduction and the Line you announced

the Sareau of Internal Revenue Buresu investigation,

reflect not only upon your forner chief and our late

president, Franklin D. Roozevelt, but upon the operation
of an agency directly under your supervision, the Bureau
of Internal Revenue.

In the interests of good government and of
your OVE record, I have no doubt that you are anxious

to give the public all information possible about every

angle of this case.
Therefore, from TO interest in keeping my
people stare of what in happening in government and

because I sant to be well informed on this subject, I
an requesting you to reply to the following questions at
your early conveniences

2

1. Why did the Bureau of Internal Revenue wait until recently
to begin investigating Nortford's 1942 deduction of such a

large amount? Had the officials of the burous gained knowledge that Westbrook Pogler Intended to make the disclosure?

2. Do you not feel that Lt in time for druntic improvement

in the service of the Buresu of Internal Revenue when this agency

of the government is two years belded in investigating the
returns of the richest sen in America? It is now four years

after the KLP began and five years after income levels began

to rise swiftly due to direct and indirect war work.

3. Would you use the 10,000 new enforcement agents on these

higher brackets, rather than concentrating on the name basinessman
while the big ones get by with claiming Image deductions for
such losses as the one claimed by Bartford?

4. The san Collector of Internal Revenue at the time the Hartford

1942 return KEE filed? If the return WILL made at the urual time
early in 1943, Robert E. Shunggan, Po taxter General and

chaline of the Democratic No ional Comittlee, VIS collector.

Did you ever talk with H Sunga about this particular

return, Lad, LC no, what HILLS Ms excuse for not making the

necessary investigation et that Line?

5. In view of the fact that you have access to all records of

the Barong of Internal Revenue, crus you tell ne chetlaxe OC not

Elliett reported the ultimite disposition of the

$196,000 he finalled from John Hartford, and LC he did not do

this, they not? Alno, an you tell me whether or not Elliott

Roosevelt negotiated other "lows" from other prominent non,
as han been rusored?

6. If a young civilian of 29 were to deposit $200,000 or more in
a bank, although having no great noticeable income, sould
you expect a banker of today to report that as an unusual
transaction? Or what exactly do you now when you request

banks to report every Innaction".

Assuring you that I am with you in every good cause to
pronote honest government, I as

RECEIVED

Your interezy,

BPBC CORRES CONT.

JUN 23 245
HUM INT HEV
NO

Raymond E. Willia

252
June 26, 1945

My dear Mr. Pleven:

By now, you will have received official
notice from the President, through our State
Department, that he has asked me to postpone
my trip to France.

I was very sorry that I could not accept
your very kind invitation to come to France
early in July and assist in the opening of the
War Bond Exhibit. However, I hope that the

situation will be such that I will be able to

make a trip to Europe after President Truman

returns to this country.
With kind regards,

Sincerely yours,

(Signed) Henry 2t.

Honorable Rene Pleven,

Minister of Foreign Affairs,
Paris, France.

(

SPECIAL

253

TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION

DATE June 25, 1945

TO

Mrs. Klotz
Secretary Morgenthau

I want to write a personal letter to Pleven telling
him how sorry I am that I can't come over now and that I
hope to come over later. Please remind me.

255

254
June 26, 1945

June 26, 1945

10:

5. George Little

son

James Lg Houghteling

Mailing lists
Mr. Pussell of Secretary Morgenthan's office has agree no to

prepare a list of from 900 to 1,000 names of labor outlets . re-

oeive copies of Congressman Wright Patean's recent statement in the
Congressional Record in commendation of the program and work of

the Secretary of the Treasury. I suggest that reprints of Congress- Patman's reserve be sent to the following mailing lists which
are on file at our office in Chicago.
No. of
Plates

List

Dear Bob:

List Title

No.

For your information, I an enclosing

herewith a copy of Senator Willia' letter
to me, and my answer to him.
Sincerely yours,

14

15

C.I.O. Labor List Newspapers
A.F.L. Labor List and Misc. Newspapers

177
M1

15-4 Bailroad Labor Press
236-A C.I.O. International Unions

16

40

246-c C.I.O. State Industrial Union Councils

246-F A.F. of L. Organisations and Departments

246-G A.F. of L. State Branches

36

106
be

363 American Newspaper Guild

84

922

Also one copy to
D. B. Robertson,
President,

Brotherhood of Locomotive Firmed

Washington, D.C.

Order of hailroad Conductors of 4.,

and Registeren,

0. R. c. Building,

Keith Building,

Cedar Rapida, Iowa

Cleveland, Ohio

Honorable Robert L. Doughton,
House of Representatives,

H. W. Preser,
President,

Alvanley Johnston,
President,

Brotherhood of Locomotive Engineers,
Engineers Building,
Cleveland, Ohio

A. 7. Whitney,
President,

Brotherhood of Railroad Trainmen,

B. & T. Building,

William Green,
President,

American Federation of Labor,
Mass. Ave. and 9th Street N.W.,
Washington, D. C.

