aitonal compensation would be bitterly resented by the War Industries bard. I stated that if there were any legal commitments that was another matter; but the idea that the services rendered had not been adequately compensated for was absolutely ridiculous in view of the price of producing nitrate, w was well known to us. Gibbs was simply staggered at my very frank statement and I followed this with a number of clear cut statements of my position, and altogether I think it was the first time Gibbs realized that we were tot going to stand this attitude of profiteering but were quite prepared to take the situation in hand if necessary. His defense was hopelessly weak and ineffective and he was much discomforted as a result of the interview. I expect to attend the nitrate executive tomorrow and make some very clear cut, frank statements of the American position. I am satisfied Gibbs has been trying to bring pressure on Churchill to avoid his making the deal with the Chilean Govern ment and I felt that by giving Gibbs a direct taste of the American attitude he wuld realize that he was on perilous ground and it was not a situation for English pel ties but an international situation that it was dangerous to deal with. I think Mr. Anderson concurs that we enlightened Mr. Gibbs considerably. I do not what impression I am leaving here in the high-handed manner I have taken hd of two or three of these situations, but as you know, I care very little because its absolutely essential that we make the situation plain and eliminate the factors that have handicapped the presentation of facts. I am very courteously received everywhere and I think all of our committees aren aking progress. Mr. Crosby is asking me to cooperate intimately with him I am endeavoring to assist him in every way. We are pushing hard to form te tungsten executive, and I hope we will get the tin executive formed this week. In regard to further men over here, I do not think we will need Heidrich at this tite as I think Patterson can handle the jute situation. Unquestionably, it will be necessary to send over three or four men a little later as we will have to keep a Paris organization as well as a London organization. My idea is to take Macall to France where the steel program really originates and put him in touch with the French and Italians. If we do this we may need a second steel man as t..s is the largest program we have to face, and it will be necessary to scale down the requirements, which can only be done by a careful analysis of conditions. We will probably want a chemical man to deal with explosives. Perhaps MacDowell can let me have McCutcheon or some man of his type. We also will need Cornell on nonferrous metals if this situation develops actively. The question of a permanent secretary in Paris is a pressing one. Gifford is acting at present but he has shown a yellow streak which has disgusted Stettinius wt Lim, and I think it will eventually evolve upon us to name a permanent secretary for the Americans at the Inter-Allied Munitions Council. This secretary will have to reside in Paris. Mr. Anderson will leave between the third and sixth of September if they put on a boat, and he will be able to give you a first-hand picture of the situation over here which will greatly assist you in formulating your policy. Very sincerely yours, US W. I. B. M. No. 25. EXHIBIT No. 3347 (Incoming cable] Date: AUG. 27, 1918. Subject: Steel replacements. Embassy no. 966. (From Baruch to Summers) Request Stettinius and purchasing agents of expeditionary force not to make promises of replacement of materials without consulting us. Some of the promises made are impossible of fulfillment under present conditions and their action only makes it difficult for us to handle the matter here. Mr. B. M. BARUCH, EXHIBIT No. 3346 Chairman, War Industries Board, LONDON, ENGLAND, August 27, 1918. Washington, D. C. MY DEAR MR. BARUCH: We have held some steel meetings, and on yesterday, the 26th, we perfected the permanent organization of the steel committee and started in to try to reconcile the very conflicting programs which have been presented by the various Allies. The steel committee had two meetings while I was in Paris and they wired a brief report to the Munitions Council. This report was sent to the British representative, Mr. Layton, and when I got back to London I found that Mr. Layton had never presented it as it involved England furnishing a greater portion of coal to Italy, and I presume Layton thought he could make a better bargain in Paris where we did not have the detailed information. In view of these circumstances and the fact that there was a very pronounced tendency to simply take control of the committee meetings and appoint their own chairman, I decided to make a move in the matter. Yesterday I attended the meeting with Mackall and Mr. Layton, who has been acting as temporary chairman, was late in arriving, so I called the meeting together and asked that a permanent organization be perfected. This was done in a few minutes and I then stated that inasmuch as the American steel production was treble the combined production of the Allies and we were being called upon for very heavy commitments, I felt an American should be chairman of the steel committee, and if there was no objection I would nominate Mr. Mackall for permanent chairman. Of course, there were no objections, but my high-handed manner had simply taken the breath away from the British and we rapidly formed the permanent organization with Mr. Mackall as chairman and the British representative as permanent secretary. Mr. Anderson and I called on Winston Churchill yesterday afternoon and discussed the nitrate situation with him. He was to meet the Chilean Minister later in the afternoon. The situation seems to be just about as it was, and nothing has been accomplished. We had a long talk with Skinner in the forenoon and it was quite evident from the facts Skinner gave us that Gibbs has been bucking the idea of dealing with the Chilean Government. Gibbs' attitude throughout has been that of an autocrat and Skinner had a copy of a letter he had given him in confidence which Gibbs had written to one of the prominent officers in the British Government in which he made a statement that all of the Allies were cooperating and recognized the work that had been done by the executive except the American representative who did not appreciate the wonderful service that the executive had rendered the American people. Skinner