Office of the Historian

841.24/698: Telegram

The Secretary of State to the Ambassador in the United Kingdom (Winant)

Washington, August 28, 1941—7 p.m.

3466. In reply to your 3821 to Mr. Hopkins and 3722 to Oscar Cox, who have both been away. The Chancellor’s statement forwarded in your 3310 has been considered by Mr. Hopkins, Secretary Morgenthau, General Burns and representatives of this department. This Government regards it in the main as an admirable statement which would be acceptable if the following modifications could be made:

1. Section “2” to read “Lend-Lease materials sent to this country have not been used for export and every effort will be made in the future to ensure that they are not used for export.”

We think it important to establish the principle that actual material furnished under Lend-Lease should not itself be re-exported. We can assure the British that in cases where complete physical segregation of Lend-Lease material is impracticable, we will be satisfied that they have lived up to their undertaking if they consume as much or more of the material in the United Kingdom as they obtain under Lend-Lease.

2. Last sentence of last paragraph of section “3” to read “Where materials being provided through Lend-Lease funds are not in short supply in the United States, the export of similar materials or articles made of similar materials will not be restricted except in cases where such exports compete with American exports. In such cases of competition, every effort will be made to restrict such exports to the irreducible minimum necessary to supply or obtain materials essential to the war effort.” This would permit export of cotton, for example, to the extent that such export is necessary to supply Dominion or Allied forces or to obtain foreign exchange for imports essential to the war effort.

3. Add to paragraph “4” the sentence: “In the distribution of Lend-Lease goods there will be no discrimination against United States [Page 28] firms.” We feel that this addition is necessary in the light of reports this Department has received concerning discrimination against American firms.

Hull