Foreign Relations of the United States: Diplomatic Papers, 1943, The British Commonwealth, Eastern Europe, the Far East, Volume III

841.24/2046b

The Department of State to the British Embassy

Aide-Mémoire

The request made of the British Government by the Government of the United States for the provision as reciprocal aid of raw materials from the British Empire to a value of from $200,000,000 to $300,000,000 a year was designed to carry the principle of common pooling of the resources of the two countries a substantial step forward toward complete realization. This principle is widely and favorably accepted in the United States and the extent of British reciprocal aid to the United States has made a highly favorable impression. Both informed and partially informed circles, however, both in Washington and elsewhere in the United States, find it difficult to understand, in view of the value of lend-lease aid being extended to the British Empire, why cash payments by the United States Government for raw materials obtained from the British Empire should continue to be necessary. This situation is regarded as a striking exception to the principle of pooling resources.

The proposal set forth in the British Aide-Mémoire of August 2, 1943 is a welcome contribution to the purpose mentioned above, although its details seem unduly restrictive.

1. The United States Government has separate reciprocal aid agreements with the governments of Australia and New Zealand, and is negotiating such an agreement with the Government of South Africa. The situation in regard to India is different. The United States Government does not have a reciprocal aid agreement with the Government of India and does not consider that it would be practicable at the present time to conclude such an agreement. The United States Government would, however, be prepared to advise the governments of Australia, New Zealand, South Africa and India of the procurement program which it desires be transferred to a reciprocal aid basis, it being understood that such financial arrangements as may be necessary to permit this to be done would be for discussion between the governments of the United Kingdom and the other British Empire governments concerned.

2. Many United States Government contracts for materials from British Empire countries do not terminate until sometime after October 1, 1943. The suggestion of the British Government that the arrangement apply only to contracts made on or after October 1, 1943 would therefore mean that during the immediate future the reciprocal aid extended in the form of raw materials would fall short of the amount deemed desirable. For this reason, the United States Government suggests that all of its raw material contracts in the United Kingdom, Southern Rhodesia and the Colonies either in effect on or signed after July 1, 1943, be brought within the scope of the program and that arrangements be worked out whereby as the need arises, the necessary means of payment would be made available to the United States Commercial Corporation or any other agency designated by the United States Government to pay for any deliveries made on these contracts on or after July 1, 1943. This would permit the two Governments to announce that since July 1, 1943 the United States Government has been receiving without charge and as reciprocal aid all raw materials procured by it in the United Kingdom, Southern Rhodesia and the Colonies.

3. The Embassy’s Aide-Mémoire states that the decision of the British Government to supply as reciprocal aid the raw materials purchased by the United States Government from the United Kingdom, Southern Rhodesia and the Colonies on contracts signed on or after October 1, 1943, is made on the assumption that the list and valuation accompanying the letter from Mr. Stettinius to the late Sir Frederick Phillips of June 26¹³ “represents roughly the effect of what is proposed and that no major item will be added.” This tabulation was submitted to Sir Frederick only as a rough indication of the scope of the contemplated program. It was not meant to be taken as a definitive list of either the quantities or the specific commodities which this Government might wish to bring within the program. It seems desirable because of constantly changing war conditions that like lend-lease, the arrangement be kept as flexible as possible in this respect. The United States Government, therefore, urges that the agreement not be restricted to a particular list of items or quantity thereof.

4. The United States Government appreciates the willingness of the British Government to meet its suggestion that monetary figures for reciprocal aid be announced. It is hoped that this publication may be made at an early date, and it is further hoped that subsequent periodic publication may be in such form as will permit the United States War Department either to withdraw or to modify the instructions issued in June 1943, so that it will not be necessary for the War Department to make its own independent evaluation of reciprocal aid received in the United Kingdom, in Southern Rhodesia, or in the colonies.

Washington , August 18, 1943.

13. Letter and its enclosure not printed. Sir Frederick Phillips had died on August 14, 1943.