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The CHAIRMAN. Mr. Jarman, any questions?

Mr. JARMAN. No questions.

The CHAIRMAN. Mr. Arnold, do you have any questions?
Mr. ARNOLD. No questions.

The CHAIRMAN. Mr. Burgin, do you have any questions?

Mr. BURGIN. Mr. Secretary, are there any purchases which have been made jointly by Great Britain and France? Is any material which they could use tied up?

Mr. MORGENTHAU. Well, what happened was this. Somewhere along in the first week of July the British Purchasing Commission took over the outstanding contracts of the French and paid for them so they were welded into one group. But I might point out that at that time the French had more in the way of liquid dollar assets than the English had. But the British Purchasing Commission took over all of the French purchases in this country.

The CHAIRMAN. Mr. Courtney, do you have any questions?
Mr. COURTNEY. I have no questions.

The CHAIRMAN. Mr. Eberharter?

Mr. EBERHARTER. Mr. Secretary, in the first sheet which you gave us, the first item there seems to be dated in 1941 of $1,274,000,000. Is that amount exclusively for war materials and munitions?

Mr. MORGENTHAU. That figure is practically entirely for munitions, as I understand it.

Mr. EBERHARTER. Then would you say that is about the extent of their contemplated purchases during this year for war materials?

Mr. MORGENTHAU. Those are the figures they have furnished me of what they had already bought-have signed contracts for prior to January 1, 1941.

Mr. EBERHARTER. Well, I think it would be enlightening if you could furnish us with an estimate or if they could furnish us with an estimate of what they might spend during 1941 or might be compelled to order in addition to what they have already ordered.

Mr. MORGENTHAU. If this legislation passes in the approximate form it now is before this committee, the proposal would be that the Army and Navy would do the ordering of the munitions-not only what they need but any other country might need. Both the Secretary of War and the Secretary of the Navy have copies of what the British Purchasing Commission requirements are for this year. And I think, if it is agreeable to you, that it would be better to wait until Mr. Stimson or Mr. Knox appear, because they have that information and I feel it is within their sphere rather than mine.

Mr. EBERHARTER. You feel, Mr. Secretary, from a study of this statement, they are really not in a financial position to pay or continue to pay for any length of time for war materials?

Mr. MORGENTHAU. From this financial picture which I have given to you I am satisfied that they can pay with dollars during this year for what they have already bought. But when it comes to finding the dollars to pay for anything like what they need in the future, they just have not got it.

Mr. EBERHARTER. That is all.

The CHAIRMAN. Mr. Gregory?

Mr. GREGORY. I have no questions, Mr. Chairman.
The CHAIRMAN. Mr. Wasielewski?

Mr. WASIELEWSKI. I have no questions.

The CHAIRMAN. Mr. Sikes?

Mr. SIKES. I have no questions.
The CHAIRMAN. Mr. Davis?

Mr. DAVIS. I have no questions.
The CHAIRMAN. Mr. Fish?

Mr. FISH. Mr. Secretary, how much money has Great Britain spent here in the last 16 months since the war was declared?

Mr. MORGENTHAU. If you will give me a minute I will give you the figure.

Congressman Fish, the answer is that as of January 1, the British Purchasing Commission has paid and taken delivery of $1,337,000,000. Mr. FISH. They have paid that amount of money since the war began?

Mr. MORGENTHAU. Yes; $1,337,000,000.

Mr. FISH. Now, what is the total figure that you estimate that they have available in dollar securities for further buying of war supplies here?

Mr. MORGENTHAU. The figure that I have here is an over-all figure of $1,775,000,000.

Mr. FISH. That has only to do with the securities in the United States; is that correct?

Mr. MORGENTHAU. That has to do with the gold, the dollar balances, their listed American securities and their direct investments in the United States.

Mr. FISH. In the United States?

Mr. MORGENTHAU. In the United States. In other words, dollars. Mr. FISH. Do you know how much dollar exchange, or, let us say, gold, England has available that could be transferred here for credit? Mr. MORGENTHAU. Well, now, do you mind if I ask you: from some of her dominions?

Mr. FISH. I mean Great Britain has available for transfer to the United States for credit to buy war supplies?

Mr. MORGENTHAU. May I have a minute, please?

Mr. FISH. Yes.

