841.5018/714: Telegram
The Ambassador in the United Kingdom (Winant) to the Secretary of State
[Received July 31—10:45 a.m.]
3310. Personal for the Acting Secretary for the Secretary of the Treasury. In Mr. Hopkins’ message to me 2483, July 9, and in Secretary Morgenthau’s message to Coe 2657, July 18, in which I was asked to collaborate and also in a section of Secretary Wickard’s21 message 2761, July 24,22 inquiries were made as to the distribution of articles under the Lend-Lease Bill. I have made replies to these messages in my messages 3189, July 24; 3251, July 28; and 3278, July 29, to the Secretary of the Treasury and also in my message 3229, July 26,23 to the Secretary of Agriculture.
Mr. Hopkins asked me to follow this matter up for him as he did not have time to press the importance of the issue himself. Since there seems to be no agreement in principle, I asked the Chancellor of the Exchequer for a statement as I explained in my message 3251, June [July] 28.
The statement handed to me this evening by the Chancellor is as follows:
“1. All materials which we obtain under the Lend-Lease Act are required for the prosecution of the war effort. This principle governs all questions of the distribution and use of such goods and His Majesty’s Government have taken and will continue to take action to see [Page 18] that these goods are not in any ease diverted to the furtherance of private interests.
Export Policy.
2. No lend-lease materials sent to this country have been used for export.
3. For some time past exports from the United Kingdom have been more and more confined to those essentials (i) for the supply of vital requirements of overseas countries, particularly in the sterling Empire; (ii) for the acquisition of foreign exchange particularly in the Western Hemisphere. His Majesty’s Government will now adopt the policy summarized below:
(i) In the future no materials on which the use is being restricted in the United States on the grounds of short supply and of which we obtain supplies from the United States either by payment or on lend-lease terms will be used in exports with the exception of the following special cases:
- (a)
- Material which is needed overseas in connection with supplies essential to the war effort for ourselves and our allies, and which cannot be obtained from the United States. This would enable us (i) to export supplies essential to the war effort to countries within the Empire and to our allies, and (ii) to export such articles as tinplate for canning to Portugal and the Argentine for our food requirements, if such tinplate could not be supplied by the United States of America.
- (b)
- Small quantities of such materials needed as minor though essential components of exports which otherwise are composed of materials not in short supply in the United States.
- (c)
- Repair parts for British machinery and plant now in use, and machinery sea plant needed to complete installations now under construction so long as they have already been contracted for.
Steps will be taken forthwith to prevent the execution of existing contracts for the export (except to Empire and Allied territories) of such goods which do not come within the exceptions referred to in (a), (b) and (c) above, (i. a.) Materials which are not in short supply in the United States but which we obtain on lend-lease terms will not be used for export in quantities greater than those which we ourselves produce or buy from any source.
Distribution in the United Kingdom Chancelleries Lend-Lease Goods.
4. The general principle followed in this matter is that the remuneration received by the distributors, whatever the method of distribution, is controlled and will be no more than a fair return for the services rendered in the work of distribution. The arrangements rigorously exclude any opportunity for a speculative profit by private interests from dealing in lend-lease goods. In most cases lend-lease supplies will be distributed through organizations acting as agents of His Majesty’s Government in the strict sense of the term and not as principals. Where, for strong practical reasons, this cannot be done a full explanation will be supplied to the United States administration and their concurrence sought beforehand in any alternative arrangements proposed. The justification for retaining existing [Page 19] channels of distribution operating under strict Government control is that the creation of elaborate new organizations in their place would inevitably result in loss of efficiency and the wasteful use of manpower, and retard the war effort.
5. Food is a special case. Only some 5 or 6 percent of the total British food supply will come from the United States and without great practical complications it would be impossible to have a separate system for the distribution of lend-leased food. Food distribution is carried out in the United Kingdom by wholesalers to whom the Government sells food as principals. In fact the Ministry of Food has established a close control over all district margins so that neither the wholesalers nor the retailers receive any greater remuneration than is adequate to cover the cost of the services performed. No food obtained on lend-lease terms is or will be sold at uncontrolled prices. Thus, the general arrangements as regards the issue of lend-leased food fit into His Majesty’s Government’s policy of stabilizing the whole price level of foodstuffs, a policy to which the Government contributes pounds 100 millions a year.
6. In some cases direct free distribution is practicable and will be adopted. For example, some milk products (including lend-leased supplies from the United States) are distributed direct and free of charge to children and others in need through schools, clinics and hospitals. The distribution is undertaken by state agencies and the cost of the distribution is borne by the Government.”
The statement handed me by the Chancellor should be read in connection with the public announcement made in the House by the Prime Minister in his address of Tuesday (see message 3278, July 29).
Coe is preparing, with the cooperation of British Treasury officials an exact description of the methods of distribution of all articles under the Lend-Lease Bill which will be forwarded on completion.
I would appreciate your informing the President on this matter as I understand from Mr. Hopkins that he is interested in this situation. It would also be helpful if you would let General Burns24 have copies of this entire correspondence for his own information and for Mr. Hopkins on his return.
I explained to the Chancellor that I was forwarding this statement to you. An early answer would be greatly appreciated.