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have not given her anything free. We have been making her pay through the nose for everything she has got?

Mr. MORGENTHAU. So far she has paid cash for everything. She has not been given anything.

Mr. Eaton. And so if England is our first line of defense, we have not covered ourselves with a special glory so far?

Mr. MORGENTHAU. I agree with you.

Mr. EATON. That is, we have not covered ourselves with a special glory so far in our system?

Mir. MORGENTHAU. I agree with you.

Mr. Eaton. Now, just one more question, due to the fact that I have no economic experience or knowledge, these security holdings that are set forth in these statements, do they belong to private citizens of England?

Mr. MORGENTHAU. They do.

Mr. EATON. Now, does it mean that the British Government will take those over from the private citizens and use them for a public purpose?

Mr. MORGENTHAU. What they are doing now is this: In the case of American securities listed on our exchanges, they have been rapidly taking those over and selling them to American investors; and they propose to sell, as rapidly as they can find buyers, the so-called direct investment in factories or businesses, which are not listed on the exchange.

Mr. Eaton. How do they take them over? Are the owners compensated? Does the government borrow them and promise to pay later on?

Mr. MORGENTHAU. They call it vesting under their law. They take possession and they pay for them in sterling. They give the English citizen sterling and they keep the dollars and pay our American manufacturers with the dollars that they secure in that manner.

Mr. Eaton. Now, just one more question. How much more in value does the United Kingdom desire to purchase here in 1941?

Mr. MORGANTHAU. Well, that figure I have not given.
Mr. EATON. Yes.

Mr. MORGENTHAU. Because I would rather that that would be developed by Mr. Stimson and Mr. Knox and Mr. Knudsen, because, as I explained, it becomes a part of the orders which we will be placing for our own munitions. It is an integral part and it becomes a matter for our Army and Navy expense. I think you will find they are prepared to answer that question.

Mr. EATON. From now on under the terms of this bill all materials acquired by Great Britain in defense orders will be placed by our Government authorities with our producers and will be paid for by our Government to those producers? And then a transaction of exchange or gift or sale or whatever it is will be made by our Government to the British Government?

Mr. MORGENTHAU. Your statement is, as I understand it, correct, with this slight modification, if I may make it. It does not follow necessarily that all the orders that Great Britain will place will be done in that way. They may, I think you will find, have orders that they will place directly. I think the bulk, the majority, it is proposed would be placed in just the way that you described.

Mr. EATON. Up to this time the American people have made no financial sacrifices in assisting Great Britain defending America against the totalitarian governments?

Mr. MORGENTHAU. Not one dollar.
Mr. EATON. Thank you, Mr. Secretary.
Mr. MORGENTHAU. Thank you.
The CHAIRMAN. Mr. Tinkham?

Mr. TINKHAM. I notice with a good deal of interest that you only ask the British Government to use American assets with which to pay for anything they buy. They have assets in England. They have assets in their dominions, now; I am speaking of stocks and bonds. They have assets in many other countries, particularly South America. We have a rate of exchange. Why should not they either sell some of those assets because they are their property and they are buying from us, and which our taxpayers, if they do not pay us, have got to pay. Why should not they pay some of those or segregate some of those securities in such a way that we may have the benefit?

Mr. MORGENTHAU. Congressman, I have not attempted to say what the British should or should not do. I do not feel that I have the right or the authority. All I have attempted to do here today is to lay before this committee a picture, a correct one, as far as I know, of all of the securities in dollars that the British Empire has. I have also given you a list of the sterling securities that they have, an estimate-not an estimate furnished by them, but the best that we could get-of their investments all over the world. And I have not attempted to say whether they should or should not make those available. I have simply tried to present as best I know how what they have in the way of worldly goods that can be converted into dollars.

Mr. TINKHAM. You are an American and you represent the American taxpayers in part. It seems to me that as our chief financial officer you should tell us what your opinion is as to whether they should pay us anything with some of their sterling securities, no matter where they are situated, or segregate them in such a way that we get the benefit.

Mr. MORGENTHAU. You do not mind if I have an honest difference of opinion with you?

Mr. TINKHAM. No; I am only asking you if you do not think that ought to be done to protect America's interests. That is all. If you want to say no, it is up to you. That is your position; that is all.

Mr. MORGENTHAU. I feel that I have discharged my duty as an American citizen and as Secretary of the Treasury when I lay all the facts before you. Then, as to how we proceed from that point, I feel it is up to the Congress which has this bill. And I would fail in my duty if knowingly I withheld any information from you.

Mr. TINKHAM. It is not a question of information. It is a question of policy and of deep fiscal policy and of very great importance to the American people who are apparently being asked under this bill to finance a world war. If you want to decline to answer, that, of course, is your privilege, but are you or are you not in favor of some policy which will either mean that we should approach Great Britain as to the segregation of securities for final payment or for the sale of some of the securities for making payment? When I say immediate I

mean in 1941 or 1942. I would say they are wealthy. If you do not want to answer that question it is all right. But it seems to me as chief fiscal officer of this Government you should say whether England should do that with her wealth or whether the burden should be put upon the United States and its taxpayers.

Mr. MORGENTHAU. Well, as long as you have given me the option, I would rather not express an opinion.

Mr. TINKHAM. Excuse me?

Mr. MORGENTHAU. As long as you have given me the option I would rather not express an opinion.

Mr. TINKHAM. Every year Great Britain is receiving gold from South Africa where it is mined to an extent of $700,000,000 to $750,000,000. What reason is there, that you know of, why that gold in due course and under proper arrangements should not be transferred to us? I mean of course as security and collateral for what we may advance it which may be an unlimited amount.

Mr. MORGENTHAU. Mr. Tinkham, under that section B (3) it says South African exports of gold, $480,000,000, which they advise me is the amount which would flow to the United Kingdom. There is $480,000,000. We have also listed in Australian gold $75,000,000.

Mr. TINKHAM. We will not dispute about the amount. I have seen seven hundred to seven hundred fifty million dollars repeatedly stated as the amount of gold produced in the Rand in English publications which I could submit to you. If they are submitting a larger amount and we have notices of approximately the amount of $450,000,000 or $750,000,000, or as I suggested, $700,000,000, why should not they transfer it to us as collateral against such loans as we are making so the American taxpayer does not have to meet their bills as is proposed in this legislation?

Mr. MORGENTHAU. You and I think alike on this point. I believe that any amount of South African gold that the United Kingdom receives during this year they should use to pay for merchandise which they buy in this country.

Mr. TINKHAM. Now, have they been doing that, do you know?
Mr. MORGENTHAU. They have been paying their bills.

Mr. TINKHAM. But you do not know whether they have used that or whether they are segregating that, cacheing it, as it were, in London?


Mr. TINKHAM. Or even selling it to us, of course, at a very heavy profit at the present prices you are paying for gold?

Mr. MORGENTHAU. That is something else again. They have been selling us most of their South African gold and they propose to sell us all the South African gold that they produce.

Mr. TINKHAM. Sell us! Yes; but do you not think that where we are to let them have an unlimited credit it should be given us as security and as collateral annually?

Mr. MORGENTHAU. I do not think you really mean that.
Mr. TINKHAM. What did you say?
Mr. MORGENTHAU. I do not think you really mean that,

Mr. Tinkham. Certainly, I do, Mr. Morgenthau; I am always very serious.

Mr. MORGENTHAU. These figures which I presented here today include, I believe, all of the gold that will be mined in South Africa

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

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