Mr. MORGENTHAU. The answer to your question, Congressman Fish, is that I have listed here all the readily available dollar assets that the United Kingdom has, as I am advised by their Treasury.

Mr. FISH. Well, I am advised by a statement of the Federal Reserve that Great Britain has something over 7 billion dollars in gold securities that could be transferred to us for credit. This is the official statement the Federal Reserve issues.

Mr. MORGENTHAU. Congressman Fish, I have their Bulletin here. I take it you refer to their total gold and dollar reserves of $7,115,000.000, listed in the Bulletin. Now, in the first place, that includes the central gold reserves of the dominions, as well as of the United Kingdom, $2,735,000,000.

Now, it includes the dollar balances for the whole British Empire of $1,050,000,000. These figures of the Federal Reserve and ours, so far as I know, are not in conflict. I would like to point out that these figures are as of August 1939, that is, before the war started. But we have used those figures as well as all other figures availableplus what the British Government has given us-and I have no reason

to believe that the figures which I have presented to you today are

not accurate.

Mr. FISH. Is there any reason that the British Government should necessarily buy with dollar securities that they may have available in the United States? Is it not reasonable they should also spend the money they have in gold in other countries such as Great Britain or South Africa or any part of the Dominion?

Mr. MORGENTHAU. Your statement is perfectly reasonable, and in going over these figures there are included in these figures all of the dollars or gold or securities that they can readily convert into dollars that the British Government itself has or that belongs to its peopleits nationals.

Mr. FISH. Well, of course, these figures are new to me and I will have to look them over and analyze them.

Now, I would like to ask you, Mr. Secretary, because the Secretary of State answered all the questions that he could in a very general way and continually referred to the fact that this bill was written by the Treasury Department, and I assume and always have assumed that the Secretary of State is a very honorable and truthful man. Mr. MORGENTHAU. I agree with you.

Mr. FISH. Now, are you the author of this bill?

Mr. MORGENTHAU. I would be very glad to tell you the history of the birth of the bill, as I know it. I think it was a week ago Friday that President Roosevelt sent for me after having seen and discussed this proposed legislation with Speaker Rayburn. As the result of that conference between the President and Speaker Rayburn, we were asked to get in touch with Speaker Rayburn who would put us in touch with the bill drafting commission, Mr. Beaman, in particular, of the House, and that we should lay all of the information that we had before Mr. Beaman, which we proceeded to do.

Mr. FISH. May I interrupt you and ask who "we" is?

Mr. MORGENTHAU. Well, when I say "we," I mean Mr. Foley acting for me as my general counsel. And after the bill drafting, I think you call it, commission of the House, Mr. Beaman and Mr. O'Brien had proposed a draft, this bill was shown to Secretary Hull Secretary Stimson, Secretary Knox, and myself. We all initialed it, giving it our approval. And after these three gentlemen plus myself had had a chance to see the draft that Mr. Beaman had prepared, the President invited to the White House Senator Barkley, Senator Harrison, Senator Connally, Speaker Rayburn, Mr. McCormack, your chairman, Senator George, and Mr. Johnson of Texas. And at that time the House draft of the bill was discussed and it was agreed at that meeting between the Democratic leaders of the Senate and the House, that the bill would be introduced.

Now, that, as I know it, talking for people associated with me in the Treasury, is the history of the bill as far as we had anything to do with it.

Mr. FISH. Am I correct in saying that you initiated the bill in the Treasury Department?

Mr. MORGENTHAU. No; I do not think you are correct.

Mr. FISH. Well, you certainly, as I understand it, turned the bill over to the drafting representatives down here in the Congress to revise with your plan?

Mr. MORGENTHAU. No: so far as I know, we gave information to the bill-drafting commission-it is a nonpartisan commission and they can talk for themselves.

Mr. FISH. There were not any members of the minority party present at this meeting, were there?

Mr. MORGENTHAU. Not that I know of. We gave them the information that we had available.

Mr. FISH. Therefore, I do not want to quibble about this. It is not so terribly important, but you originated the bill and you gave them the information to make the bill and to develop it along legislative lines?

Mr. MORGENTHAU. I do not feel I did, but if you do, that is your privilege.

Mr. FISH. I am trying to get the facts, and I am in search of facts and of the truth. The Secretary of State says that you did.

Mr. MORGENTHAU. The only difference is, I do not think there is any difference, and I am just telling you my part in it.

