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might be interpreted hereafter in more than one sense. They also think it better, and in this they feel sure the President will agree, to emphasise that what both Governments have in view is part of a general plan and that the escape from restrictions on one side will only be practicable by their relaxation on all sides.

4. My Government suggest therefore, below, a form of words which better serves so they feel-the common desire to collaborate. And since, admittedly and inevitably, the bare words themselves carry insufficient content with them, they have added a clause, which is, I think, in conformity with a suggestion you made to Mr. Keynes and which will, my Government hope, commend itself to the President, providing for the initiation of conversations at an early date with a view to giving substance and clarity to the preceding phrases.

5. The Departments chiefly concerned are now at work trying to clear up their own minds, which is none too easy when we know so little about the sort of world we shall have to deal with when the struggle is over; and to prepare concrete proposals. Progress is not so rapid as it would be if our time were less taken up with more immediate preoccupations. But we should be glad to make a start as early as may be found mutually convenient in company with those whom the President may designate to represent him with a view to formulating measures for the achievement of the ends which both Governments have in mind.


Memorandum of Conversation, by the Assistant Secretary of State


[WASHINGTON,] December 2, 1941.

Participants: The British Ambassador, Lord Halifax,

First Secretary of the British Embassy, Mr. Redvers

The Assistant Secretary of State, Mr. Dean Acheson,
Adviser on International Economic Affairs, Dr. Her-
bert Feis.

Dr. Feis and I called on the British Ambassador at our request. Mr. Opie was present with the Ambassador.

We handed to the Ambassador copies of the redraft of the Temporary Lease-Lend Agreement with the British 51 recently approved by the President, the Secretary, the Economic Defense Board and the Lend-Lease Administration. We explained to the Ambassador that we might wish to insert in Article II, in the 6th line, after the word

"Not printed, but see telegram No. 5637, infra.

"services", the phrase "the use of facilities," in order to make it clear that the reciprocal obligations of the British would include, if desired by us, such things as the repairs of ships, the use of anchorages, landing fields, etc., in the same manner as similar facilities are being made available to the British in this country. It was pointed out to him that the word "facilities" was used in Article VI and that its use in Article II would make the two articles coextensive. The Ambassador appeared to have no question about this.

We then went over with him Article VII, pointing out in detail the changes which the redraft made both as compared with our original draft and with the British proposal. We explained the reason for eliminating the reference for "joint action" and addition of the phrase "open to participation to all other countries of like mind". The Ambassador said that speaking for himself he regarded our change in this respect as an improvement. We then explained the remainder of the article, pointing out that it was an attempt to reassure the British that many of the fears expressed by Mr. Keynes were unfounded. The article as redrafted, we pointed out, made it clear that the broad policy to be followed in the final settlement was not restricted to matters of commercial or tariff policy but expressly recognized that these matters had to be approached against a background of expanding economic activity in production, employment and the exchange and consumption of goods. This should make it plain that we were not asking the British to agree to move with us in the direction of liberal economic relations without recognizing that common action in other directions was required to enable them to do so.

We then stated that the article was expressed in general terms so as to avoid specific reference to preferential or other arrangements to refer to which might cause political embarrassment to the British Government at this time. We added, however, that all of these matters were included within the scope of the general provisions and that if in the event of the publication of the Agreement, we were asked to explain what did fall within its terms, we proposed to say that it was all inclusive and that nothing was excluded from consideration. The Ambassador then remarked that among the objectives stated was the "elimination" of discriminatory treatment' whereas the reference to tariffs and other trade barriers was made by the term "reduction". He said that he feared critics might seize upon this difference and he wondered whether language could be devised upon for making the objectives similar in each case. To this we pointed out that the two matters were different in kind and that it was the purpose to eliminate discriminations but to reduce tariffs. We added further that the elimination of all forms of discriminatory, treatment did not leave open the loop-hole of using tariffs for purposes of discrimination since the objective was all inclusive. We pointed out,

secondly, that the Agreement was a Lease-Lend Agreement and that we hoped the Ambassador would stress to the British Government the necessity of obtaining an Agreement which would definitely further American interests and American policy without imposing burdens upon the British which they could not afford. We dealt at some length upon this aspect of the Agreement which the Ambassador said he would make clear in transmitting it to London.

The Ambassador then asked whether it would be possible to state as an objective "the progressive elimination of all forms of discriminatory treatment", which would indicate that no sudden, drastic or upsetting action was contemplated. We repeated that the second paragraph of Article VII made it clear that the objectives stated in the first paragraph were to be approached "in the light of governing economic conditions" and that the best means of attaining them were to be sought. These provisions we felt recognized amply the latitude which practical necessities required in framing provisions to achieve the broader purpose stated in the first paragraph.

