The British Ambassador (Halifax) to the Under Secretary of State (Stettinius)

My Dear Ed: I am now in a position to give an answer to the questions regarding Reciprocal Aid from Australia and India55 raised in the discussions that were held in the State Department on February 15th.56 After your conversation with Opie on February 29th,57 I think you are probably aware of the general answer my Government were proposing to give.

The position taken by my Government regarding these questions is as follows:—

After the fullest consideration, the United Kingdom Government regret that they find themselves unable to agree to the suggestions made to them that they should purchase certain raw materials in Australia, and turn them over to the United States Government as Reciprocal Aid.

The United Kingdom Government’s position in this matter was made clear at the meeting on September 16th58 at which Sir David Waley,59 Mr. Opie and Mr. R. L. Hall60 met Mr. Acheson, Mr. White,61 Mr. Achilles and Mr. Knollenberg.62 The matter was then discussed in terms of financial considerations, and it was suggested [Page 208] that the United Kingdom Government might be prepared to consider giving financial assistance to the Dominions or India, insofar as the bar to those countries giving supplies on reciprocal aid was financial in character. As I understand it, at no time in the discussions that have taken place did the United Kingdom Government give any more general undertaking to make supplies available where such supplies were required by the United States Government, but fell outside the limits within which the producing countries were prepared to provide reciprocal aid themselves. Thus, apart from using their good offices in bringing about an agreement between the Dominion and Indian Governments on the one hand, and the United States Government on the other, the United Kingdom Government was prepared to consider further assistance only insofar as the major obstacle was at any time financial in character.

If, then, the effect of the Australian Government’s supplying raw materials under Reciprocal Aid would have been to deplete unduly the sterling balances of the Commonwealth, the United Kingdom Government would, in accordance with the above understanding, have readily agreed to safeguard the Commonwealth Government in this respect, and from the outset the United Kingdom Government gave the Commonwealth Government the fullest assurances on this point. In fact, however, the sterling liabilities of the United Kingdom to Australia are rising, and military developments render it probable that they will increase still further. The United Kingdom Government do not consider that it is justifiable to ask them to contribute Australian raw materials as Reciprocal Aid from the United Kingdom, for the United Kingdom could only obtain such Australian raw materials by incurring indebtedness to Australia. In any case, the United States Government will no doubt take into account the fact that the volume of Reciprocal Aid provided in Australia to United States forces is on a very considerable scale having regard to the limits of the economic resources available to Australia.

As regards India, while the United Kingdom Government will be glad to use its good offices in so far as this may be practicable, it does not feel able to provide raw materials on Reciprocal Aid to supplement such raw materials as the Government of India may itself feel able to provide. The reasons which apply in this case of Australia apply even more strongly in the case of India, whose holdings of sterling are increasing even more rapidly.

His Majesty’s Government in the United Kingdom accordingly trust that when the United States Government realise that His Majesty’s Government could not comply with its request without adding [Page 209] to the problem of their external liabilities, the United States Government will agree not to press them further in the matter.63

Yours ever,

  1. For correspondence on this subject relative to India, see Foreign Relations, 1943, vol. iv, pp. 246 ff., and pp. 283 ff.
  2. These discussions involved British and U.S. representatives and concerned lend-lease and reverse lend-lease problems relating to British Commonwealth countries; memorandum of conversation not printed.
  3. No record of this conversation with Redvers Opie, Counselor of the British Embassy, has been found in Department files.
  4. For a record of this meeting, see memorandum by Mr. Theodore C. Achilles, September 16, 1943, Foreign Relations, 1943, vol. iii, p. 84.
  5. United Kingdom Treasury Representative, British Supply Council, Washington.
  6. Robert Lowe Hall, Member of the British Raw Materials Mission, Washington.
  7. Harry Dexter White, Assistant to the Secretary of the Treasury.
  8. Bernhard Knollenberg, Senior Deputy Lend-Lease Administrator.
  9. In a letter of May 13, 1944, from the Assistant Secretary of State (Acheson) to the Deputy Foreign Economic Administrator (Currie), which transmitted a copy of this letter from Lord Halifax, Mr. Acheson made the following statement: “It is the view of the Department that no further action on this matter is called for at this time.” (800.24/1667)