Vincent Lopez and His Orchestra (NBCB), 2 p.m. EST:
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Press Conference by Treasury Secretary Morgenthau
December 8, 1941
Q. Good afternoon, Mr. Secretary.
SECRETARY MORGENTHAU: I hope we did not inundate you with too many regulations.
Q. Everything goes smoothly.
SECRETARY MORGENTHAU: Who is president of the press room?
Q. Mr. Herman, but he is not here.
SECRETARY MORGENTHAU: Everything go all right?
Q. I believe so, sir.
What did you think of the behavior of the government bond market today?
SECRETARY MORGENTHAU: I was very pleased, very pleased.
Q. There has been no support, no open market support?
SECRETARY MORGENTHAU: I understand there has not. The last I heard, not even a dollar.
BELL: That is right.
SECRETARY MORGENTHAU: Not even a dollar natural market.
Q. It did decline a little, didn’t it?
SECRETARY MORGENTHAU: Oh, yes, it is off a point and a fraction.
BELL: Back up at the close.
SECRETARY MORGENTHAU: Bell says, “Up a little at the close.”
Q. The fact there was no support of the bond market today does not necessarily mean anything in the future, does it?
SECRETARY MORGENTHAU: No. The Federal Reserve and ourselves are watching it day by day, but at least it took very good care of itself today when you consider we borrowed a billion and a half on Thursday; and I think it was good that we put in stiffer regulations on Thursday and I think we discouraged some people who wanted to get in on a quick ride.
Q. Mr. Secretary, can you tell us what the quick turn of events means to people in terms of taxes?
SECRETARY MORGENTHAU: No, no.
Q. You think you will get your six percent limitation on profits now.
SECRETARY MORGENTHAU: I still think – I have not had time to think about taxes. We have been so busy getting out regulations that it took everybody’s time.
Q. Aside from details of taxes, can you tell us whether they will speed up or have any influence at all on your program for taxes?
SECRETARY MORGENTHAU: I can only imagine that the-- I think it makes it easier for the Treasury to get the taxes that we need, the revenue that we need. I am sure that people would be more willing to pay their money under war conditions than they would prior to yesterday.
Q. You imply in that, that stiffer taxes are necessary?
SECRETARY MORGENTHAU: Let’s put it this way, I think that that will mean certainly greater expenditures for war purposes which will mean a corresponding increase in taxes.
Q. Mr. Secretary, what effect will this have on the Defense Savings campaign?
SECRETARY MORGENTHAU: I don’t know of any except that we will certainly increase our efforts.
Q. Do you intend to change the name from “defense” to “war” savings?
SECRETARY MORGENTHAU: You men helped me word that originally. We worked it out in a press conference.
Q. Conditions have changed.
SECRETARY MORGENTHAU: But I say you boys helped me. I worked that out with the help of you men.
Q. Still “defense” isn’t it?
SECRETARY MORGENTHAU: Yes.
Q. Everybody’s calling them “offensive” savings bonds.
SECRETARY MORGENTHAU: I hope not.
Q. Did you hear what he said, that they called them “offensive” savings bonds? Somebody suggested just leaving out the word “defense.”
Q. How about the six percent limit now that the country is at war?
SECRETARY MORGENTHAU: I am not going to get into details. I am not prepared.
Q. The general theory contained in that statement before the Banking Committee at that time, you still stand by that?
SECRETARY MORGENTHAU: I am not going to depart from my plan. As far as I know, I think I will save my statement for the Ways and Means Committee.
Q. Any idea when that will come?
SECRETARY MORGENTHAU: No, everybody has been pretty busy for the last twenty-four hours.
Q. Mr. Secretary, I understand that the Federal Reserve Bank of New York asked the banks and the life insurance companies not to liquidate any bonds at this time, government bonds, in order not to disturb the market. Was that at your behest?
Q. The bill is being signed. You can see the flashlights over at the White House.
SECRETARY MORGENTHAU: I don’t think, in the first instance, any such instructions went from here and I gravely doubt if any instructions were given.
Q. You doubt it?
SECRETARY MORGENTHAU: I know no such instructions were given, and I gravely doubt that any such request was made.
BELL: They did confer with those people this morning, and they may have made some suggestions.
SECRETARY MORGENTHAU: I made no such request, and I talked to Mr. Sproul several times and he did not mention it. It was not necessary. Everybody knows what this means, and everybody we have come in contact with is more than willing to do his part and assume his responsibility.
Q. This policy of not throwing any support to the government bond market on the day on which we declared war with the United States, will that policy–
SECRETARY MORGENTHAU: Declared war against Japan.
Q. That is right. There are two ways either to support the market or let it alone, and let it decline to its natural level. I remember at the outbreak of the war you particularly favored a natural market at that time.
That was in ’39.
SECRETARY MORGENTHAU: Yes, we still do, and two things happened today, decision to leave all markets open worked out well. I mean, nobody has gotten excited, and no necessity to do anything in the government bond market, which I think, through the financial nerves of the country, shows they are in a very good condition.
Q. What was the other thing that happened, Mr. Secretary?
SECRETARY MORGENTHAU: Nothing.
