tees, by and large. to make their appropriations without limit and then to allow the Appropriations Committee to hold them down as a matter of general practice?

Mr. MORGENTHAU. One thing I learned when I went to Albany as an appointive officer and appeared before the legislature there was never to attempt to advise a legislator about his business. And I have stuck to that ever since I was conservation commissioner in Albany.

Mr. MUNDT. I believe our legislative body needs financial advice, and my thought is the Secretary of State premises the whole argument in behalf of this bill as a national-defense measure. We sometimes hear it said that the English Navy is our first line of defense and sometimes it is said that keeping entirely out of all foreign wars and building up our own defenses to make them impregnable is our first line of defense. Sometimes a moneywise fellow comes along and says the country's finances are the country's first line of defense. I do not pretend to know but this is what we must always reckon with. There comes a time in our country's finances when to continually spend what we do not have jeopardizes our national defense.

Mr. MORGENTHAU. As a broad statement, of course, it is correct. Mr. MUNDT. The reason I mentioned that is this. Before these hearings are over I hope you will be able to confer as fiscal officer with the defense people and the Cabinet and with the President and come back to us at some future time with a suggestion as to the amount involved in this bill, because I believe that wise congressional policy demands that this provision, if it does not specify the amounts to be appropriated, should at least set some maximum limit on these costs. Otherwise I am afraid we are never going to keep track of Federal spending. Is that an impossible suggestion? Perhaps in a week or 10 days you might be able to give us some more definite information on that than you have today?

Mr. MORGENTHAU. I will give your suggestion the most careful consideration, which it deserves.

Mr. MUNDT. Thank you very much.
The CHAIRMAN. Mr. Jonkman.

Mr. JONKMAN. I understood that you are perfectly willing to assume responsibility within the scope and sphere of the Treasury Department on the financial condition of England, but outside of that you do not wish to assume too great responsibility. I think that position is eminently fair and I wish to respect it. On the other hand, that those who draw an instrument or a bill usually are able to say what it means with reference to those things that may seem ambiguous to others. I will ask you one question. I am not saying this is within the scope or sphere of the Treasury Department, but I would like to find out from somebody who had to do with this bill what the answer is. Assuming that the President under this bill authorizes the Secretary of the Navy and the Secretary of War to sell, transfer, or lease to England articles of defense, would this bill directly or impliedly give him the power of delivering and shipping those articles in American ships? In other words, does the power to sell carry with it an implied power to deliver in American ships?

Mr. MORGENTHAU. My counsel advises me no. That is his opinion. Mr JONKMAN. It has been brought out here that the only limitation that could be placed upon this lend-lease service to England would be by way of appropriation. Isn't that true when we read, for instance,

section 2, "sell, transfer, exchange, lease, lend, or otherwise dispose of to any such government any defense article," and then we read the description of the defense articles which means any weapon, munition, aircraft, vessel, or boat, or any machinery, facility, tool, material, or supply necessary to manufacture or necessary for the production or processing or repair or servicing or operation of any article described herein that the President will without a single cent of appropriation be able to sell, transfer or lease all the defense property we have up to the seventeen and a half billion dollars that we have appropriated last year and everything else without a cent of further appropriation. Mr. MORGENTHAU. This is the Treasury's opinion, which somebody else in another department may differ with. But if I understand your question correctly the answer is yes.

Mr. JONKMAN. He could?

Mr. MORGENTHAU. The answer is yes.

Mr. JONKMAN. Even war vessels? I understood you to say this bill does not give the President any additional powers that he does not already have; is that your statement? Is that correct?

Mr. MORGENTHAU. If I said that, I misspoke myself. I do not think I said that. If I did I withdraw it.

The CHAIRMAN. Mrs. Bolton.

Mrs. BOLTON. In speaking of the Dutch moneys, Mr. Secretary, we have been reading in the papers a good deal of Dutch money. Would you say that would be over $1,000,000,000, or is that an unfair question.

Mr. MORGENTHAU. No; it is not an unfair question. I just happen to know what the exact figure is. I think it would be a breach of trust on my part if I said what the exact figure was without getting their permission. But if it is the wish of the committee that they want that information, I will ask the representative of the Dutch Government whether I can furnish that figure.

