The Secretary of the Navy (Knox) to the Secretary of State
[Received September 2, 1941.]
Sir: Reference is made to Department of State Liaison Officer Memorandum U–L 810.20 Defense/1267 of August 23, 1941,40 furnishing information regarding the dissatisfaction on the part of Cuba with the offer made by the United States of Military and Naval material under the Lend-Lease Program.
Upon a recommendation of the Joint Army-Navy Advisory Board on American Republics, a total allocation of credit for Cuban Naval material was tentatively set at $700,000. It was further indicated, as the opinion of the Board, that material not to exceed in value $100,000 could probably be delivered during the present fiscal year.
Although the Navy Department has not been informed of the details of the basic agreement negotiated by the State Department with the Government of Cuba, or with the Government of any other American Republic, from the tenure of the despatches enclosed in Department of State Liaison Officer Memorandum, it would appear that the Cuban Government has been informed that the extent of their credit during the present fiscal year is limited to $100,000.
It is thought that the dissatisfaction expressed by the Cuban Government is partly due to the failure to distinguish between the value of material which could be delivered during this fiscal year, and the necessary credit required to make contracts and place on order material which will require twelve months or more to manufacture.
The amount of the Naval allocation of credit was based on recommendations of the staff conversations which took place between representatives of the United States Navy and the Cuban Navy. Since these conversations were held, there has been a change in the administrative head of the Cuban Navy. The new regime has greatly increased the amount of material requested.
There is no objection on the part of the Navy Department to an increase in the allocation of credit to purchase all of the Naval material requested by the Cuban Government as being urgent in character for National Defense. It is estimated that this will require a total sum of $3,700,000 for Naval credit alone, or an increase of $3,000,000 over the present allocation. This amount can be taken from the unallocated reserve.
It is desired to point out that in case the basic agreements made with other American Republics have also confused the value of material that [Page 121] could probably be delivered during this fiscal year with the amount of credits desired to make contracts for future delivery, there will be other cases of dissatisfaction.
It is the understanding of the Navy Department that, except for a very small sum to procure articles already manufactured, there is no money available under the Lend-Lease appropriation for the procurement of any of the material requested by Latin American Governments. Furthermore, no funds can be made available for this purpose until a new Lend-Lease appropriation has been approved by Congress.41 It would, therefore, appear to be impracticable to inform the other American Republics what credit they should expect during this fiscal year, until Congress has appropriated the necessary funds.
Representatives of the Navy Department have appeared before the Bureau of the Budget during the consideration of the projects which Congress will be requested to appropriate for a new Lend-Lease appropriation. In discussing the funds required, it was particularly requested that the total allocation of credits allowed to the American Republics should be made available during this fiscal year, in order that contracts could be negotiated for the future delivery of material as well as the delivery of any material that could be made available during this fiscal year. It was stated that, out of the total of $100,000,000 requested for Naval material, it was not considered possible to deliver more than approximately $12,000,000 in value during the present fiscal year.
It is suggested that the dissatisfaction of the Cuban Government can be dissipated by simply explaining that their total allocation of credit to procure Naval material will be increased to a total of $3,700,000, and the credit for this fiscal year will be whatever part of this amount that is allowed by Congress.