Foreign Relations of the United States Diplomatic Papers, 1941, Europe, Volume II

611.59A31/61

The British Embassy to the Department of State ¹³

With reference to the Department’s memorandum of October 7th regarding the cooperation between the United States and British Governments in fulfilling their obligations to Iceland, we are authorized to state that the British Government agree in principle to the following proposals made by the Department in the aforementioned memorandum.

(a) That the fish agreement shall be included in the proposed Lease Lend arrangements.

(b) That in order that it may fulfill its broad obligations under the exchange of letters between the President and the Prime Minister of Iceland, the United States Government should purchase, until further notice, all imports from Iceland into the United Kingdom, these to be supplied to the British Government and charged to the British account as defense aid.

(c) That the United States Government should take over all of the unexpired contracts by which Iceland is obligated to supply goods to Britain. It is understood that goods which are not under contract will be the subject of arrangements to be made between the Lease Lend representative and the British representatives in Reykjavik, and further, that as unexpired contracts run out the United States Government will confer with the British Government.

The British authorities are communicating to the British Food Mission in Washington details of the working of the fish contract in order that discussions may take place with the United States authorities in order to ascertain how the proposals referred to above may be put into effect. Details of other outstanding contracts will also be transmitted to Washington.

As regards the question whether the British Government would require the Icelandic Government in accordance with the financial agreement between the two Governments to repay out of the dollars accruing under the present arrangements some two million dollars of Canadian and United States exchange advanced to Iceland by Great Britain last summer, we are instructed to say that the British Government would wish the Icelandic Government to admit their obligation to resell foreign exchange, but we are authorized to assure the United States Government that the British Government would not press the Icelanders to resell until they have substantial dollar balances.

Finally, in reply to the Department’s suggestion that the Icelanders should be allowed to utilize sterling funds for re-purchase of Icelandic debts held in Britain, we are authorized to state that the British Government would raise no objection to a suggestion of this kind provided that the transaction were effected through paying agents.

[ Washington ,] October 20, 1941.

13. Left at the Department on October 20 by Mr. Wyndham White. The substance of this memorandum was sent to the Minister in Iceland in telegram No. 98, October 21, 11 p.m.