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

611.59A31/61

The British Embassy to the Department of State ¹⁴

Reference is made to the Embassy’s memorandum of even date about arrangements for cooperation between the British and United States Governments in fulfilling parallel obligations to Iceland. The new situation brought about by the Department’s memorandum of October 7th compels the British Government to reconsider its general financial relations with Iceland which hitherto have been based on the agreement of March 14th, 1941. We are asked, therefore, to obtain the Department’s views on the following proposals which the British Government are considering making to the Icelandic Government:—

(a) His Majesty’s Government to renounce their right to control over Iceland’s expenditure of foreign exchange and to agree to abolish committee of 2.

(b) His Majesty’s Government to renounce their right to control Iceland’s import programme.

(c) His Majesty’s Government to agree that Iceland’s sterling accrued and to accrue shall remain available for any payments to residents of sterling area.

(d) Icelandic Government to renounce the right to call on His Majesty’s Government to meet any deficit of foreign exchange (not only United States dollars but all other currencies than sterling and in particular Canadian dollars) including any deficit arising from service of export import bank credit.

(e) Icelandic Government to adhere to their obligation to resell to His Majesty’s Government out of eventual surplus sums made available in foreign exchange by his Majesty’s Government since beginning of British occupation.

(f) His Majesty’s Government to agree to relinquish control of Krone–sterling rate provided that Icelandic Government agrees to make available without limit and at present rate the Krone required by His Majesty’s Government for British forces in Iceland.

The above proposals are not being communicated to the Icelandic Government until the views of the United States Government are known.

[ Washington ,] October 20, 1941.

14. 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.