and Australia within this coming year and they need all of that gold and all of the securities of their citizens and they need all of the investments they have in this country to raise sufficient dollars to pay for the orders already placed here.

Mr. TINKHAM. Would you object to the bill if an amendment was put in which in some way would provide for collateral, including the gold which I have mentioned going annually to Great Britain, for the war material that we are now proposing to lend or give Great Britain? In other words, an amendment which would protect the American people for those expenditures so far as it is possible and reasonably adequate?

Mr. MORGENTHAU. That is a matter that rests with the Congress.
Mr. TINKHAM. I know that.

Mr. MORGENTHAU. Well, I just thought I would remind you.
Mr. TINKHAM. I wanted your opinion.

Mr. MORGENTHAU. I am glad you are not always serious.

Mr. TINKHAM. I wanted your opinion whether you did not think as a safeguard for the American interests and for the American taxpayers that some provision of that character should be made in the bill which today contains no provision for the protection of American

interests.

Mr. MORGENTHAU. I am speaking for myself and am more than willing to leave it to the President of the United States to make the best bargain possible.

Mr. TINKHAM. I am very sorry to say that I have not the same confidence in the President that you have.

Mr. MORGENTHAU. That possibly, if you do not mind my saying, is why you are in the minority.

Mr. TINKHAM. In the majority do you count all the British as well as some of the Americans?

Mr. MORGENTHAU. I am willing to rest.

Mr. TINKHAM. I will do the same, Mr. Secretary.

The CHAIRMAN. Mrs. Rogers.

Mrs. ROGERS. Mr. Secretary, it seems if we pass this bill with the assurances that we had as a result of the President's message to Congress when it first convened, that we would be embarking on a plan of policing the world. Do you not think, as our Federal fiscal officer, that this country might well be bankrupt?

Mr. MORGENTHAU. You are asking me, if you do not mind, at least two questions. You are asking me a foreign policy question, which I am not prepared to answer; namely, to quote you, "We will embark on" I think you said "policing the world." I think that is a matter of foreign policy which, if you do not mind, as a Treasury man, I would rather not answer.

Mrs. ROGERS. But can you answer and will you answer what the cost of that will be?

Mr. MORGENTHAU. I do not know.

Mrs. ROGERS. Well, then, can you give me any idea?

Mr. MORGENTHAU. Anything I tell you would be purely a guess and it would not be worth anything.

Mrs. ROGERS. Who can tell us if you cannot tell us?

Mr. MORGENTHAU. Mrs. Rogers, I take it that if this bill passes, which I sincerely hope it will, that the Members of the Cabinet,

State, War, Navy, and the National Defense, and myself, will be called before the Appropriations Committee, at which time they will ask us to name a figure. I think it will be perfectly appropriate at that time. But I am not prepared today to give you a figure that I do not know.

Mrs. ROGERS. Does it not seem to you that all the Members of the Cabinet should gather together immediately to give us some cost of estimate, otherwise you will be asking us to write a blank check which does not seem good business procedure? You are asking us to pass this bill. You come before us and you ask us, so to speak, to swallow it whole and we do not know how we are going to digest it. I think we should be given all the facts and all the ingredients of the medicine before we take it. I know you are tremendously interested in the financial condition of America today and in the future, but we as the guardians of our constituents and therefore the guardians of the people and the entire country of the United States, ought to know what we are leading them into.

Mr. MORGENTHAU. Of course, we only are following the same procedure that Congress does in connection with our own appropriations. I have recommended that the Committee on Ways and Means and the Appropriations Committee should take up our appropriations and the tax bills at the same time. But we do not proceed that way. They vote the appropriations and then they vote the tax afterward. We have to get the method of doing this first and after the method has been established I think you will find that no one is going to be reluctant to give you the information as to what the Army and Navy and the National Defense Commission feel that the orders will amount to. I am not trying to avoid it but I just do not know.

Mrs. ROGERS. Do you not think, Mr. Secretary, that we ought to find out and you should so far as possible give us the facts? This is in defense of the so-called democracies of the world. It is not just financing our own country.

Mr. MORGENTHAU. I agree with you.

Mrs. ROGERS. It is a tremendously big thing. I know you realize that.

Mr. MORGENTHAU. It is one of the most important things I have ever taken part in since I have been in the Government.

