Foreign Relations of the United States Diplomatic Papers, 1940, The British Commonwealth, The Soviet Union, The Near East and Africa, Volume III
740.0011 European War 1939/4578
Memorandum of Conversation, by the Secretary of State
The British Ambassador called at his request and handed me an aide-mémoire dated July 3, 1940 (copy attached), which reviewed at length the altered situation of the British in view of the collapse of the French. This aide-mémoire pointed out certain considerations and situations which the British Government hoped would receive the careful attention of the United States Government.
I thanked the Ambassador and said the matters would receive due attention.
The British Embassy to the Department of State
His Majesty’s Government in the United Kingdom desire to invite the attention of the United States Government to the grave consequences to the Allies and to the cause of civilisation, of the collapse of French resistance to totalitarian aggression. They feel that they are entitled to place the results of their own review of the conditions thus created before the United States Government, because the United States Government have repeatedly stated that they are deeply concerned with the preservation wherever possible of free institutions, because successive United States Administrations have declined to recognise the validity of the forcible annexation of territory by an aggressor, and because within the limits imposed by their international obligations and the Neutrality Act49 they have throughout rendered all the assistance they could to the Allies.
2. His Majesty’s Government do not wish to discuss in this Aide-Mémoire the military consequences of the collapse of France further than to say that the economic and manufacturing resources of almost the whole of Europe are now at the disposal of the Nazi and Fascist Powers for the purposes of attack on Great Britain, now almost the last free country left in Europe. They would only repeat what they have said before, that the immediate sale of destroyers and power boats, aeroplanes and seaplanes, and guns, rifles and ammunition of all kinds is of the utmost importance if the impending attack on Great Britain is to be beaten off before winter sets in. His Majesty’s Government gratefully acknowledge the great value of the war material [Page 43]that the United States Government have already released to them, but feel constrained to emphasise once more that further releases, if promptly made, would be of immeasurable value.
3. His Majesty’s Government desires in this Aide-Mémoire rather to call attention to the economic situation which follows from the French collapse. In this field they desire to impress upon the United States Government the conviction to which they have been driven, that if victory over Nazi aggression is to be achieved, they must seek from the United States equipment, supplies of aircraft and other munitions and essential raw materials on an altogether larger scale than hitherto. This is partly because the Nazi successes in Europe have deprived the Allies of many sources of supply to which they have hitherto had access and partly because incessant bombing is likely to reduce their own manufacturing capacity, while intensive submarine and air blockade is likely to reduce the quantity of foodstuffs and materials they can import from abroad.
4. In these altered circumstances, His Majesty’s Government believe that the United States Government will not take it amiss if they express the conviction, founded upon their own experience, that the United States Government will find that if they are to complete their own rearmament programme in the shortest possible time and at the same time provide the increased supplies necessary to enable Great Britain and the Dominions and their allies to maintain the struggle, that far-reaching changes in the industrial organisation of this country are essential. His Majesty’s Government have found that their own programmes have suffered severely from slowness in realising this necessity and they are anxious to place their own experience in this matter at the disposal of the United States Government.
5. The natural tendency of all democracies engaged in rearmament is to believe that it is possible to expand the production of guns and to enjoy a full supply of butter at the same time. His Majesty’s Government have found by bitter experience that this is not true and that full production cannot be secured solely by expansion and development of munitions and auxiliary industries, other industries being left unaffected. The establishment of requisite priority for labour, materials, machine tools, etc., necessarily involves the early curtailment of production for domestic civil consumption. This reorganisation becomes all the more necessary if more than one country is engaged in expanding its production of armaments and if raw material supplies are limited. Where total available supplies are restricted (e. g. raw materials such as aluminium and steel or machine tools) His Majesty’s Government hope that the Administration will agree to open immediate discussions with them on allocations as between themselves, Great Britain and Canada to secure the maximum possible [Page 44]production with the utmost promptitude. As regards raw materials they hope also that it will be possible that those Central and South American States who are important producers should be included in the proposed arrangements.