Philip Murray,
President,

Congress of Industrial Organizations,
718 Jackson Place N.W.
Washington, D.C.

Cleveland, Ohio

T. c. Cashen, Chairman,

Railway Labor Executives Association,
10 Independence Avenue S.W.

Washington, D.C.

The mailing to the above lists will give the article in question

a very fine circulation among labor leaders.

TRADE MARK

MICROSTAT

MICROFILM

ROLL NO.

256 (

251

Release date

FROM Newspaper Section
War Finance Division
Treasury Department

A.M

Weshingson IS,D.C

Release No

P.M.

DESK

NEWS

(
Room 746, Washington Building Washington 25, D.C.

June 26, 1945

- --- Jound

Fours K Tear Claim - Name Good - - -

Lema - Company Treasury

- - Newspaper

Execute Bus Janualand New - Kansacs, Name Nampar

Burn - Heart -

Assistant

Lane L Labe Edition
Premises McCAPPERS
Mas Hard, American P

Fun United Press

Office of We Information experiencing
990

INTEDIATS RELEASE

TASHINGTON, D. C., June 26 - The winning quotation from

Dear Walter:

Franklin

D. Roosevelt's speeches, to be imprinted on a special war bond to be

issued in the 8th "for Loan as a memorial to the late president, will

For your information, I am enclosing

be announced by Secretary of the Treasury Morgenthan during a broad-

herewith a copy of Senator Willia' letter

east over NTC on Friday, June 29, from 10:45 to 11 p.m., ETT.
The Washington newspapernan who aubritto the winning quotation

to me and my answer to him.

will receive a war bond and from the Secretary. Associate Justice

Thank you very much for your helpful
(

suggestions.

Sincerely yours,
(signed) Eyes

Oven J. Roberts of the U. S. Suprene Court was judge of the contest.
Decision to issue the memorial bond, to carry Mr. Roosevelt's
picture and the quotation, ma made by President Truman and Secretary

Morgenthau in & conference on how best to met the public demand for
such a menorial, a Treasury spokesman explained. It was a physical

impossibility to print and distribute such a bond in the interval bebreen President Roomovelt's death and the opening of the Seventh Mar

Loan, so it mas ande the first project for the next var loan. The
contest was opened to Washington newspapermen and correspondents and

three war hand prizes will be awarded for three quotations considered
most appropriate.

Honorable Walter F. George,
United States Senate,
Washington, D.C.

The program will be heard in "fashington over Station INC.
555

INSIDIATE RUSE - PADIO PAGES TO LISTINGS

590-A

Washington, D. C., June 26 - Secretary of the Treasury Henry Horgen thau

Jrs will talk on progress of the 7th Mar Loan on the Victory Parade of

Spotlight Brinds program, June 27, 9:30 to 10 P.M., ETT, over
the Mutual network.

(The loor1 "ashington outlet is TOT).
230

258

Release date

FROM Newspaper Section
Was Finance Division

A.M

P.M.

Treasury Department

Washington I.D.C.

Release No

NEWS

(

DESK

WAR LOAN

Room 746, Washington Building Washington 25. D. C.

From . Term Chairman - - Count - - Expires D. Purk New here
New Name - Publisher Premises Burn For - Delivered false

. Clean Lema Special - Coar. Manager See James

Trum Serious / -

Date Terror - -

L Lane - labe Editor

Payment McCurrent F Friend

Mas date - Press

Fees - Union Press

Office of For Information cooperating

Sp.Release #G-5

RELEASE AMs. JUNE 26

WASHINGTON, D.C., June 25 - Secretary of the Treasury Morgenthau
announced today that two milestones had been passed in the Highty
Seventh War Loan drive,

At the close of business Monday night overall sales
totalled $20,250,000,000.

Having passed 20 billion dollars at this stage of the drive,
Mr. Morganthan mid, "It would appear that we are going to et a now

high in total sales for any War Loan to date."
He further pointed out that, more importantly, sales to
individuals in this drive, had passed a high watermark of all Loans of

the for to date, Total of all types of securities sold to individuals
in the Seventh Tar Loan roached 595,000,000 tonight.
However, the Secretary continued, since higher goals had boon

not for individual participation, there was still much work remining to
be done by volunteers throughout the country in order that these high
quotas night be attained.
ltr. Borgenthau concluded "I believe that the results achieved
to date in the Seventh Jar Loan drive prove conclusively that the American
people not only are bound and determined to stand behind their fighting
non, but to see the nor with Japan through to complete and unconditional
surrender."
###

(

.

258

Heele Park
County, New York

June 26, 1945

Dear Henry:

I was delighted to see this and

although I have told you before I vast
to any again what a grand job you did on
Bretton Woods.