also stated Gibbs was trying to make the prices paid for nitrate since the first of June, the deliveries of which were made since June 30th, retroactive, and at the price we are offering to pay the Chilean Government. I told Skinner that Mr. Anderson and I would attend the meeting of the nitrate executive on Thursday and asked him to make the necessary arrangements. When we got to Churchill's office we found Gibbs was with Churchill and we were introduced to him. After we were through with Churchill Gibbs was waiting to see us and he sprung the proposition about making the price retroactive. I was satisfied Gibbs has been playing simply for personal profit in this whole matter and I decided to relieve Skinner of any embarrassment that might have been occasioned by showing that Skinner was far more lenient than the War Industries Board. The result was that Gibbs and I had a most spirited conversation for about fifteen minutes. He made a very strong statement in regard to the necessity for the retroactive price. I replied that if the parties demanding this additional payment were British subjects, I was appalled at their greed and spirit of profiteering; that I had no conception that the British Nation would for a minute countenance this attitude in view of the sacrifices America was making; that if the parties making this demand were not British or Allied subjects but were simply parties seeking to profiteer at the expense of the Allies I had no sympathy for them, as the prices paid were more than fair and represented a very large profit; and that any plea for aditional compensation would be bitterly resented by the War Industries Beard. I stated that if there were any legal commitments that was another matter; but the idea that the services rendered had not been adequately comper sated for was absolutely ridiculous in view of the price of producing nitrate, atch was well known to us. Gibbs was simply staggered at my very frank statement and I followed this with a number of clear cut statements of my position, and altogether I think it was the first time Gibbs realized that we were not going to stand this attitude of profiteering but were quite prepared to take the situation in hand if necessary. His defense was hopelessly weak and ineffective and he was much discomforted as a result of the interview. I expect to attend the nitrate executive tomorrow and make some very clear cut, frank statements of the American position. I am satisfied Gibbs has been trying to big pressure on Churchill to avoid his making the deal with the Chilean Govern ment and I felt that by giving Gibbs a direct taste of the American attitude he d realize that he was on perilous ground and it was not a situation for English ...es but an international situation that it was dangerous to deal with. I think Mr. Anderson concurs that we enlightened Mr. Gibbs considerably. I do not Kow what impression I am leaving here in the high-handed manner I have taken 7d of two or three of these situations, but as you know, I care very little because absolutely essential that we make the situation plain and eliminate the factors that have handicapped the presentation of facts. I am very courteously received everywhere and I think all of our committees are taking progress. Mr. Crosby is asking me to cooperate intimately with him :: I am endeavoring to assist him in every way. We are pushing hard to form tungsten executive, and I hope we will get the tin executive formed this week. In regard to further men over here, I do not think we will need Heidrich at this te as I think Patterson can handle the jute situation. Unquestionably, it will be teressary to send over three or four men a little later as we will have to keep a Paris organization as well as a London organization. My idea is to take Macall to France where the steel program really originates and put him in touch with the French and Italians. If we do this we may need a second steel man as ts is the largest program we have to face, and it will be necessary to scale down the requirements, which can only be done by a careful analysis of conditions. We will probably want a chemical man to deal with explosives. Perhaps MacDowell can let me have McCutcheon or some man of his type. We also will need Corell on nonferrous metals if this situation develops actively. The question of a permanent secretary in Paris is a pressing one. Gifford is acting at present but he has shown a yellow streak which has disgusted Stettinius with him, and I think it will eventually evolve upon us to name a permanent secretary for the Americans at the Inter-Allied Munitions Council. This secretary will have to reside in Paris. Mr. Anderson will leave between the third and sixth of September if they put or a boat, and he will be able to give you a first-hand picture of the situation over here which will greatly assist you in formulating your policy. Very sincerely yours, Request Stettinius and purchasing agents of expeditionary force not to make promises of replacement of materials without consulting us. Some of the promises made are impossible of fulfillment under present conditions and their action only makes it difficult for us to handle the matter here. Duly authorised representatives of Ministry of Munitions of Great Britain have accepted following formal agreement for controlling tin. British representative has signed this document. "In order to provide for controlling the procurement and distribution of tin to meet the requirements of the countries participating in this agreement, it is agreed as follows: "1. That an Inter Allied Tin Executive be established in London, composed of one or more representatives of each country participating, with authority to carry out the arrangements agreed upon by the appropriate governmental agencies in each country. These arrangements shall be modified and re-adjusted from time to time by such further agreements as may be required in order to serve the best interests of all concerned. "2. The present arrangements, subject to modification and re-adjustment as above provided for, are: "1. The allocation of pig tin to the countries participating shall be on the basis of the following estimated minimum annual requirements: For the United States.. For France__. For Italy. 