6. So long as gold and other foreign assets at their disposal permit, His Majesty’s Government will of course continue to pay cash for essential armaments, raw materials and food stuffs. They feel however that they should in all frankness inform the United States Government that it will be utterly impossible for them to continue to do this for any indefinite period in view of the scale on which they will need to obtain such resources from United States. Their immediate anxiety arises from the necessity of entering into long term contracts.
7. There is a considerable risk that, with the development of total war and the consequent great increase in the calls on the Royal Navy, the merchant marine serving the Allies may for a time at least suffer from a much higher rate of losses than hitherto. The temporary expansion of Allied shipping facilities due to the fact that certain Norwegian, Danish and other merchant vessels are now available would not offset the situation created by such losses. His Majesty’s Government therefore feel compelled to ask whether the United States Government can take steps by whatever procedure seems most expeditious, to secure the withdrawal of the present prohibition on ships flying the United States flag entering the “combat areas” and belligerent ports to the extent necessary to permit such ships to bring imports to Great Britain. If they are prepared to do this His Majesty’s Government would urge that the Administration jointly with themselves should immediately examine the possibilities of taking measures to secure the most effective joint use of the mercantile fleets of the United States, of the United Kingdom and their Allies and those of the Central and South American states.
8. His Majesty’s Government regard it as a matter of the utmost urgency, from the point of view of wartime control as well as from that of post-war reconstruction, that the plans of the British nations and their Allies for dealing with their export surpluses should be concerted with those of the United States and of the other American Republics for dealing with theirs, and this is especially so as regards those products of which there is likely to be a world surplus, e. g. cotton, corn, wheat, edible oils. A fuller statement of the view of His Majesty’s Government on this subject is given in the British Ambassador’s separate memorandum “A” of July 3rd, 1940.50
There are a number of ways in which Germany and Italy might obtain resources from America, and His Majesty’s Government accordingly desire to urge strongly that:— [Page 45]
- The United States Government should use any means in their power to cut off from Germany, Italy and the territories occupied by those states, including France, all direct and indirect exports from the United States of America; and to limit exports to other destinations from which they might subsequently reach German or Italian controlled territory. The more detailed views of His Majesty’s Government on this vital subject are contained in the British Ambassador’s separate memorandum “B” of July 3rd, 1940.51
- The United States Government should take measures to block financial balances belonging to Germany or Italy, as has been done in the case of occupied countries, and obtain any supplementary powers needed for this purpose. The previous exchange of views on this subject, ending with Mr. Sumner Welles’ letter to His Majesty’s Ambassador of 20th June, 1940,52 has not been overlooked, but His Majesty’s Government would once more emphasise the great importance which they attach to action of this kind, and would urge that the previous decision should be reconsidered.
- Steps should be taken to prevent the return from the United States to Europe of German and Italian technicians either for military service or for employment as skilled operatives in the war industries.
9. In the event of His Majesty’s Government in the United Kingdom deciding to invite the Governments of the Central and South American States to adopt measures parallel with those referred to in paragraph 8 of this Aide-Mémoire, His Majesty’s Government wish to express the earnest hope that the United States Government may see their way either to take the initiative in the matter or to use their good offices with those Governments in support of that approach. These governments have an equal interest with the United States in preventing the Nazi and Fascist powers from obtaining the resources which may enable them to adopt a policy of aggression in America.
As regards financial measures, His Majesty’s Ambassador had a preliminary discussion on the 26th June with Mr. Sumner Welles,53 who promised to look further into the matter. Certain action has been taken by the Governments of the Argentine Republic, Brazil, and Uruguay, but it does not appear to go far enough, while in Chile no action has been taken. A note giving more detail of the direction in which action is desired will shortly be submitted to the United States Government.
10. His Majesty’s Government in the United Kingdom realise that in the above statement they are making wide and even difficult requests to the United States Government. It is only right therefore that they should conclude by stating in the gravest possible manner their considered opinion that the measures outlined are necessary if the civilisation which the United States and the nations of the British [Page 46]Empire share in common is to be successfully defended from attempts to overthrow it.