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3. His Majesty's Government have not applied and will not apply any materials similar to those supplied under Lend-Lease in such a way as to enable their exporters to enter new markets or to extend their export trade at the expense of United States exporters. Owing to the need to devote all available capacity and manpower to war production, the United Kingdom export trade is restricted to the irreducible minimum necessary to supply or obtain materials essential to the war effort.

4. For some time past, exports from the United Kingdom have been more and more confined to those essential (1) for the supply of vital requirements of oversea countries, particularly in the sterling empire; (2) for the acquisition of foreign exchange, particularly in the Western Hemisphere. His Majesty's Government will not [sic] adopt the policy summarized below: (1) In future no materials of a type the use of which is being restricted in the United States on the grounds of short supply and of which we obtain supplies from the United States either by payment or on lend-lease terms will be used in exports with the exception of the following special cases: (a) material which is needed overseas in connection with supplies essential to the war effort for ourselves and our Allies, and which cannot be obtained from the United States. This would enable us (1) to export supplies essential to the war effort to countries within the Empire and to our Allies and (2) to export such articles as tinplate for canning to Portugal and the Argentine for our food requirements if such tinplate could not be supplied by the United States; (b) small quantities of such materials needed as minor though essential components of exports which otherwise are composed of materials not in short supply in the United States; (c) repair parts for British machinery and plant now in use and machinery and plant needed to complete installations now under construction, so long as they have already been contracted for. Steps will be taken forthwith to prevent the execution of existing contracts for the export (except to Empire and Allied territories) of such goods which do not come within the exceptions referred to in (a), (b) and (c) above. (2) Materials similar to those being provided under LendLease which are not in short supply in the United States will not be used for export in quantities greater than those which we ourselves produce or buy from any source.

Distribution in the United Kingdom of Lend-Lease Goods.

5. The general principle followed in this matter is that the remuneration received by the distributors, whatever the method of distribution, is controlled and will be no more than a fair return for the services rendered in the work of distribution. The arrangements rigorously exclude any opportunity for a speculative profit by private interests from dealing in lend-lease goods. In most cases, lend-lease supplies will be distributed through organizations active as agents of His Majesty's Government in the strict sense of the term and not as principals. Where for strong practical reasons this cannot be done, a full explanation will be supplied to the United States Administration and then concurrence sought beforehand in any alternative arrangements proposed. The justification for retaining existing channels of distribution operating under strict Government control, is that the creation of elaborate new organizations in their place would inevitably result in

loss of efficiency and the wasteful use of manpower, and retard the war effort. In the distribution of lease-lend goods there will be no discrimination against United States firms.

6. Food is a special case. Only some 5 or 6 percent of the total British food supply will come from the United States, and, without great practical complications, it would be impossible to have a separate system for the distribution of lend-leased food. Food distribution is carried out in the United Kingdom by wholesalers, to whom the Government sells food as principals. In fact, the Ministry of Food has established a close control over all distributive margins so that neither the wholesalers nor the retailers receive any greater remuneration than is adequate to cover the cost of the services performed. No food obtained on lend-lease terms is or will be sold at uncontrolled prices. Thus, the general arrangements as regards the issue of lend-lease food fit into His Majesty's Government's policy of stabilizing the whole price level of foodstuffs, a policy to which the Government contributes 100 million pounds a year.

7. In some cases, direct free distribution is practicable and will be adopted. For example, some milk products (including lend-leased supplies from the United States) are distributed direct and free of charge to children and others in need through schools, clinics, and hospitals. The distribution is undertaken by state agencies and the cost of the distribution is borne by the Government.

8th September, 1941."

WINANT

841.24/749a: Telegram

The Secretary of State to the Ambassador in the United Kingdom

(Winant)

WASHINGTON, September 8, 1941. 3656. The President's message to Congress regarding lend-lease has been deferred until Thursday.35 We would accordingly prefer that the simultaneous publication of the text of the exchange of letters be timed on the following basis-namely, no later than Thursday, but even before that time if the changes we have suggested can be cleared and arrangements made for earlier publication. Please telegraph at once if this is agreeable to the British government.

We would like to suggest two changes in the text of the British memorandum as given in your 4134,36 as well as a slight change in the text of Mr. Eden's letter. These suggestions will be cabled to you tomorrow morning.

37

HULL

35 September 11.

36 Supra.

37 See telegram No. 4133, September 7, 11 p. m., from the Ambassador in the United Kingdom, p. 31.

841.24/742: Telegram

The Secretary of State to the Ambassador in the United Kingdom

(Winant)

WASHINGTON, September 9, 1941.

3672. My 3644 38 and 3656.39 Further consideration by this Department of the text of the proposed agreement with the British, as contained in your 4134 of September 7, 1941, leads this Department to suggest that an urgent effort be made, before signing, to get the British to agree to the two following changes:

1. Certain changes should, it is felt, be made in the text of section 4 of the memorandum, and also in Mr. Eden's letter, for the purpose of avoiding the implication that the British have been guilty of serious transgressions as regards the matters referred to which they will now undertake to correct. From a publicity standpoint this seems unfortunate, and doubtless the British will be as anxious as ourselves to avoid raising such an implication when it is not necessary to do so.

