841.24/688: Telegram
The Secretary of State to the Ambassador in the United Kingdom (Winant)
3165. From Oscar Cox.28
“I am told by the British Purchasing Commission that London is holding up formulation of a definite policy with respect to the re-export and commercial distribution of Lend-Lease articles pending receipt from us of comments on Sir Kingsley Wood’s memorandum forwarded by you on July 31, 1941.29 I understand also that on receipt of this memorandum the Treasury cabled you suggesting that Mr. Purvis was familiar with our point of view here and that you might wish to get in touch with him.
[Page 23]We discussed the problems presented by re-export and commercial distribution of Lend-Lease articles fully with Mr. Purvis, and expressed the policy which would be satisfactory to us in two letters, which Mr. Purvis took with him to London and with which I understand he was in substantial agreement. Mr. Harriman has also been consulted about these letters and has approved them. I am transmitting at the end of this telegram the texts of these two letters with slight modifications recently developed here.
You will see that the only basic difference between our statement and Sir Kingsley Wood’s is that his criterion for limitations on re-export is short supply, whereas ours is competition.
Would you be able to find out from Sir Kingsley Wood whether he discussed these letters with Mr. Purvis and whether he approves the policy which they express. If so, we can exchange them with the British here immediately.”
Following is the text of a draft letter dated August 14 from General Burns to the Chairman of the British Supply Council:
“In view of current public discussions of British export policy and its relation to the administration of the Lend-Lease Act, it seems timely to set forth in concrete form certain of the principles which have guided this Division in the administration of the Lend-Lease Act and will continue to do so in the future.
As you know, it has been the policy of this Division from the outset to limit the aid rendered under the Lend-Lease Act to that which is essential to the maintenance of the war effort and to refuse consent under Section 4 of the Act to the use of Lend-Lease articles for re-export in commercial trade. To execute this policy we have required a stipulation in the requisitions that Lend-Lease articles which might be available for such export be used in the United Kingdom or in other parts of the Empire and only for needs essential to the maintenance of the war effort.
We appreciate that Great Britain must continue exports in order to obtain imports. However, this Division has urged and will continue to urge upon His Majesty’s Government the importance of Great Britain’s making every effort to concentrate her exports in the field of traditional articles and to cut down exportation of articles similar to, or made of materials similar to, those being provided through Lend-Lease funds to the irreducible minimum necessary to supply or obtain materials essential to the war effort.
I would appreciate your confirming that the foregoing conforms to your understanding of the basis upon which Lend-Lease articles are being provided and receiving your assurance that every effort will be made to carry out the foregoing policy to the fullest extent.”
Following is the text of a draft letter dated August 14 from General Burns to the Chairman of the British Supply Council:
“Section 4 of the Lend-Lease Act requires the consent of the President to any retransfers of lend-lease articles by His Majesty’s Government. Distribution through commercial channels in the United Kingdom and in other parts of the Empire of necessity involves a retransfer and Presidential consent.
[Page 24]In the administration of the Lend-Lease Act the President will expect that, insofar as practicable, lend-lease articles will be distributed through Government agencies and, in the case of foods, on the free list. Where such distribution is not practicable, the President will, before granting his consent to commercial distribution, require assurances that:
- a.
- The articles to be distributed commercially, and those into which they are incorporated, are essential to the British war effort.
- b.
- The commercial channels of distribution to be used are the most effective and economical means of assuring the efficient use of the articles or their prompt delivery to the places where they are needed.
- c.
- No profiteering by commercial distributors of the articles will be permitted.
- d.
- There will be no discrimination against American firms.
Since the nature of distribution and ultimate destination of the various articles to be commercially distributed either in their original or in an advanced form naturally varies widely with a particular article, it is impossible for any blanket consent to retransfer to be given and each case must be determined on its own facts. The following, however, are suggested as items of information which would assist the President in determining whether the basic criteria set forth above have been met:
- 1.
- Destination of articles—in original and advanced form, e. g. United Kingdom, Dominions, Colonies, etc.
- 2.
- Intended use of articles and those into which they are to be incorporated, e. g., military, civilian, etc.
- 3.
- Method of distribution to be adopted, showing the channels through which the materials pass to the user.
- 4.
- Availability of Government distribution agencies.
- 5.
- The status of the distributors, i. e. whether they are acting as agents of the distributing Government or as principals purchasing to re-sell to consumers.
- 6.
- The extent to which Government supervision is exercised over distributors to insure that the prices and fees charged by them will be limited to a minimum reasonable remuneration for services actually performed.
- 7.
- Details of distribution, e. g. will the recipient Government sell the articles to a manufacturer, or will it deliver them to him gratis for incorporation in a completed article.
More detailed information will be expected in case of distributions in the Dominions and other parts of the Empire than in the United Kingdom in view of the strict controls known to be in force in the United Kingdom.
The foregoing are suggestions only and are not intended to be all-inclusive, as the necessity for further and different information will undoubtedly become apparent in particular cases. I am confident that most cases will fall into more or less standardized patterns, so that a method of presenting the necessary information can be worked out which will avoid useless repetition and complication of requisitions.”