The Secretary of State to the Consul at Capetown (Denby)
9. For the Minister.7 The South African Minister has presented to the department a formal request on the part of his Government for the conclusion of a reciprocal lend-lease agreement. Preliminary discussions began January 13. It is hoped to implement agreement by an exchange of notes along general lines of those concluded with Australia and New Zealand.8 However, memorandum containing following points has been handed to the Minister:
- Political and other considerations make inadvisable the creation of unduly large credits on either side where both countries are able and willing to pay for goods received.
- While the gold and dollar position of the Union remains at or near its present favorable position, it is thought preferable that all [Page 175]non-military supplies to the Union should be on a cash reimbursable basis.
- Military supplies should be on reciprocal lend-lease basis and should be balanced as far as possible by aid to American forces abroad and by supplies of raw materials.
- Lend-lease transactions will be subject to frequent review in order to prevent the building up on either side of unwarranted balances.