Mrs. BOLTON. Would it be conceivable that there would be a sufficient amount there to feel that they could finance another year of the Allies' fight?

Mr. MORGENTHAU. If you do not mind, I do not want to play that game.

Mrs. BOLTON. I do not mean to press the matter unduly. Mr. MORGENTHAU. Because I know what the amount is. It sort of reminds me a little bit of the game, "Are you hot or cold?" and you are a little too hot.

Mrs. BOLTON. I think a good many things are being said in the papers about it and we have reason to feel that if there is money by which this financing can be done and it is really money perhaps that should be used before we go ahead financing the democracies.

Mr. MORGENTHAU. It is like any other trust. I have this information and I feel it would be a breach of trust unless I first asked the representative of the Netherlands Government whether I could furnish this information. If it is the wish of the committee I will ask the Netherlands Government.

Mrs. BOLTON. I have just one other question, Mr. Secretary. In the bill here on page 3 the meaning of these words has puzzled me:

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.

What is meant by those words?

Mr. MORGENTHAU. I think it means just what it says. If Congress passes this bill it is up to the President to make the very best bargain that he can whereby the people of the United States will benefit directly or indirectly.

Mrs. BOLTON. "Indirectly benefit" would be freedom from――

Mr. MORGENTHAU. Attack?

Mrs. BOLTON. Attack.

Mr. MORGENTHAU. Maybe.

Mrs. BOLTON. And it would be in the President's judgment?
Mr. MORGENTHAU. It would be; yes.

Mrs. BOLTON. That is all.

The CHAIRMAN. Mr. Secretary, Mr. Fish has got a couple of very short questions he wishes to ask you.

Mr. FISH. Mr. Secretary, I would like to ask you whether the stabilization fund has been used to extend any credits to buy any war materials of any kind?

Mr. MORGENTHAU. The stabilization fund, Mr. Fish, has not been so used. We consummated a stabilization arrangement with the Argentine which we announced and we are negotiating an arrangement with China. As you most likely know, I appeared before a Joint Committee on Banking and Currency of the Senate and Committee on Coinage, Weights, and Measures of the House, Mr. Hull and I did, and explained what we proposed to do before we entered into it. And they gave us what they call a vote of confidence and on that basis we went ahead and negotiated those two.

Mr. FISH. I would like to ask you just a clarifying question, because at the very outset I asked you whether the President has the power to sell or transfer, or exchange, or otherwise dispose of any defense article and I spoke of the Navy and some other defense articles, and you thought at that time that he did not have the power. Since then you have modified that and said you thought he had full power under that to do what he wanted?

Mr. MORGENTHAU. That is right.

Mr. FISH. I just want to correct the record in that respect. I have just one other question. This is a loan defense bill for the purpose of lending money so that foreign countries can buy war materials here. Does it in any way expedite production at the present time? Mr. MORGENTHAU. Do you mind repeating that? I did not quite get it.

Mr. FISH. I want to know whether or not this bill is supposed to be an emergency bill in any way insofar as the production of war material at the present time is concerned?

Mr. MORGENTHAU. I can give you an example. The Army and the Navy and the Defense Commission were in the process of placing orders for 2,000-horsepower Pratt-Whitney and Curtiss-Wright aircraft engines with the Studebaker and Buick companies in order to get the production that they needed. They wanted to include the British in this order in order to get the right size factory and in order to get the whole production of those 2,000-horsepower engines in the way that the Army and Navy and Defense Commission sought. Those two particular orders right now are just stopped pending some direction from Congress as to where do we go from here.

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Mr. FISH. I want to point out it has been stated that the crisis-I think it was the Secretary of State, stated that the crisis in England would come within the next 90 days. There is nothing in this bill that would help England within the next 90 days if it were passed today?

Mr. MORGENTHAU. Well, I just do not know what he has in mind. But he is in so much better position in matters of foreign affairs that I am more than willing to take his word for it.

Mrs. ROGERS. Will the Secretary come back tomorrow?

The CHAIRMAN. Mr. Stimson will be here tomorrow.

Mrs. ROGERS. Is the gentleman through?

The CHAIRMAN. If the committee does not mind, I would like to ask one question.

Do you want to ask a question?

Mrs. ROGERS. Yes.