Q. You said there were two things: one was the decision to leave all markets open-- And the bond market.
SECRETARY MORGENTHAU: I mean exchanges and the bond market.
Q. Did you reach this first decision to leave all exchanges open?
SECRETARY MORGENTHAU: That was reached in consultation with the president and the Secretary of Agriculture and myself.
Q. I see Lt. Stevens is back. Any special significance to that?
SECRETARY MORGENTHAU: I need a little help, a little extra help, and I asked them until we get over this time, if they would leave him here for a while.
Q. It has nothing to do with liaison between Navy and Treasury?
SECRETARY MORGENTHAU: As a matter of fact, for background, actually what happened, I was about to step on a plane for a week’s holiday in Tucson and Stevens was with me, when I got a call from the president to come back. What I said was, “Having been with me, why don’t you stay on,” and this was the way it happened. I mean I was just about to get on the plane.
Q. Where does the House Ways and Senate Finance now stand with regard to taxes? In the exchange of letters between the president and Mr. Doughton they said the tax program had been temporarily deferred. Have you been given any other notice as to when they might take it up again?
SECRETARY MORGENTHAU: No.
Q. Are you going to testify before the Senate on price control?
SECRETARY MORGENTHAU: I have not been asked.
Q. The decision to leave the markets open, Mr. Secretary, that applied to the securities market too?
SECRETARY MORGENTHAU: Securities market.
Q. Was the SEC represented at this conference?
SECRETARY MORGENTHAU: No, Mr. Bell talked with Purcell, didn’t you?
BELL: Yes.
SECRETARY MORGENTHAU: Last night, and I talked with Mr. Eccles last night.
Q. That for any length of time continuing under present conditions?
SECRETARY MORGENTHAU: Just handling the situation for the moment, it has always been my recommendation when anybody gets excited, let’s leave the market open, and I am sure American horse sense will take care of the rest. So far that is proven – you might add, “horse sense and patriotism.” So far, I have not been disappointed. I suppose you should say “patriotism and horse sense.”
Q. Horse sense is a little rare.
SECRETARY MORGENTHAU: They are both good qualities. I have not been disappointed.
Q. Doesn’t this thing confirm your utmost fears when you wanted to freeze Japanese assets and your hand was held when the horse had been stolen?
SECRETARY MORGENTHAU: Let’s forget all about that, let’s forget all about that. We are facing a new situation.
Q. Would you say that from his point on there will be greater control of capital markets to the extent of being more careful where financing goes for other than defense needs?
SECRETARY MORGENTHAU: Yes, but I don’t want to get the impression out that people always think, control and domination, and so forth – I think certainly that any business that needs capital should be encouraged to get it if it is in connection with defense needs, but I certainly think the various financial agencies will be on the lookout for anybody that is borrowing money for purposes other than defense. If you can write it that Washington steps in, and so forth–
Q. There is a lot of disposition under the present circumstances to expect leadership from Washington.
SECRETARY MORGENTHAU: I think they will get it. If you can distinguish between leadership and control and the capitalistic system and so forth and so on.
Q. From SEC circles, Mr. Secretary, has come already, I think, in the form of a speech by Mr. Purcell, among others, something called a Capital Issues Committee. How do you stand on that, or do you stand on it?
SECRETARY MORGENTHAU: We studied that in the summer of 1939, didn’t we?
BELL: Yes.
SECRETARY MORGENTHAU: We started the first studies here in connection with SEC. I think we had studies here in June and July 1939.
Q. You know there was a Capital Issues Committee in the last war?
SECRETARY MORGENTHAU: I know there was. Right now, everything seems to be working nicely on an informal basis, just by picking up the phone, and they have been very good in New York. They got together, the Federal Reserve Bank and the Stock Exchange; the whole thing worked beautifully. I think the governor of the Federal Reserve Bank slept here last night.
BELL: The president and the vice president of the Federal Reserve. At least they had a bed; whether they slept, I don’t know.
SECRETARY MORGENTHAU: But everybody has a good feeling, good cooperation between Washington and New York. It has been fine.
Q. How about the Pacific coast, have you heard anything from out there?
SECRETARY MORGENTHAU: No, but everything as I say, all along the line, banking and financial institutions, the cooperation has been one hundred percent.
Q. Would we expect shortly any financing, in view–
SECRETARY MORGENTHAU: No change.
Q. You are sticking to your program of no new money issues in the near future?
SECRETARY MORGENTHAU: Nothing has happened in the last couple of days to make me change my mind, but I want to be free to change. I don’t want you fellows to say, “You told us on December 8th you weren’t going to do anything,” but I am not thinking of doing anything.
Q. You say everything has worked nicely on a cooperative basis with regard to supervising capital markets. Will this be a good time to formalize that system and it might be possible we would have a committee?
SECRETARY MORGENTHAU: It is working pretty well now over the telephone and sitting down with a fellow over the lunch table, and I personally prefer that to the formal method. If it has to be formal, I will, but right now, between Ball and myself and the telephone and having lunch together with some of these people, it is working very nicely, isn’t it, Dan?
BELL: Very nicely, very good.
SECRETARY MORGENTHAU: I want to thank you fellows for the nice way in which you handled all of our press releases last night.
John’s Other Wife (NBCB), 3:30 p.m. EST: