The Waterbury Democrat., 1940-09-03

On the other hand, a great many have not. Some have been very much like British and French munitions firms in ther procras- tination over vital war orders.
 The story goes back to Novem- Der 8, 1889, when John Hanes, then Under Secretary of the Treasury, submitted a conflden- tial memorandum to the Presi- dent advising that industry would have to be given tax concessions if it was to expand for national defense. Specifically, Hanes pointed out that airplane manu- facturers could not be expected to build new plants to speed up production if, after 8 year or two, the war would be over and they would be left with empty plants on their hands.
 So Hanes proposed that the cost of these new plants be anlortized in a relatively short time so that industry would not have to pay taxes on them after the war emergency was over.
 MORGENTHAU'S IDEA
 Roosevelt approved this pro posal. But when the Hanes mem- orandum went back to Secretary of the Treasury Morganthau. 1t ran into stormy weather. In tact' this memo was one of the things over which Morgenthau and his Under Secretary quarreled.
 Haines and Morgenthau both
 are millionaircs, both able men.
 But Hanes, 8 director Of the
 Glenn Martin Aircraft Corpora
 ton. looks at taxes more from
 the businessman's viewpoint,
 while Morgenthau looks at taxes
 from the viewpoint of collecting
 money to run the Government.
 Therefor, Morgenthau told Roosevelt that he would secure enough factory expansion from the airplane companies, but in- stead of taking it out of govern ment tax revenue, he would make the French and British pay for 1t. He pointed out that the Allies were placing large airplane orders, and that they could pay American factories a. higher price in order to finance plant enlargement and new machine tools.
 This seemed good idea 70 Roosevelt, and on November lO he decided to make Morgenthau coordinator for the sale of ar planes to France and Great BTU ain. Later, on December 6, Un- der Secretary of State Sumner Welles approved a plan whereby the Treasury rather than the State Department passed on the shipment of airplanes to the AL lies.
 HITLER GUMS THE WORKS
 The Morgenthau idea Seemed to work all right during the winter, and the Allies laid plans for spending about $7000,000 on U. s. factory expansion. They didn't do this very willingly, but Louis Johnson, hard boiled Assistant Secretary of War, saw to 1t that they didn't get the latest types o1 planes unless they paid extra for plant expansion, and Morgenthau backed him up.
 Thus the British paid $7S9,00O
 to the Curtiss aircraft company for putting in new tools not only
 fOr British but for new Us 5.
 planes.
 One factor upset this program namely, Adolf Hitler. For by the time he had gone into Norway, Belgium and Holland 1t became apparent that the Unted States was going to need airplanes 6 great deal faster than either the British or the United states could finance plant expansion-in fact, much faster than anyone could build new plants.
 COMPANIES FEAR TAXES
 Shortly after the invasion of the Low Countries, the British entered into c deal with the War Department and-they thought with Ford to manufacture D,0o0 Rolls Royce airplane motors, 5000 for Britain and 5000 for the United States. The price wss increased somewhat in order to take care Of the extra expenee to be incurred by Ford ln oqllipping hln plant, and conerehs FilEhed through c special appropriation Of als M 1ooeeo !,eo 70 pay ior 'fs order .