Mr. Secretary, is it not a fact if this bill should pass, does it not seem to you that we ought to have some control as to where the ships and airplanes are to be used if we are to get the benefit of them? During the World War I happened to be in France at the time and talked with a good many French officers. Those in command had a great desire to have our troops used as their reserves. It seems to me if we deliver ships and airplanes we should have something to say as to where they should be used.

Mr. MORGENTHAU. The only answer I have is the control would be as it is stated in the bill, no more, no less.

Mrs. ROGERS. And they can say where they are to be used and not just turned over?

Mr. MORGENTHAU. I say, it is just as it is stated in the bill.

Mrs. ROGERS. Would you have any objection to our making it very specific?

Mr. MORGENTHAU. I cannot object. I have no right to object. Mr. VORYS. Under section 5 of the bill on page 4 information is to be given immediately to the export licensing authority. I wonder if it is contemplated whether that information would be made public? I think the export licensing authority to date has been making that very information public. I do not know whether it is contemplated it would be public?

Mr. MORGENTHAU. If my memory serves me right, I may be wrong, I think that export licenses are in the State Department. I think they make an annual report to the Congress.

The CHAIRMAN. The Munitions Control Board has that, and it is a domestic law. They make their report to the Congress. Mr. MORGENTHAU. I think that is correct.

Mr. VORYS. This is not the Munitions Control.

The CHAIRMAN. That goes into the Munitions Control, does it not? Mr. VORYS. No; this is a different thing than export licensing under section 6 of the bill that we passed last year.

The CHAIRMAN. All export licenses, if you will permit me a suggestion, go into the Munitions Control, the way I understand it. Mrs. ROGERS. How many reports have they made?

The CHAIRMAN. I do not know. Someone informs me that they have made four reports.

Mrs. ROGERS. How many have they made?

The CHAIRMAN. Four.

Mr. MORGENTHAU. The answer to your question is the way this is written it would be permissive. In other words, it is not mandatory. Mr. VORYS. I wonder whether in discussing the bill you would have had that in mind that that would become public information, or whether that is the type of thing that would be kept confidential? Mr. MORGENTHAU. It would rest with the Administrator of Export Control. It gives him that discretionary power.

The CHAIRMAN. Now, may I ask a question?

It has been suggested, Mr. Secretary, that if possible the committee would like to have the rate of taxes to borrowing or fiat money. Could that be secured for the benefit of the committee?

Mr. MORGENTHAU. The rate of taxes of England?

The CHAIRMAN. The ratio of taxes to borrowing or fiat money, if that could be secured. If that could be secured the committee would

very much like to have it.

Mr. MORGENTHAU. We can give you what we have.

The CHAIRMAN. Thank you very much. Mr. Secretary, I have a couple of questions here. Does England have money to pay American manufacturers for the orders that she has already placed? Mr. MORGENTHAU. I believe so.

The CHAIRMAN. Does England have any more orders she wants to place at this time?

Mr. MORGENTHAU. Yes.

The CHAIRMAN. And that is the purpose of this bill here; is it not? Mr. MORGENTHAU. That is right.

The CHAIRMAN. So as to satisfy the manufacturers, that if England places the orders, that somebody is going to pay for them or guarantee it; is that right?

Mr. MORGENTHAU. That is right.

The CHAIRMAN. Did the French collapse cut down the money that the Allies had planned to use for American war orders?

Mr. MORGENTHAU. It cut it down greatly. The French had more dollar assets than the British had at the time of the collapse.

The CHAIRMAN. And those orders were taken over by the British? Mr. MORGENTHAU. Yes; those dollar assets of the French which were in the United States have been frozen and the United States Treasury is custodian of them.

The CHAIRMAN. Could you tell the committee how much it is costing England to conduct the war at the present time?

Mr. MORGENTHAU. We are advised it is costing in the neighborhood

of £12,000,000 a day.

The CHAIRMAN. £12,000,000 a day?

Mr. MORGENTHAU. Yes.

The CHAIRMAN. And how is England raising this money?

Mr. MORGENTHAU. They are raising over 5 billion dollars in taxes, or about 40 percent in taxes and 60 percent by borrowing and depletion of foreign assets.

The CHAIRMAN. How do the English taxes compare with our taxes at the present time?

Mr. MORGENTHAU. I have a table here of a comparison of British and United States taxes.