Affectionately,

EK
I do hape Kiece is lett syn

aveility is believed

(Not printed at Government expense)

Congressional Record
CONGRESS FIRST SESSION

United States
of America

PROCEEDINGS AND DEBATES OF THE 79'
Let - one think of the present Becre-

Tebate to Hos. Henry Margettes Jr. less croubities
were
relatively stable
is
largely due
to agreements
** made
Secretary of the Treasury

with them

SPEECH
or

HON WRIGHT PATMAN
or TEXAS

Medias intent upon only distant goals
His entire record shows . deep realize
tion that his job to to HRIVE the United
States of America and its people

and the possibility N made become
world-wide endangering the United

World War II be was outstanding to his

In the years preceding the outbreak of

States, WAS demonstrated as early as

recognition of the necessity of seeing that

Wednesday June f. 1943

1936 In that year the impending de-

the United States should be prepared to

PATMAN Mr. Chairman

valuation of the French frane held

ment any eventualities

IN THE HOUR or REPRESENTATIVES

Mr.

Secretary Mergentheu's been sware
of the imminence of was in Europe

tary of the Treasury as & starry-eyed

discussion of the Bretton Woods proSTATE would be complete without

treats of grave trouble If the devalue.

tion should have set of . MY interes-

genthes's institute on American per-

tribute to the man who in primarily -

nai-exchange war, the French ecenomic structure might be to weakened
by dota and strikes that Hiller even with
military machine only half buth. would
have been encouraged to march in. with
the thought that be could take Prance
with Intle or no struggle

parents that American siveraft fac

sponsible for this opportunity to build

. sold economic foundation fee world
peace and world progress. I refer to
Henry Margenthau Jr. the Sicretary of

the United States Treasury Ba has
held that position longer than any other

It was largely date to Secretary Mor-

tories were tooled up. well is advance of

President Roosevelt's historic plea for
50.000 airplanes, to AMOUNT their obligaUntil

n - largely date to investigations
launched by the Treasury Department

person is the history of the United

This was part of the massering that re-

States, with one exception: be has date

suited is the United States Great Britain,

even before SECURITY attack on Poland
that this country KTAT what entities) and

more during his Incumbercy than an

and Practer Joining to the tripartite

strategic materials It might require, in

other Secretary of the Treasury. with

agreement of 1935 The purpose of the

exception

The Bretter Woods program for the
International Bank and Fund is the cuiminution of the policy of International

was M maintain . reasonable

WAT should bottle up our customary
ADDRESS of supply across the Atlantic and

parity between the currencias of the -

the Pacific

operating nations Holland Belgium
and Swisperland 1000 Jaised the origina

It was largely due to Secretary Morgrather's personal Interest that realistic

monetary and financial cooperation

sore of the plan and the members of the

programs of helping China and par-

which the Treasury Department invoice
rated under Secretary Morgenthau
The decade of the 1933's partly as
result of the depension was . period

student starting blue benefited
machinery under which economic and

American countries meet their urgent
economic problems were launched But
for three programs Japan might have
crushed China in relatively short order

serious mondary disorder. Countric
were usable to maintain the value

political cooperation could have been de-

and Ritier and Mussing might have

villaped along with this monetary .

been abin to establish in our own bemit

their exchanges and world trade declined

operation the Axia Powers might well

aphere military bases for war against the

expidly Difficulties were Intensified to
the fact that Certificaty girding for was
of REEPERSION Insugurated strict ecc

have been curted and this terrible war

United States

and discriminatory exchange controls to
attack established trade relations and
obtain . large supply of war materials

Secretary Morgenthau realised no
early that only through International
cooperation would is be possible to free
world trade from the mounting volume
of currency restrictions

The fact that the letter part of the
1930's the exchanges of the Latin Amer

27. at that time there had been the

prevented Unhappily there was no
each machiners

Secretary Morgenthan remained how-

Home may say that roch reserving is
much in the category of what mish
have been But there ract certainly to DE

EYES constant in his knowledge that 10.

dispating the solid evidence of facts and

enembe cooperation main undertle politi-

firstes

es) cooperation and med provide . solds
fugnitation for any enduring place 25c
awaited the propitious time for bringing
the peace-loving national of the world -

either and the Bretten Woods Confercame as the realis of to untiring
efforts and unflagging and

Let or turn to the master of was financInc.

Secretary

record

Morgenthes's

resound to this credit at every point Me

has urged is one Congress after an:
keep
to

more of terror using restrictive

from exchange stabilization

other

Nation's

upon

sound

basis

advice has been followed

s

MICROFILM

MICROSTAT

ROLL NO

CONGRESSIONAL RECORD

be

has

eppoard

plans

or bash It is informate

should be shocked at the doeswary of

philosophy It the shiexcelle of Thomas Jefferson of Andrew
Jackson of Alcaham Uneals of Frank

the bendholders that be has
declared was use the Mee's

In Reserve of Harry Truman Thus

marketeers the rocketeres and the other

men know the people They trusted the
research informed statement the pro-

extine only an opportunity amans

not only because they

of his policies. but been

which prevailed during World War and
contract this with the 1% -percent rate

seevalling today you will need to furNATION

up-

persimately $4,000,000,000 price

This fact is net markets tribrets Sec.

retary Morgenthes's was recied to
comes about as the result of careful
planning. prudent management it the
Nation's fiscal effairs in time of prace
plus intelligent development of tru ideas
benefit of the Government and
its people