Mrs. ROGERS. I know your interest is sincere, Mr. Secretary.
Mr. MORGENTHAU. I try to be.

Mrs. ROGERS. One other question, Mr. Secretary. I think you said there were $3,019,000,000 in assets that the British had. In one of your releases I find that the total of the United Kingdom investments outside of the United States-the nominal value is in billions-I think it would be $12,000,000,000, approximately.

Mr. MORGENTHAU. Mrs. Rogers, that is what we call a nominal value. That is the face value of those securities. Now, what they would be worth if they tried to sell them in a hurry I just do not know. But certainly their investments, in Mexico for example, are in default. I do not know what they are worth. I do not know what the street railways that they own in the Argentine are worth. I do not know who would buy them. So I have simply attempted to give you everything we have. But when you begin, as I say, to sell their investments in Mexico, their oil properties, their street railways

or railroads in the Argentine, what they could get for them, I have no idea-and mind you, they would get sterling or Mexican currency or Argentine currency-and with the various exchange controls existing in those particular countries I doubt if they could get the sterling out of Mexico or out of the Argentine.

Mrs. ROGERS. Why could not the title of stock be transferred to us as collateral? I should think, for instance, if Great Britain was defeated she would be very glad to have the title of stock in railways in South America or elsewhere.

Mr. MORGENTHAU. It can be transferred. It is perfectly possible. Mrs. ROGERS. Do you not think that it would be very much pleasanter in our relations if Great Britain gave us in collateral or actually paid for what we would give her?

Mr. MORGENTHAU. That gets back to the question of whether I want to express an opinion as to whether they should or should not put up collateral. If you do not mind, unless you insist I would rather not answer.

Mrs. ROGERS. Then, of course, you would not answer as to the advisability of requiring them to give us some of their possessions which I should think they would not need but which are valuable to us?

Mr. MORGENTHAU. It would just be my personal opinion, and as I say, if you do not mind, I would rather not express it.

Mrs. ROGERS. Do you not think, Mr. Secretary, it would be a wise plan for the Foreign Affairs Committee to ask the British Defense Commission to appear before us? During the World War they appeared before the Ways and Means Committee, and certainly we are acting as if we were actually to all intent and purposes at war.

Mr. JOHNSON. Mr. Chairman, I think that is an improper question to ask this witness, as to whom we should examine before the committee. That is a matter for the committee to decide. I object to it. The CHAIRMAN. Objection sustained.

Mrs. ROGERS. That is all, for the present, Mr. Secretary. Thank you very much.

The CHAIRMAN. Mr. Chiperfield.

Mr. CHIPERFIELD. Mr. Secretary, if I understood you correctly we are going to have to pass this bill without knowing what it is going to cost the taxpayers of this country; is that not a correct statement? Mr. MORGENTHAU. Not necessarily. As I say you have yet to hear, as I read in the papers, the Secretary of War, the Secretary of the Navy, and Mr. Knudsen. They have a pretty good idea of what Great Britain, Greece, China, the Dutch East Indies, and South America are asking for in the way of munitions.

Mr. CHIPERFIELD. If I understood you correctly, you said that conditions were constantly changing and that it was impossible to determine the future needs are. We do not know what terms and conditions will be satisfactory to the President, so how can we say what this is going to cost? In other words, we are asked to pass a bill without knowing what it is going to cost, except in a most general way, to the taxpayers of this country.

Mr. MORGENTHAU. Would you mind if I put it in my own way? Mr. CHIPERFIELD. Yes, sir. That is what I wish you would do.

Mr. MORGENTHAU. As I understand it, what the Congress is considering, and this committee in particular is considering, is: Should they pass a bill making it possible to lend or lease war materials to certain countries? It is impossible for us to do this unless the Appropriations Committee passes a bill with a definite figure, and that figure will have to be stated.

Mr. CHIPERFIELD. That figure will be known some time later after this bill is passed?

Mr. MORGENTHAU. Not necessarily. If this committee takes the position that they want a figure, that is their privilege. But I am simply saying as of today, if you press me as of this moment I am not prepared to give you a figure. But I think that after you hear these secretaries because I have some idea of what they are going to sayI think you will have a much better idea and also the way possibly our own defense will be benefited through the expansion of plant, and that sort of thing.

