611.59A31/22
The Department of State to the British Embassy
Memorandum
The British Embassy’s memorandum dated July 29, 1941 sets forth the view that owing to the limitations of available supplies in the United Kingdom, most of Iceland’s requirements must to an increasing extent be drawn from the United States and Canada. Accordingly, it is proposed by His Majesty’s Government in the United Kingdom:
- (1)
- that the British Government and the United States Government discuss the means by which they may cooperate in fulfilling their respective obligations to provide for the economic welfare of Iceland;
- (2)
- that the United States assume the responsibility for providing the tonnage necessary to transport such of Iceland’s civil and military requirements which must be drawn from North America;
- (3)
- that the United States arrange to assist Iceland to obtain such additional United States and/or Canadian dollars as may be needed to meet increased Icelandic purchases in North America;
- (4)
- that the British Government continue to pay in sterling for purchases in Iceland of mutton, fish and fish oil necessary to fulfill the British food program; and
- (5)
- that the United States provide tonnage for the transportation to Iceland of British military requirements to be purchased and shipped under lend-lease arrangements.
Before entering into detailed discussions of the British proposals, the Department of State would appreciate being informed as soon as practicable whether the British Government would be disposed to agree in principle to a procedure under which the United States Government would purchase in Iceland, in United States dollars from lend-lease appropriations charged to British account as defense aid, supplies of mutton, fish, fish oil, et cetera, which would then be moved from Iceland to the United Kingdom under shipping arrangements to be made by the British Government. Such purchases could provide Iceland with dollar exchange to cover payment of increased Icelandic purchases in the United States. The determination of the amount and value of such purchases will require discussions concerning the value [Page 762] and quantity of supplies to be purchased by Iceland from the United Kingdom and the United States, respectively, and the supplies to be purchased by the United Kingdom from Iceland.
Upon being informed that this procedure is agreeable to the British Government, the Department of State will discuss the matter with the Government of Iceland.
While awaiting the reply of the British Government immediate consideration will be given to other phases of the British proposals.