Arrengening for war financial are

case politic Back 1935 who United
States darings bends were first offered to

the public. there was to threat of WAT

But secmrd to Secretary Morgenthas

that would be good thise for the
Government to have the national debt

districted as widely as possible and

that would be a good thing for the

But the Date bonds o 1935 and succeed

product storm bustice for there tax
eventers. because know the apira that

the was for system of compulsory SAY

erimates Sirretary Morgenthau and I
know too what delight be takes in ed-

ministrative timey. accompli

adams upon this news. Its wanted
people Invest their savings in Govern

mults whatever be undertakes

their free - they vented
to
United

traintite accord of 1136 to the campaign

not under test

the

win

was

and

2 is perhaps Jane cry from the

States

because

against tax evazion and same of histers may say there Hille connect

bonds were the world's brat and sitest

investment And Secretary Morgen

between war tend campaigns and

their's - state take so

Bertion Woods But want scipt out

siftcant of the philosophy guiding all his

that the percent of min provides the
beit yardstick to measure his stature

actions that quote from what be said
tock in 1941 when be first arked 69

: point to the record of Ricretary

because outstand

from Congress to from
through defenar SATE

bond

ines

bondholders

certificate wralth and doden their texts

Incs But Scretary Margenthere 123

their interest National Dovernment
We called them "Baby bonds then

war profiteers she see in this serrible

ple And does Henry Morganizer
harth not to rimind you of the
persons that was evident early in

people to their Unitt, and
-

than a cute in keeping with his
trust in the people as whole that he
maintectors Is quite in keeping with
determination to protect the interof the millions of PUS in uniform
the 53,000.00 individual tempera and

will think back to the 45 rate

then argument in this point
result this country

Bone people in this country today are

Beventh Drive now progress
The people know ceretary Morgen

any previous war. It you who hear -

campaign

inc record It: has Surveore develop

Secretary

The

menta on occasion after occasion 10c

has and promptly and effectively He

said:
There

tedax

-

NOV. lond agn the security for stable

nearly

enery

IDE years grew into the Defense bonds

HOT

Elect

that enabled this country finance the

national

preparedneas

program.

and

after

Decem.

bet 1941 the became the was bonds
that APT held to 85,000,000 American

this

urine another side of Sucretary Morgen-

the (YOUT war loan to date will in
conform be matched in the Mighty

has

become

facing

emergency

- And thats record is

been echieved with stable interest ratesfor lower than have ever been achieved is

-

people

Coverage

the

pursuant

what hrs been done and what being

due to his careful planning that the

many

single

other

think

which

The people of this country recognize

to heed his advice But his tradership
has been reeminent all times And

-plan

Our

classes

accumpt

-

taked

this matter past Congress failed

great the Federal 4bbt

studio

or to make effective generally the
month safeguarda that have Item

when Income taxes

help!"

-

West

been able to distribute the widdly

the forgiveness of $0,500,000 000 tixes

people

from
come

between

made lote before was clouds
the world this Nation would

to

that

and

such

their daily let transfully and with

today And but for the start that

the letter. It is to his refill that be
unged sound financing names
M

TRADE MARK

2

PRECISION

order

de

the

world

van

more

prace Today we have an opportunity
to take advaniser of his foresight. his
playming

his

windom

259

TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION

AAA
Date June 26,
1945

TO

FROM

Secretary Morgenthan
J. W. Pehle

Points you may wish to raise at the three

o'clock meeting:

1. Assure full Bureau of Internal Revenue
agreement on the statistical work which
you want done covering all significant

Bureau activities. The figures are to
cover the period beginning July 1, and
be furnished to you every four weeks

in detail.

2. Confirm that the Commissioner is assigning
Tom Atkenson to this work, and that he is

being relieved of other responsibilities
and given the necessary staff.

3. I understand Charles Bell has obtained
the written concurrence of Commissioner

Nunan and Joseph O'Connell in a memorandum

which he hna sent to you covering current
plans for Internal Revenue expansion. If
you are in agreement with such memorandum

it might be well to indicate your concurrence at this meeting.

4. I believe you wanted to discuss the

McKellar case further with some other
people present at this meeting.

5. Emphasis of tax drive not to be directed

against "the little fellow".

PRECISION

TRADE MARK

MICROSTAT MICROFILM ROLL NO

260

or

THE PLAZA BANK OF ST. Louis
ST.LOUIS.MO

70.
June 26, 1945

M. C..

House office Bldg.,
Kashington, D. C.
Dear Mr. Pataent

in
has
done
reservable which

of It was

the extives on Wednesday, June

Heart
Thank Non.
you for
ending a Jr., copy Secretar/ of your tribute of the to Treasury, sixth,

have
past time forto
Xa regal public of

the

1945. the our/government House of Asce the Represent of rughout during work this in the Morgenthau the most Card handling certifical ox service. of periods the finances very

debt whiel.ue BLV
Sincerely,

the

F.R. in Kindeggers

Preigdent

FRYWELF

Co to lion. Heary Morgenthau, Jr.
Secretary of the Treasury
Washington, D. C.