80, 000 gross tons 25,000 gross tons "2. As part of the United States' allotment sixty per cent of the Straits tin output shall, during the continuance of this arrangement, be allocated to the United States. "3. During the continuance of this arrangement Great Britain will refrain from purchasing tin from China (except Hong Kong), Mexico, the Dutch East Indies, Central America, South America, or Australia, or more than thirty percent of the Hong Kong output. Great Britain and the United States shall both be at liberty to purchase ore and concentrates in South America in such proportions as may be required to enable, so far as possible, the smelters in both Great Britain and the United States to operate to their full capacity. "4. The French and Italian requirements will be supplied through Great Britain from its allocation of Straits tin and the output of smelters in Great Britain. During the continuance of this agreement these countries will refrain from purchasing or procuring tin otherwise than as above specified on the understanding that their requirements will be fully supplied up to the amounts allocated to them. "5. In case the total available annual supply of pig tin from all sources is found to be insufficient to provide the participating countries with the amounts allocated to them as above, it is agreed that the respective allotments of the participating countries shall be reduced proportionately and their respective shares readjusted on that basis. "6. All purchases for the countries represented on the executive, exclusive of those already contracted for, shall be made under the direction of the executive. The executive may appoint a director of purchases, in London, and buying agencies in any or each of the various producing centers, these agencies to be the sole channel through which the various participating countries are to purchase the quantities of tin allocated to them in accordance with this agreement. "7. As to tin produced in one of the participating countries and forming part of the allocation of another, the purchasing agency of the latter country will be permitted to procure its alloted share at the same price at the place of production as that paid by the producing country for its share. If necessary for this purpose, all purchases for account of both countries will be pooled as to price at the place of production and the share of each paid for at the pool price. 8. The executive may, from time to time, fix the maximum and/or minimum prices to be paid by the participating countries for pig tin or tin ore in any producing country, with the view, on the one hand, of preventing price raising by competitive buying, and on the other, of stimulating production by increasing the profits of producers. " In case the allocation of markets results in disadvantage to any of the part cipating countries through inequality of prices in various markets, the ost of purchases in the different markets may be equalised by monthly readjustTents so that all participating countries will pay the same average price for their respective shares. The executive may require all purchases made for account of more than one of the participating countries in a common market to be pooled as to quantity and price. **10 Each of the countries represented on the executive shall keep the executive informed of all purchases of tin from all sources for its own use. "11 The executive will collect information as to the measures adopted in the part.cipating countries for economy in the distribution and use of the tin and may, whenever it is considered desirable, make recommendations to this end to any or all of the participating countries." Representatives of France and Italy have attended conference and are in ared with plan, and we expect France and Italy to join agreement. British Government asked Japanese Ambassador to appoint representative to attend conference on this matter, but no reply received. British Government now ask g Japanese Government through Japanese Ambassador to join in this acement. Suggest our State Department in Washington make same request thrigh Japanese Ambassador, Washington. Tin executive has been formed comprising Sir Leonard Llewellyn, chairman, and Tennant representing Great Bets.n. Armsby and Hughes representing United States, and one representative ach from France and Italy. Japanese representative will be added if Japan ecomes party to the agreement. The tin executive appointed executive comthee composed of Tennant, Hughes, and Armsby to consider all matters of Organization, purchasing, price fixing, etc. Consider it very necessary that War Industries Board proceed immediately to arange sole buying organization in United States to purchase United States Locations under direction of tin executive in London and receive and pay for same and distribute to users in United States under control and direction of War Industries Board. As it is of the greatest importance to get this machinery organized and in operation at the earliest possible moment think best plan is ask Uited States Steel Corporation to act for War Industries Board in this matter of same general basis on which they acted for Food Administration on palm oil. If you don't think this plan advisable or if Steel Corporation unwilling to act, will be necessary to have consumers form organization to function in this conLeeton. Also think War Industries Board should arrange to license all users of tan United States as has already been done in England. DEAR MR. BARUCH: Mr. Anderson is sailing this week, and will be able to give you at first hand an idea of the general situation over here. I have spent most of the past week in consultation with Mr. Crosby and various offers connected with the Inter-Allied Council on Purchases and Finance. On Wednesday the council met, Clementel, Minister of Commerce, and Loucheur, Minister of Munitions, representing France; Austen Chamberlain and Lord Buckmister representing England; and Signor de Villa representing Italy. Crosby presided as chairman, and made a very effective presiding officer. Crosby is ding a long cable to the Treasury Department practically summarizing the rests of this meeting. I presented the steel situation to them and showed it would be necessary to erta their demands, as the entire steel production of America was allocated and any demands now made by them could only be met by depriving essential war projects of raw material. It regard to the railroad situation, the total requisitions of France for August amounted to 250,000 tons of rail, and Italy wants 60,000. France wants 7,300 cars and Italy wants 10,000. Italy also wants 150 locomotives. Loucheur Rade a very strong plea for the railroads of France, stating that as the Germans |