Finally, we impressed upon the Ambassador that in all likelihood it would be necessary for the President sometime in January to ask Congress for a further Lease-Lend appropriation and that by that time it was most essential that an Agreement be entered into between the two governments. The Ambassador said that he fully appreciated this and would urge most expeditious possible consideration in London. DEAN ACHESON

841.24/1093a: Telegram

The Secretary of State to the Ambassador in the United Kingdom


WASHINGTON, December 3, 1941-midnight. 5637. A redraft of the temporary Lend-Lease Agreement was handed to Lord Halifax Tuesday evening.52 Except for Article 7 the text was the same in substance as the draft which we first gave the British and contained only verbal alterations suggested by them. Article 7 in our new draft reads as follows:

"In the final determination of the benefits to be provided to the United States of America by the Government of the United Kingdom in return for aid furnished under the Act of Congress of March 11, 1941, the terms and conditions thereof shall be such as not to burden commerce between the two countries, but to promote mutually advantageous economic relations between them and the betterment of worldwide economic relations. To that end, they shall include provision for agreed action by the United States of America and the United Kingdom, open to participation by all other countries of like mind, directed

[blocks in formation]

to the expansion, by appropriate international and domestic measures, of production, employment, and the exchange and consumption of goods, which are the material foundations of the liberty and welfare of all peoples; to the elimination of all forms of discriminatory treatment in international commerce, and to the reduction of tariffs and other trade barriers; and, in general, to the attainment of all the economic objectives set forth in the Joint Declaration made on August 12, 1941, by the President of the United States of America and the Prime Minister of the United Kingdom.

At an early convenient date, conversations shall be begun between the two Governments with a view to determining, in the light of governing economic conditions, the best means of attaining the abovestated objectives by their own agreed action and of seeking the agreed action of other like-minded Governments."

We will telegraph you further giving our views.


841.24/1093b: Telegram

The Secretary of State to the Ambassador in the United Kingdom


WASHINGTON, December 9, 1941-7 p. m.

5789. We have already telegraphed you the text of Article VII of the draft lend-lease agreement which was handed to the British Ambassador on December 2. We have sent you by air mail the complete text of this proposed agreement and of the memorandum of the conversation between Assistant Secretary Acheson and Lord Halifax at the time the draft was handed to him.

While the nature of our draft is such as to preclude in our minds the possibility that there would be any serious objection to it, we nevertheless think it desirable that you approach the Prime Minister with the object of obtaining acceptance of the draft as promptly as possible. Developments in the past few days and the possible developments in the immediate future make it highly important that an agreement between our two governments be completed without delay. There should not be even the appearance of disagreement between the governments. It had been expected that the President would have to go to Congress in January for a further Lease-Lend appropriation. It is possible now not only that that date may have to be anticipated but that other requests for war appropriations must be made. The President has already, since the outbreak of the war with Japan, stressed his determination to continue the Lease-Lend program in full vigor. It is of the utmost importance that no factor such as the absence of a Lease-Lend Agreement between the two governments should operate to cause any reluctance in Congress to furnish the necessary funds or

cause differentiation between appropriations necessitated by the outbreak of hostilities with Japan and those needed in the broad view of the war. It is also highly important that the terms of the Agreement should be kept on the broad plain of our draft and encouragement be not given to narrower conceptions which will not redound to the long range and basic interest of both countries.

The draft of Article VII which was handed to Lord Halifax is general in character and obviously of mutual benefit. Basically it defines the economic objectives of the two governments and provides for the opening of detailed conversations to reach agreement as to ways and means of reaching these objectives. Article VII, in essence, charts a broad course and commits the two governments to collaboration in making headway along that course. The negotiations which are to take place in pursuance of this proposed agreement will, of course, be based upon governing economic conditions. It is hard to see what more could be done to meet the difficulties which have been presented from the British standpoint.

The provision looking to the participation of other nations and the reiteration of the objectives of the Atlantic Charter make the Article a declaration of purpose around which all peoples of like mind may rally.

A speedy agreement is in the interest of both countries.


841.24/1093b: Telegram

The Secretary of State to the Ambassador in the United Kingdom


WASHINGTON, December 9, 1941-8 p. m.

5790. The Department's 5789 of December 9, 7 p. m., outlines the importance which we attach to prompt agreement on the basis of our new draft. You may show a paraphrase to them. The following discussion is for your guidance in rebutting possible arguments which they may raise:

The first sentence of Article VII is self-explanatory in its statement of purpose, to find terms that will not burden commerce between the two nations but rather promote mutually advantageous economic relations between them and between other nations. The balance of the Article provides assurance (1) that the final settlement will be reached by negotiation, and (2) that it will be of such a nature that other nations can join in it as a forward step toward world-wide reconstruction.

On the negative side the Article provides that the final settlement shall not be an incubus upon relations between the British and our-" selves but will be an instrument for improving our mutual relations

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