PRECISION TRADE MARK MICROSTATI MICROFILM

6/26/45 - Original list sent
Mr. Mr. Fussell.

ROLL NO.

MICROFILM

TRADE MARK

ROLL NO

-2-

261
Patman Statement to be sent to:

Mr. San Lewischn,
61 Broadway,

New York, New York.

Captain Henry Morgenthau 111,

0-1091909,

Troop B, 2d Cavalry Sq. (Meez),
APO 403,

c/o Postmaster

General Edward 3. Greenbaum,

ar Department,

Room 3E 724

New York, New York.

Pentagon Building.

Lieut. Robert M. Morgenthau,
USS Harry F. Bauer (Du 26).

Mr. Harold Hochachild,
61 Broadway,

Fleet Post Office
San Francisco, California.

New York, New York.

Miss Joan Morgenthau,
Davison Hall,
Vessar College

285 Ladisco Avenue,
New York 17, New York.

Mr. Korris L. Ernet,

Poughkeepsie, New York.
Mr. Lawrence Greenbaum,
285 Madison Avenue,

New York 17, New York.
Mrs. Robert Morgenthau,

4440 West Lake Barriet Blvd.,

Minneapolis, Minnesota.

Mr. Herbert Wolff,
285 Madison Avenue,

Sex York 17, New York.

Honorable Henry Morgenthau, Sr.,
1133 Fifth Avenue,

New York, New York.

Dr. larold Hyman,

940 Park Avenue,
New York, New York.

Mrs. Mortimer J. Fox,
Foxden

Peekskill, New York.

Dr. Robert Levy,

730 Park Avenue,
New York, New York.

Mrs. John Knight,

40 East 66th Street,
New York, New York.

Mrs. Paul L. Wiener,
399 Park Avenue,
New York, New York.

Mr. Bernard Heineman,

245 Church Street

New York, New York.

263

-4-

-3Judge Irving Lohman,

36 Eat 44th Street,
New York, New York.

Mrs. Franklin D. Roosevelt,
Hyde Park,
New York.

Mr. E. E. Brown,
President,

First National Bank of Chicago,
Chicago, Illinois.

Mr. Leo T. Crowley,
Administrator,
Foreign Economic Administration,
Washington, D. C.

Mr. Alan Barth,
The Washington Post,
Washington, D. C.

Mr. Harriner S. Eccles,
Chairman.

Board of Governors of the
Mr. Nathan Straus,
1657 Broadway

Federal Reserve System,
Eashington, D. C.

New York 19, New York.
Miss Vabel Newcomer

Mr. Fred Smith,

The Blue Network

30 Rockefeller Plaza,

Professor of Economics,
Vassar College,
Poughkeepsie, New York.

New York 20, New York.
Honorable Brent Spence,
Mr. George Albee,

House of Representatives.

University Club,

Wilmington, Delaware.

Honorable Charles W. Tobey,

United States Senate.

Mr. B. M. Edwards,
1401 Main Street,

Columbia, South Carolina.
Mr. Fred M. Vinson

Director, Bar Mobilization,

Washington, D. C.
Mr. Dean Acheson,

Assistant Secretary of State,
Washington, D. C.

Honorable Robert F. Wagner,

United States Senate.

Honorable Jesse P. Wolcott,
House of Representatives.

264

265
-5Mr. Alfred Jaretaki,
48 all Street,
New York, New York.

Mr. Arthur H. Sulaberger,
Publisher, New York Times,
Times Square,
New York, New York.

Members of Cabinet, including the incoming members.
Heads of Independent Agencies.
6/29/56
lisa.

Charles Heming

(

Miss Edith Hass
Mrs. Josten

PRECISION

TRADE MARK

MICROFILM

MICROSTAT

ROLL NO.

266
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION

DATE June 26,1945

0

TO

FROM

Mrs. Klotz

Check for $131.85to
turned

Mr. Fussell

As the Secretary has been informed, the
following are the winners of the Roosevelt quotation contest:
Mr. Daniel M. Kidney, winner of the
$100 bond

Mr. Ned Brooks, winner of the $50
bond

Mr. Thomas W. Kelley, winner of the
$25 bond.

(

At your convenience, would you please secure
the Secretary's check for $131.25 so that bonds may
be obtained for them as follows:

Mr. Daniel M. Kidney, -- $100 bond
2121 R Street, N. a.
(Daniel M. Kidney, Jr., Co-owner
2121 R Street, N. W.)
Mr. Ned Brooks, -- $50 Bond
4614 Langdrum Lane,
Chevy Chase, Mr.

(Mrs. Mary J. Brooks, co-owner
Same address)

Mr. Thomas W. Kelley, -- $25 bond
906 Garland Avenue,

Takona Park, Maryland.