The changes referred to are as follows:

1. Second sentence of section 4 to be changed to read as follows: "His Majesty's Government has adopted the policy summarized below: (1) no materials", etc., to end of the sentence.

2. The next to the last sentence of section 4 to be changed to read: "Steps have been taken to prevent the export", etc.

3. The first sentence of Mr. Eden's letter to be changed so that the portion which now reads "I enclose an agreed memorandum on the policy which His Majesty's Government intend to follow with regard to exports," etc., will, as revised, read as follows: "I enclose a memorandum on the policy of His Majesty's Government with regard to exports", etc.

2. Section 4, omit the whole of the second sentence under Exception A, which begins "This would enable us", etc.

The reason for this suggestion is the difficulty which arises in connection with the second part of the sentence, pertaining to tinplate. It seems certain that critics will raise the question as to how it is possible, considering the fact that provision has been made for purchase by lend-lease of large amounts of tinplate for the British Empire, that the British can have surplus tinplate of their own production to send to Argentina or Portugal. The specific inclusion of this interpretative provision seems certain to invite criticism which might not otherwise be raised. Furthermore, it seems desirable in a memorandum of this kind to avoid reference to specific commodities and countries.

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If the second part of this sentence is omitted, then the first part seems unnecessary, since its meaning is already incorporated in the preceding sentence.

HULL

841.24/751: Telegram

The Ambassador in the United Kingdom (Winant) to the Secretary

of State

LONDON, September 9, 1941. [Received September 9-2: 43 p. m.]

4183. Your 3672, 9th. Thanks helpful suggestions. Seeing the Chancellor early tomorrow morning for final concurrence.

I am also suggesting that in numbered paragraph 6, second sentence, the words "in tonnage" be inserted after "6 percent." This seems essential for clarity in meaning as the percentage in values is greater than 5 or 6 percent. In same sentence I am suggesting that phrase "is coming" be substituted for "will come."

I will include these minor changes in the final document 40 unless I hear from you to the contrary.

WINANT

841.24/811c: Telegram

The Secretary of State to the Ambassador in the United Kingdom

(Winant)

WASHINGTON, September 27, 1941-8 p. m.

4079. On July 28 last, Assistant Secretary Acheson handed to Mr. Maynard Keynes a draft Lease-Lend agreement between the United States and the United Kingdom. Mr. Keynes was to take this draft with him back to London and to place it before the British Government for its consideration. Since that time, we have had no word from the British Government in regard to this proposed agreement. I am sure you realize the importance which we attach to concluding such an agreement at an early date. I hope therefore that you will get in touch with Mr. Eden and ask him to expedite the consideration of this draft by the British Government in order that the negotiations looking to the agreement may be pressed to a conclusion.

40

HULL

For text of the final document, together with exchange of letters between Mr. Eden and Mr. Winant, see Department of State Bulletin, September 13, 1941, pp. 204-206.

841.24/811: Telegram

The Ambassador in the United Kingdom (Winant) to the
Secretary of State

LONDON, September 29, 1941-midnight.
[Received September 29-8: 50 p. m.]

4606. Personal for the Secretary. In answer to your telegram 4079, September 27, 8 p. m. I got in touch with Mr. Eden this noon. 1 asked him to help me expedite consideration of the draft agreement between the United States and the United Kingdom. I explained to him that Mr. Maynard Keynes had been given a copy of this draft by Assistant Secretary Acheson on the 28 of July. He told me that he would get in touch with Sir Kingsley Wood, the Chancellor. This afternoon Mr. Eden telephoned me to say that the Chancellor was sending at once a memorandum to Lord Halifax and that a copy would be forwarded to me this evening. If you want me to pursue this matter further, I will gladly do so.

41

Since Dr. Penrose " arrived I have gone over all the questions that Mr. Acheson discussed with him as well as going through all the trade and economic material that you have forwarded to me.

42

Before your message 3674, September 9, noon, and since I have taken every occasion to emphasize our views as set forth in the second paragraph of that message. I believe that we have made some progress.

WINANT

841.24/814: Telegram

The Ambassador in the United Kingdom (Winant) to the Secretary of State

LONDON, September 30, 1941-2 p. m. [Received September 30-10: 15 a. m.]

4617. Personal for the Secretary. In relation to my message 4609 [4606], September 29, midnight. This morning the Chancellor asked me if I would see him. He explained that Mr. Eden's telephone conversation with me was not exactly accurate in that Lord Halifax had taken with him draft memoranda which he wanted to discuss personally with Dean Acheson. He asked that I not request a copy of the memoranda until Lord Halifax had an opportunity to speak with Mr. Acheson. He further told me that the Dominion Governments were being consulted and that they expected a reply within the next 2 or 3 days.

dom.

42

Ernest F. Penrose, economic adviser to the Ambassador in the United King

12 Vol. 1, p. 372.

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