Memorandum of Conversation, by Mr. Theodore C. Achilles of the Division of European Affairs

Participants: The South African Minister;1
Sir Frederick Phillips, British Treasury;
Mr. Acheson;2
Mr. Reams;3
Mr. Achilles.

The South African Minister having previously suggested to the Secretary the conclusion of a reciprocal aid agreement between this Government and his Government, Mr. Acheson requested him to call and gave him copies of the attached draft4 and of the attached informal memorandum5 indicating our contemplated lend-lease policy with respect to South Africa. In view of the relationship between United States-South Africa lend-lease arrangements and the Empire foreign exchange position, Mr. Acheson invited Sir Frederick Phillips to be present.

Mr. Acheson explained that we would be happy to have a reciprocal aid agreement with South Africa but that, in view of South Africa’s strong and improving foreign exchange position, we could see no reason why South Africa should be furnished non-military supplies other than on a cash reimbursable basis and that we believed raw materials obtained for [from] South Africa, as well as aid to American forces, should be provided as reciprocal aid. He also said that while it was not contemplated that reciprocal aid should necessarily balance military aid furnished South Africa, it would be desirable to [Page 174]review the position at frequent intervals in order to avoid criticism should the difference between the two become too great.

Sir Frederick remarked that both the proposal to provide non-military goods only for cash and the request for raw materials on reverse lend-lease seemed to indicate a departure from previous policy. Mr. Acheson said the arrangement with the Netherlands Government6 is one under which the latter pays cash for non-military items and also furnishes us reciprocal aid. Sir Frederick said that his Government would greatly regret the adoption of any policy implying payment for military aid. He thought this contrary to the trend of lend-lease policy. He also stated that the British Government had furnished the Soviet Government some $500,000,000 worth of military supplies without payment.

The Minister inquired whether our contemplated lend-lease policy would have any effect upon gold mining in the Union or upon the supply of gold mining machinery from this country. Mr. Acheson impressed upon him that it would not, that our views on the question of gold production in the Union were under consideration in an entirely separate connection, that neither a reciprocal aid agreement nor the adoption of our contemplated lend-lease policy would have any bearing upon that subject.

The Minister said he would study the draft and memorandum and communicate with us again after ascertaining his Government’s views.

  1. Ralph William Close.
  2. Dean Acheson, Assistant Secretary of State.
  3. R. Borden Reams, of the Division of European Affairs.
  4. Not attached to this document, but presumably the same text as the draft printed on p. 193.
  5. Not attached to this document, but for summary, see telegram No. 9, January 14, 13 p. m., to the Consul at Capetown, infra.
  6. For text of agreement signed at Washington July 8, 1942, see Department of State Executive Agreement Series No. 259, or 56 Stat. (pt. 2) 1554.