(Mrs. Barbara N. Kelley, co-owner
Same address)

FROM

Secretary of the treasury

STANDARD

269

BUREAU

Exchange Stabilisation

TELEGRAM

CHG APPROPRIATION

OFFICIAL BUSINESS GOVERNMENT RATES

26 JUN 1945

W. H. Wheeler, Jr.

Business & Industry Committee for Brettes Foods. Inc.
Notel Receevelt
New York, N. T

Retel your consittee 1. to be commended for giving public recognition
to the sensitors and congression who have worked together is a non-

parties spirit to give the world machinery for international economic
cooperation. The Brotten Foods proposals were conceived through the

cohesive action of 44 nations. Our Desgress has followed through in

this constructive spirit, casting asida party politics to pull to
gether is the public interest. By their action these stategess have
polated the my for intelligent relations between nations.
The sponsors of the legislation and the members of the House Beaking

and Ourrency Committee are particularly deserving of the gratitude
of all who want world peace and security. It use these statesment who
guaranteed passage of the legislation through their demontration of
steadfast devotion to public service.
As Secretary of the Treasury and as as individual. I send my heartiest
good wishes to your heared quests and to your committee which has

itself performed . notable public service.

Heary Morgenthan, Jr.

(X
K
RF:Dri -6/26/45

.

E
G

with

R
A

P

BUS NL PD

H

NEWYORK NY JUN 22 1945

T

955 JUN 23 AM 8 25

HON HENRY MORGENTHAU JR

E
A

SECY OF THE TREASURY
S
U

THE BUSINESS AND INDUSTRY COMMITTEE FOR BRETTON WOODS, INC,

R
T

CONGRESSMEN WHOSE NON-PARTISAN EFFORTS EFFECTED THE PASSAGE OF

Y

RALPH E FLANDERS, CHAIRMAN, 18 GIVING A LUNCHEON TO HONOR THE

E
L

THE BRETTON WOODS LEGISLATION IN THE HOUSE. THE MEMBERS OF THE

E

HOUSE BANKING AND CURRENCY COMMITTEE WILL BE HONORED GUESTS AT
G

R

THE LUNCHEON, AND IN ADDITION, U a SENATORS WAGNER AND TOBEY.

A

P

THE LUNCHEON WILL BE HELD AT THE ROOSEVELT HOTEL IN NEW YORK
ON THURSDAY. JUNE 28TH. WITH 500 PROMINENT BUSINESSMEN AND THE
CONGRESSMEN IN ATTENDANCE. WE WOULD GREATLY APPRECIATE A WIRE

T
A

$

BUSINESS AND INDUSTRIAL GROUP HAS HAD THE OPPORTUNITY OF

E

SINCE WE BELIEVE THIS IS THE FIRST OCCASION THAT A PROMINENT

R

OF CREETING FROM YOU TO THE GROUP ASSEMBLED AT THE LUNCHEON

U

R

CONGRATULATING CONGRESS PUBLICLY ON ITS STATESMANLIKE

Y

APPROACH TO THE BRETTON WOODS ISSUE. A MESSAGE FROM YOU WOULD
T

L
G

BUSINESS & INDUSTRY COMMITTEE FOR BRETTON WOODS, HOTEL ROOSEVELT

E

BE DIRECTED TO WH WHEELER, JR CHAIRMAN OF THE LUNCHEON,

E

ADD GREATLY TO THE SPIRIT OF THE MEETING. THE MESSAGE SHOULD

R

NEW YORK

A

P

LOUIS P BIRK EXECUTIVE DIRECTOR

H

815A JUN 23.
T

R

DN

TRADE MARK

MICROSTAT

REG. U.S.PAT. OR

MICROFILM

ROLL

BUSINESS AND INDUSTRY COMMITTEE FOR BRETTON MADISON
WOODS
Inc.
AT 45th
ROOSEVELT HOTEL

NEW YORK 17

MURRAY MISS 4.3986

June 22nd, 1945

CHAIRMAN

RALFIS E FLANDER
RECRETARY

WAITER H WHITE JR

Hom. Henry Morgenthau Jr.

TREASURER

Secretary of the Treasury

LOUIS SACHALE

washington, D. C.

EXECURIVE SUBLICION

Dear are

TOUIS BIGS

he wish to confirm the following night letter sent to you
this day:-

BOARD OF DIRECTOR

HENES MISTOL
President
Result Mywry Ca
BORENT BUTLER
President

Wybel Butter THE
RAUFIN FLANDERS
President

Federal Reside Bank,

"The Business and Industry Committee for Bretton Roods, Inc.,
Halph E. Flanders, Chairman La giving B luneheon to honor
the Congressmen whose non-parties efforts effected the peaange of the Bretton floods legislation in the House,

The members of the Banking and Currency Committee will
be honored guests at the lunoheon, and in addition, United

Austral

MATCH

States Semators Hagner and Tobay.

resident
-

The luneheon will be held at the Hotel in New York

N-CORMACK
President

on Thursday, June 28th, with 500 prominent businessmen and

Treatment

the congressment in attendance.

