The Secretary of War (Stimson) and the Secretary of the Navy (Forrestal) to the Secretary of State

Dear Mr. Secretary: The Congress of the United States has shown a very marked interest in the total value of Reciprocal Aid, or Reverse Lend Lease, which has been received by the United States from foreign governments and has frequently requested that the armed forces of this country show the total amount of such aid, including the full dollar value, which has been received.

Accordingly, both the U.S. Army and the U.S. Navy have issued directives requiring their officers responsible for receiving Reciprocal Aid to obtain money values for all such aid received and to make full reports of Reciprocal Aid received to the Army’s International Division and to the International Aid Division of the Navy’s Bureau of Supplies and Accounts, respectively.

The Government of the United Kingdom, from whom the major part of Reciprocal Aid has been received, has issued instructions through the British Treasury, however, that prices or pricing information concerning Reciprocal Aid shall not be given to the United States or its representatives receiving such aid.

It is obviously very difficult for the U.S. armed forces to comply with the request of the Congress for information on the value of Reciprocal Aid received, if accurate information on the value of goods and services received cannot be ascertained. Efforts have been made by both the Army and the Navy to have their officers in the field estimate dollar values of Reciprocal Aid received, but such a system is unsatisfactory and is, at best, subject to considerable inaccuracies.

It has been stated by British authorities that manpower is lacking to do the work of pricing Reciprocal Aid items. However, in many instances British officials have given copies of priced invoices for Reciprocal Aid items to officers of the U.S. armed forces on which the price columns have been physically cut out; in other instances special unpriced invoices have been made out separately by the British for the U.S. officers. It is therefore obvious that some kind of record is being kept by British authorities, and that this record involves, in such cases as those above, a greater expenditure of manpower than if [Page 67] the British were simply to give identical copies of their own priced invoices directly to the officials of the U.S. armed forces.

The Government of the United Kingdom is now furnishing the Government of the United States with quarterly over-all estimates of the value of Reciprocal Aid furnished: this fact is an additional clear indication that British authorities are assigning values to Reciprocal Aid transactions, but for U.S. purposes these quarterly estimates have many deficiencies, chief among which are the following:

The figures presented to the United States are summary totals only, with no indication of the method by which they were reached, nor what quantities they cover, and therefore offer no real indication of what prices are being assigned Reciprocal Aid items.
There is no way in which these figures can be checked against any figures kept by the U.S. armed forces on Reciprocal Aid receipts.
The British reports of Reciprocal Aid include items which had previously been transferred to the British by the United States as Lend Lease and subsequently retransferred to the United States. Consequently, British figures are padded by those amounts and do not represent an entirely accurate record of Reciprocal Aid.
The British reports do not show what part of the totals were delivered to the U.S. Army, U.S. Navy, and to other U.S. agencies, thus leaving the various branches of the armed services without a basis for replying to the inquiries of the Congress concerning the extent of Reciprocal Aid received by each.

It is strongly felt by the U.S. War Department and the U.S. Navy Department that the Army, the Navy, and other U.S. agencies which receive Reciprocal Aid from the United Kingdom are entitled to full information, including prices, relating to such aid received and it is noted in this connection that the U.S. Government furnishes the Government of the United Kingdom with the most complete information, including prices, on all items transferred to the United Kingdom as direct Lend Lease.

It is further believed that the Government of the United States will be placed in a highly disadvantageous position in the post-war discussions concerning eventual settlement of the master Lend-Lease accounts if the British are in possession of all figures showing the value of both U.S. Lend Lease aid to Britain and British Reciprocal Aid to the United States, while this country is in possession of detailed figures on direct Lend Lease only.

The present situation, where directives issued by the U.S. armed forces conflict with those issued by the Government of the United Kingdom, is a most undesirable one and tends to lead to friction between representatives of the two Governments on lower operating levels. Efforts on the part of the armed forces to obtain individual prices from the British agencies have been made without success, and the British services concerned state that in view of the order of the British Treasury, they are unable to furnish itemized prices.

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In view of the facts above set forth, it will be greatly appreciated if the Honorable the Secretary of State will take up the matter of Reciprocal Aid pricing with the Government of the United Kingdom, and request that the British Treasury’s current directive be modified, and that British agencies furnishing Reciprocal Aid to the U.S. armed forces or other agencies of the U.S. Government give the receiving agency full information, including prices, on all Reciprocal Aid which has been or will be furnished by the British Government.

Sincerely yours,

Henry L. Stimson