811.20 (D) E. M. D. E./116: Telegram
The Ambassador in the United Kingdom (Winant) to the Secretary of State
[Received July 24—6 p.m.]
3189. Personal for Mr. Morgenthau. Delivered message to Coe as your telegram 2657 July 18, 3 p.m. Two weeks ago I asked Sir John Anderson, Lord President of the Council, who has charge of the over-all statistical and accounting services which reach into all the Ministries of the Government to give me information on some aspects of the problem you raise in your telegram. At the same time I went to the Prime Minister and told him it was essential we have information and he promised his support and cooperation.
For your information, I brought to the attention of the Chancellor of the Exchequer18 and Mr. Keynes before he left for the United States the possible embarrassments that might result from introducing raw material purchased under the Lend-Lease Act into ordinary channels of commercial trade, particularly the export trade. I suggested an independent accounting of such material with return payment. There is also reference to this problem as it relates to food stuffs in a confidential report I forwarded sometime ago to Washington.
Ben Cohen19 is aware of the conversation and has read the report.
Yesterday I took Coe to meet the Chancellor and Sir John Anderson. The Chancellor has promised us as soon as possible a full report on the distribution of lend-lease articles. Sir John Anderson gave me a short memorandum in answer to my earlier inquiry.
It is substantially similar to Keynes’ statement on the re-export problem issued in Washington a fortnight ago. He also answers the inquiry about 90-cent cheese.
Today Coe met other Treasury officials working on the problem and expects by a series of interviews and memoranda from various Departments to obtain a general picture for you in the next few days.
Following is the text of Sir John Anderson’s memorandum:
“We fully realize the importance for the appropriation debates of giving a full and clear answer to the suggestions that we are using lend-lease goods to push our export trade to South America, Canada and the United States.
So far as goods containing steel are concerned, individual orders from Canada are carefully examined and steel is not released for their manufacture unless we are satisfied either that they are essential to [Page 10] the Canadian war effort and cannot be supplied from the United States or Canada, or that they can be produced and shipped without interfering with war production in this country and represent a high conversion value. As for the United States, it is our policy only to export goods containing steel where it is in the interests of both countries that we should do so. The amounts concerned are small. For South America we try to export no goods containing steel in appreciable quantities, except that we have felt bound to maintain in some degree our export trade with the Argentine in view of the necessity of keeping up means of payments for our food supplies from there; but the amount of exports containing steel has rapidly diminished and if it is needed from the Congressional point of view, we are prepared to stop any new orders being accepted with very minor exceptions.
As regards aluminum there is no found action [no foundation?] for this criticism. Civilian Use in this country and export use together amount to less than one percent of our consumption. Tiny amounts are found ‘necessarily in electrical equipment and machinery’ and thus a few pounds may have got to South America but that is all.
In general, exports made now which give rise to many of the complaints are in fulfillment of orders placed months ago when the circumstances were completely different. There must always be a time log [lag] where production is involved between policy and its final performance.
Keynes has been taking up all these points in Washington and we have given him the material for a detailed answer which he drafted in consultation with the State Department and the Treasury. He tells us that it seems to have been completely adequate.
The Ambassador also mentioned reports in the United States that American cheese is being sold unrationed at as much as 90 cents a pound. There is no truth in this rumor. There was a small quantity of Argentine cheese which for special reasons as a non-recurring matter we allowed to be sold without restriction and off the ration so that it fetched a fancy price. Probably this is at the bottom of the story.”
Thank you for assigning Coe here.