Movie

Since And

LOUIS SACHAR

be would greatly appreciate . wire of greeting from you to

President

Reference Taulds Co

WALTER R WHEELER IN
Bower

FINES

Alains

Purtage

ADVOCT BOARD
I'm Formetical

KTWARD GROWITS

Description Board
National Bank
Chicago

AUCHAS A

the group assembled at the luneheon sinoe to believe this
is the first opension that a prominent business and industrial group has had the opportunity of congratulating Congress publicly on its stateemanlike approach to the Bretton
woods issue. A massage from you would add greatly to the
spirit of the meeting.
The message should be directed to W. H. Wheeler, Jr.. Chairzan of the Juncheon, Business & Industry Committee for Bretton
Boods, Hotel Poosevelt, New ork.'
Respectfully yours,

From: Addition
alsen -

BONIC EPPEDY
President
Eyeseds
Corp

MACK

President

Patron Walspine Corp

KOREA SIEKINGON
Provident
Insurance Co

CAR WING
President

Overuens Industries

Loris P.Buck

Louis P. Birk
Executive Director

271
THE CENTRAL BANK OF CHINA

270

HEAD OFFICE
GGVERNMENT

CHUNGKING GHINA

June 26, 1945

Honorable Henry Morgenthau, Jr.
Secretary of U. S. Treasury

26 JUN 1945

ity dear Mr. Secretary

This is in reply to the letter of 7 Jane addressed to

Washington, D. C.

Mr. White by Mr. Clayton concerning the termination of military

responsibility for civilian supplies is liberated aress.

I an glad to acknowledge receipt of your
letter of June 9, 1945 and to hear from you that
the easing of the transportation situation has facilitated the shipments of the remainder of the
$200 million of gold to China. Your cooperation
in this matter is greatly appreciated.
During my stay in this country I have received many courtesies from you and through your
friendship and understanding we have been able to
settle some of the pending questions between our
two countries. I shall cherish more than ever your
friendship that has stood the test of more than
twelve years. It is ay hope that you will continue
to extend to me the benefit of your advice and that
you will also help China's postwar reconstruction
program.

I understand that discussions have been proceeding between

Mr. MoCley, Mr. Crewley and Mr. Clayton - these matters. If
may comment, however, - the letter of Mr. MeGley which was

attached to your letter of
, June, 14 seens to no that the silifor the

tary
responsibility
importation
civilian
supplies
don in
Italy has
as long
as part of that
country isofunder
Allied
Military
errerate is wideh the United States takes part. In any case, I

- that the military relief program will not be terminated with
out prior consultation with the Italian Government as provided in

President Treas's letter also attached.

It is disturbing to - to know that the policy announced to
the world by President Roosevelt and Prime Rimister Churchill is
their joint statement of 26 September 1944 and adopted, I believe,
has
by
Trumes, not
yet been
implemented,
and that
to 11 carry
may
notPresident
be implemented
in the
future.
Such . complete
failure
out the promise made is the 26 September declaration should not, is
my opinion, be permissed to occur.

With best wishes.

I

Dear Secretary Morgenthau:

Sincerely,

Yours sincerely,

(Signed) H. Morgenthan in

H. H. Kung
The Honorable,

The Secretary of State.

- 6/25/45

UFFICIAL -

DEPARTMENT OF STATE
WASHINGTON

June 7, 1945

In reply refer to
LA

Dear Mr. Whites

I enclose, herewith, copy of a letter dated June 2,
1945, from Mr. McCloy, Assistant Secretary of War, to no
in my capacity AS Chairman of the Liberated Areas Committee.

The letter with its enclosure WAR read in the meeting

of LAC this morning and will be circulated with the matters
for further consideration. The letter is of such importance,
however, that I AS forwarding it for your urgent personal
attention.
Sincerely yours,

HyClayton

W. L. Clayton
Chairman

Liberated Arean Committee

PROJECTORY

The Honorable

BUY

Harry D. White,

Assistant Secretary of Treasury.

Attachment 3 of LAC Linutos
THE UNITE HOUSE
JASHIMOTOS

they 21, 1945

Door Dr. Sceretary
On No venbor 10, 1943, President Roosevolt directed the

Arry to undertake the initial burden of shipping and distributing relief supplies for liberated srous of Europo pending
the completion by civilian cgoncics of plcna to corry out the
nccessary long rango plan of relief. Tho fa.et that our vast

military oporations in Europo have been curried on without

disonso and unrest in liberated aross testifica to the Army's
successful discharge of the obligation so inpoad
Omoo liboration of a country has been accomplished,

however, I fool that the best interests of the United Statos
and of the liberated country itsolf require termination of
this military responsibility C.B soon ns the military situation

pornits. No responsibility for civilian supply in any liborated

country in Europe should continuo to rost upon the Any except
situation.
no my be dietatod by the actual noconsition of the military

On the other hand, no liberated country should bo projudiood

by tornination of this responsibility. The date and conditions of tomination in each also should bc subject, of course,

to the recommundation of the military commander in the field.

In order that the transition from military to civilian rosponsibility my bc smooth, final decision by the Arry to and its
responsibility should be natco only after consultation with the

government of the liborated country concerned GOOD also with
our own State Department and Foreign Soononio Administration.

