Foreign Relations of the United States Diplomatic Papers, 1941, The British Commonwealth; The Near East and Africa, Volume III

841.24/1387

Memorandum by President Roosevelt to the Secretary of State

Hyde Park, N. Y., January 11, 1941.

I think you have seen a copy of this message from Churchill which I got on January second. I really ought to send some answer.⁶

1. The situation in regard to British payments for materials already ordered in this country is not clear.

2. The situation in regard to the payment for future orders would be clear if Congress passes the proposed legislation⁷ and follows it up with an appropriation.

In regard to No. 1, the question of total British assets is involved. I do not know who told you that they amount to 18 billion dollars all over the world. In my judgment that figure is altogether too high because what we are referring to are obviously British assets which they cannot either (a) sell or (b) pledge through the Government of Great Britain. My figure would be 9 or 10 billion dollars instead of 18 billion dollars.

Still speaking of No. 1, it seems probable to me that through the investment trust method in New York, and with the aid of Jesse Jones,⁸ perhaps the British can raise about one billion dollars in the next few weeks. I do not think their total assets in this country amount to more than a total of one billion five hundred million—and the last five hundred million dollars is not of a character on which to raise cash quickly except at a very heavy and unwarranted loss.

In regard to British assets outside the United States, it is clear that in many cases they have to be used in the locality in which they exist, i. e., Canada, to pay for munitions and food; Argentina, to pay for beef, wheat, etc., and other South American countries in the same way.

Assets in South Africa are probably already earmarked to pay for things they are getting from South Africa. Assets in India, Straits Settlements, China, etc., may be of some value to them to put up with us as security but there is real doubt as to how much value such assets would have for us ultimately—as, for instance, British property in Shanghai.

In regard to No. 2, i. e., putting up some form of security for the future program of orders, I need not assure you that I am wholly sympathetic in doing something like this in order to get the bill through. But, again, I am skeptical as to the value of British owned properties which could be put up as security.

There is always the possibility of their putting up their sovereignty to and over certain colonies, such as Bermuda, the British West Indies, British Honduras and British Guinea [Guiana?]. I am not yet clear in my mind, however, as to whether the United States should consider American sovereignty over these Islands and their populations and the two mainland colonies as something worth while or as a distinct liability. If we can get our naval bases why, for example, should we buy with them two million headaches, consisting of that number of human beings who would be a definite economic drag on this country, and who would stir up questions of racial stocks by virtue of their new status as American citizens?

In the Pacific there are certain small British Islands which not from the population or economic point of view, but from the military and naval point of view, might be a distinct asset, and, at the same time, might be a definite liability. These are the Islands south of Hawaii (Canton, Enderbury, Christmas, the Phoenix group, etc., and down to Samoa) and the Islands southwest of Hawaii and south of the Japanese mandated Islands (the Gilbert and Ellice groups). If we owned them they would be valuable as stepping stones in the control of the central Pacific area, but, at the same time, they would be difficult to defend against Japan or a combination of Japan with some other naval power.

You see the difficulties of all this—the dangerous over-estimates which have been made of British assets and the problem of finding other substitutes.

We might talk it over when I get back on Tuesday.⁹

F[ranklin] D. R[oosevelt]

6. No record of an answer is found in Department files. See, however, telegram dated January 16, 1941, from President Roosevelt to Prime Minister Churchill, printed in F. D. R., His Personal Letters, 1928–1945, vol. ii, p. 1107.
7. Lend-Lease Bill, introduced in Congress January 10, 1941.
8. Secretary of Commerce and Federal Loan Administrator.
9. January 14.