Mr. FISH. You know perfectly well, Mr. Secretary, the bill-drafting agency does not just write a bill unless they are told what is in the bill and some one sees them and tells them what is to go in. They simply put it in legislative form.

Mr. MORGENTHAU. I am just telling you the story, Congressman Fish, as I know it. That is my part in it. Far from apologizing for any small part that I have played, I am very happy I was able to contribute something toward it.

Mr. FISH. I am not criticizing at all. I am trying to get the facts. Mr. MORGENTHAU. I am giving them to you.

Mr. FISH. Are not the facts simply these? The Treasury Department initiated the bill and sent it down to be drafted? It has to start somewhere. It has to have a father.

Mr. MORGENTHAU. I feel that it started after Speaker Rayburn's call on the President, and then I was called in.

Mr. FISH. You think that Speaker Rayburn is responsible?

Mr. MORGENTHAU. I will only repeat my story. After Speaker Rayburn met with the President he phoned me and told me to get in touch with Speaker Rayburn, which I did.

Mr. FISH. Now, in view of the fact that the Secretary of State intimated very clearly that you, the Treasury Department, was responsible for the bill or the author of the bill, and when we asked him questions he said he preferred to let you answer the questions, the detail questions, he spoke of the general principles of neutrality and so on, but we refrained from asking him specific questions as to what was in the bill and how it might affect the situation. Now, I have waited to ask those questions of you.

Mr. MORGENTHAU. Well, I sat here through most of the hearing, not all of it, and I was not conscious that you gentlemen overlooked very many questions.

Mr. FISH. We did not ask him details because the Secretary said that he had no part in writing the bill and to that extent was not familiar with it outside of the general principles.

I would like to ask you whether this gives the power to the President to seize any alien ship in this country and give it to another nation. Mr. MORGENTHAU. The answer to the question, as I interpret the bill, is no.

Mr. FISH. Is that your interpretation?

Mr. MORGENTHAU. That is the Treasury's interpretation.

Mr. FISH. Does this give the President the power to use the Navy to convoy belligerent ships any place in the world?

Mr. MORGENTHAU. My interpretation would be there is nothing in the bill that gives him any additional power in that respect that he does not have already.

Mr. FISH. Does this give the President the power to give away any part of or the whole of the Navy?

Mr. MORGENTHAU. This may not be the answer you want, Congressman Fish.

Mr. FISH. I am only searching for facts. That is your opinion that it may not be an answer.

Mr. MORGENTHAU. I will answer by reading the bill. The bill says,

"To sell, transfer, exchange, lease, lend, or otherwise dispose of, to any such government any defense article."

Mr. FISH. What is your interpretation of the words "to transfer or otherwise dispose of to any such government any defense article"? Mr. MORGENTHAU. It is just what it says.

Mr. FISH. In other words, he can give away?

Mr. MORGENTHAU. He can sell, transfer, exchange or lease.

Mr. FISH. I am asking you for your interpretation of the words "to transfer or otherwise dispose of to any such government any defense article." Does not that mean the President could give away any defense article?

Mr. MORGENTHAU. Let me read the terms and conditions upon which any such foreign government receives any such aid. That is under subsection (a).

Mr. FISH. Where are you reading from?

Mr. MORGENTHAU. Page 3, line 13 or line 12.

The bill reads as follows in subsection (b) of section 3:

The terms and conditions upon which any such foreign government receives any aid authorized under subsection (a) shall be those which the President deems satisfactory, and the benefit to the United States may be payment or repayment in kind or property, or any other direct or indirect benefit which the President deems satisfactory.

Under that I would not say that he can give it away.

Mr. FISH. Certainly under the other clause he has that power to give it away. That is simply a condition.

Mr. MORGENTHAU. But it is a very important condition.

Mr. FISH. It follows it, but I do not think it limits it. I will Proceed then and ask you if he may transfer and exchange instead of giving away any part of our Navy.

Mr. MORGENTHAU. He can sell, transfer, exchange under those cond tions. The conditions are those which the President deems satisfactory and the benefit to the United States may be payment or repayment in kind or property or any other direct or indirect benefit which the President deems satisfactory.

Mr. FISH. Do you consider that this proposed bill cancels the Johnscn Act?

Mr. MORGENTHAU. No, in the Treasury we feel it does not.
Mr. FISH. You feel that it cancels the Neutrality Act?

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