In addition, I think the goncral policy of the Army,
upon such tomination, should be to continue to assist the
national governments involved and the appropriate civilian
agencies of our own Government and UBERA to the extent the
SECRET

SSCRET

military situation permits. This should include, where
possible, and to the extent logally permissible, the transfer
of supplies which are in 0X0088 of essential military
requirements.

To the extent that implomentation of this policy roquiros

agreement of British military authorities, will you plonso

acuso nogotiations to bo initiated through appropriate military
dhannols to obtain such a.groomontal

Vory sincerely yours,
/s/ Harry Trumes

The Honorablo

The Socrotary of Thr
Wishington 25, D. C.

SECRET

I 2"

3
SECRET

Attachment 2 of LAC Minutes
TAR DEPARTMENT

Office of the Assistant Secretary
Washington, D. C.
2 June 1945

Non. William L. Clayton
Chairman, Liberated Areas Committee
Department of State

ashington, D. C.
Doar Ur. Claytons

I enclose herewith oopy of B letter dated May 21, 1945

from the President of the United States to the Secretary of

for dealing with termination of military responsibility for
the importation of civilian supplies.

The Jar Department contemplates the following program

to implement this letters

1. As to Holland, Morway, Belgium and Demark,

n. No funds will be included in ar Department
budget estimates for (iscal year 1946 for the provision
of civilian supplies in those areas.
b. ar Department will terminate the provision of
civilian supplies to these AFORE with August 1045 londings.

Supplies already in the pipeline resulting from the use
of funds appropriated in fiscal year 1945 will be adoquate to meet requirements through August loadings.

2. As to France.

A. Car Department will terminato the provision
of ooal with August loadings.

SECRET

SECRET

-2-

3. As to Italy.
a. No funds will be included in ar Department
budget estimates for fiscal year 1046 for the provision

of civilian supplies in this area.

b. The econouic policy for Italy established in the
Joint statement of the President and the Prine Hinistor
of September 26, 1944 can no longer be supported on A

military basis. Scenumo requirements implementing this

policy have just been received in the ar Department, up
to this tino no supplion have been furnished to Italy
above those necessary to avoid disuase and unrest. Since
the broadoned policy can no longer find support on mili-

tary basis, no supplion will bo furnished by the hr

Department to implement such policy.

G. In the event agencios of this Government other
than the Thr Department assume the responsibility for

provision of supplies to Italy, there are sufficiont
supplies currently in the pipoline to permit the Jar

Department to Curnish to such agencios other then the

Unr Department civilian supplies for Italy on the Ciscoso
and unrest formula through August 1945 leadings.

Appropriate action will he initiated proptly to appriso
British military authorities and thoutor auranders excerred
of the (for Department's position.

Thile this program has already boon the subject of 002=
sultation botwoon representativus of too foreign Comondo
Administration and the DROG Stato Departments, I wish to

formally notify you of the " Department's viceo at this

tine and to solicit your cooporation in effecting the smooth
transition dostrod by all concerned.
The Director, Civil Affairs Division, Mar Department,
will be glad to confor with the appropriate representativos
of the civilium agencies of our government at their convenience
with respect to the extent to which supplies or allocations
in the lands of the "ar Department can be rade available to
CGBO the transition.
Simocroly Yours,
John J. NoCley
SECRET

Assistant Scerotary of ar

RELEVANT PARAGRAPHS FROM JOINT DECLARATION

OF PRESIDENT HOOSEVELS AND PRIME MINISTER CHURCHILL
26 SEPTEMBER 1944

"At the same time, first steps should be taken toward
the reconstruction of an Italian economy--nn economy laid
low under the years of the misrule of Mussolini and ravished
by the German policy of vengeful destruction.
"These steps should be taken primarily BB military nima

to put the full resources of Italy and the Italian people
into the struggle to defeat Germany and Jaran. For military
reasons we should assist the Italians in the restoration of
such power systems, their railways, motor transport, roads
and other communications AB enter into the WAT situation, and
for a short time send engineers, technicians and industrial

experts into Italy to help them in their own rehabilitation.
"The application to Italy of the trading with the enemy
nots should be notified so BS to enable business contacts
between Italy and the outside world to be resumed for the
benefit of the Italian people.

"lie all wish to speed the day when the last vestiges
of Fancism in Italy will have been wiped out, and when the
last Germen will have left Italian soil, and when there
will be no need of any Ailled troops to remain--the day when
free elections can be held throughout Italy, and when Itnly
can earn her proper place in the great family of free
nations."

RECISION

TRADE MARK MICROSTATA MICROFILM ROLL NO

278
miss

26 June 1945

Dear Bernie:

I have just read your testimony

before the Senate Military Affairs
Committee on the elimination of Germany's

economic potential for var.
Your statement was a ansterful job

and I as sure will do a lot of good in
creating an enlightened public opinion
on this crucial issue.
Sincerely,
(Signed)

Mr. Bernard M. Baruch
597 Madison Avenue

New York 22, New York

JWP:1hh 6-26-45

Zears