Mr. CHIPERFIELD. I hope that the Defense Commission brings us that.

Mr. MORGENTHAU. I hope so.

The CHAIRMAN. Mr. Vorys?

Mr. VORYS. Mr. Secretary, I have not been following the figures carefully enough, but I confess I am astounded to find that the British assets are in this country only something over $3,000,000,000, when I have been reading in the papers quotations from people that I thought knew that they have $7,000,000,000, $14,000,000,000, and $5,000,000,000, and many different figures. I wonder if you could enlighten me as a person who has not followed that sort of thing closely, as to whether there has been a shrinkage in recent times, or whether the figures that we have been seeing were exaggerated? What is the explanation?

Mr. MORGENTHAU. You know, Mr. Vorys, you are no more in a quandary than I have been. I think there are two reasons for your confusion and mine. One is that these figures have been very, very closely guarded. After all they are the figures of another Government, and up to the moment I presented them to you they have been the property of the British Government. It is their position. Furthermore, I think that the people have confused their assets as to those assets which are convertible into sterling and those assets which are convertible into dollars. And the figures which you have seen are mostly sterling. In other words, if you present a certificate in XYZ Company and demand payment, you will get paid in sterling in London. On the other hand the figures which I presented today are the figures of the dollars which they can acquire to pay us. That is where all of us have gone wrong.

Mr. VORYS. Does that mean that there are in the United States British assets, things, or certificates that the British people or that the British Government owns that are sterling assets?

Mr. MORGENTHAU. No; I have presented to you today everything that the British Government through its citizens can lay its hands on that can be converted into dollars. They might perfectly well, I do not know. There might be some individual or trusts or corporations owning British sterling securities, and if they do they appear in the other list which I have given you of their assets in Canada, Australia, and South Africa.

Mr. VORYS. But in the other list there is no list of British assets in sterling in the United States, and I wonder whether that meant there were not any?

Mr. MORGENTHAU. There are not any.

Mr. VORYS. That is everything within the United States that they have is convertible into dollars and it adds up to about a little over $3,000,000,000?

Mr. MORGENTHAU. To the best of my belief and the best belief of the staff of the Treasury who have been working on this day and night now for a long time. We have presented to you all the dollar and sterling assets as we have them. If there is any gold or balances or securities other than what we have told you about, well then it is an honest error, but we have done our best to present to you the picture as we see it. I realize how serious this situation is and not only does it come as a surprise to you, but I am sure it will also come as a surprise to the British people.

Mr. VORYS. It looks then as if they are going to need a large amount, more than they can pay for? That is obvious; is it not?

Mr. MORGENTHAU. I feel that given the balance of this year and provided that our markets stay as good as they are now they will be able to raise the dollars necessary for the orders which are placed with our manufacturers. After they have done that there is very little left over and for that reason their buying has practically come to a standstill pending action by the Congress. I mean, the buying of the British Purchasing Commission in this country you might say for all purposes has stopped. There may be a little odd amount here and a little odd amount there but the buying has practically stopped because the money is not in sight.

Mr. VORYS. It is possible that this bill will be as my 12-year-old boy described it, he calls it the lend-lose bill rather than the lend-lease bill. That is, we are going into this thing, are we not, with our eyes open, contemplating that we may or may not be paid back in dollars and cents?

Mr. MORGENTHAU. What I have attempted to do, Congressman, and the only place that I would ever blame myself would be if I had not presented here today the true financial picture as I see it. Now, whether we get paid back or not I do not know, and I am not going to make any prophecies. Whether we will or will not, I do not know. But certainly I would not stay, as Secretary of the Treasury, one second if I were party in any way in misleading the Congress as to the true financial picture of Great Britain before you considered this bill.

Mr. VORYS. It would be possible to do this as we did in the last war by way of merely extending loans to the British; would it not? That is one way the same result would be accomplished?

Mr. MORGENTHAU. It could not be done unless the Neutrality Act was changed.

Mr. VORYS. It would require changing of the Johnson Act.

Mr. MORGENTHAU. It would require a change. It could be done. Mr. VORYS. As this is contemplated these Government loans and leases of things would be paid for by us, but if the British bought something themselves the Johnson Act and the Neutrality Act would still apply and they would have to pay cash; is not that right?