The Secretary of State to the Minister in the Union of South Africa (MacVeagh)
204. Your 297, 12th.62 As you know, we have been carrying on conversations with the South African Legation for nearly a year looking toward conclusion of a reciprocal aid agreement. The Union [Page 212]Government has consistently wished to place a very narrow interpretation on what it would furnish as reciprocal aid. On October 6 we advised the Legation, as we had similarly advised the British, Australian, New Zealand and Indian authorities, that we would like to receive raw materials as reciprocal aid in addition to supplies for our forces. On October 22 the Legation replied accepting our raw materials suggestion in principle but raising a number of points of procedure which, in FEA’s63 view, would greatly hamper effective procurement. The Union Government declined to meet our position on any of the remaining outstanding points of the agreement.
In view of the exceptionally strong and constantly improving financial position of the Union that Government has little need of Lend-Lease aid and has in fact for some months been receiving on Lend-Lease terms only combat material, civilian items being furnished on a cash reimbursable basis.
On November 6 it was suggested in a friendly way to the South African Minister that there might be political advantages in both countries if an arrangement were made similar to that between this Government and Canada by which each Government pays cash for anything obtained from the other. The proposal was not ill received. The Treasury Department and FEA fully support this suggestion and we intend shortly to give the Legation here a new draft based upon the agreement of November 30, 1942 with Canada.64
The foregoing is for your strictly confidential information and guidance. It should not be discussed with the South African authorities unless they raise the matter with you.