Memorandum of Conversation, by the Assistant Secretary of State (Acheson)

Participants: Secretary of State;
Secretary of the Treasury;
Mr. Leo Crowley, Administrator of Foreign Economic Administration;
Mr. Oscar Cox, General Counsel, Foreign Economic Administration;
Mr. Harry White, Treasury Department;
Assistant Secretary Dean Acheson;
The British Ambassador, Lord Halifax,
Sir David Waley71 and
Mr. Ben Smith.72

At Secretary Morgenthau’s request a meeting was held at 9:30 in the office of the Secretary of State attended by the gentlemen mentioned above. This meeting was preliminary to the same group meeting at 10:00 with Lord Halifax, Sir David Waley and Mr. Ben Smith.

The Secretary of the Treasury opened the discussion by recalling the memorandum of January 1, 1943 regarding the recommended upper and lower limits of British dollar balances, the fact that their dollar balances had during 1943 exceeded the one billion dollars referred to in the memorandum, the various discussions which had occurred in the Interdepartmental Committee, and the recent memorandum73 of the Secretary of the Treasury and Mr. Crowley to the President, together with the President’s instruction in regard thereto. The Secretary of the Treasury stated that it was the purpose of the meeting with the British representatives to take up with them the proposals that the items listed upon the attached sheets should be [Page 37] eliminated from Lend Lease transactions. He recommended that the approach to the British should be that the proposal to eliminate the items was based upon the fact that they were of such a character as might raise political criticism of Lend Lease and render more difficult the extension of the Act under the Lend Lease program when these matters came before Congress. He recommended that the approach should not be from the point of view of dollar balances and that it should be stated that for the present our concern in the matter was directed toward these items. Mr. Acheson expressed the view that the British would relate the two matters and that we should be prepared to state whether or not this proposal was for the purpose of reducing dollar balances. After some discussion it was agreed that Mr. Crowley should present the proposal to the British representatives and that any questions which they might ask regarding the dollar balance position should be referred to the Secretary of the Treasury.

The Secretary of State suggested that our attitude should be that during the present meeting, or at any subsequent discussions between British and American representatives, either side would of course be free to raise any matter which it regarded as relevant, which would be referred to the appropriate department of the Government for discussion.

At this point Lord Halifax, Sir David Waley and Mr. Ben Smith entered the meeting.

The Secretary of State said that the meeting had been called to discuss certain matters relating to Lend Lease and requested Mr. Crowley to present the subject for discussion. Mr. Crowley stated that he wished to take up with the British representatives certain items which he believed were embarrassing to the Lend Lease program and to its future legislative continuance. These related to certain items shown on the attached list, which at an earlier date had been included in items furnished under Lend Lease. Under the present circumstances he believed that this was no longer necessary and that, weighing all the considerations, the continued inclusion of these items would on net balance do more harm than good to the continuation of Lend Lease and to the furtherance of the war effort. He stated that he was solely interested in these considerations and stated the untruth of reports which had been circulated in the press and elsewhere regarding his alleged lack of sympathy with Lend Lease to the British. He discussed the political problem raised by these items and expressed his hope that the British representatives would cooperate with us in eliminating these items and with them the difficulties of which they were the cause.

Lord Halifax assured Mr. Crowley that neither he nor any of his associates took any stock whatever in the reports referred to by Mr. Crowley. He stated that he regarded it of importance that the [Page 38] matters presented by Mr. Crowley should not be considered as isolated items but should be thought of as part of a larger whole. He recalled that prior to his death, Sir Kingsley Wood74 had presented to the Treasury a statement75 of the British financial position, pointing out the difficulties of that position and the reasons why the British Government believed that a limit should not be placed upon British foreign exchange assets. He was under the impression that this statement of the British case had not been answered. While he was entirely willing to accept the views of this Government as to its political difficulties and the steps which were necessary to meet them, he hoped that, in order to help the British Government with its political difficulties, the discussion might take place against the background of an acceptance of the view expressed in Sir Kingsley Wood’s memorandum. If this were done, he felt that the matters could be considered upon their merits without raising fears in Great Britain that the British position was not accepted and that the proposals were steps based upon the contrary point of view.

Mr. Ben Smith briefly reiterated and supported what Lord Halifax had said, stressing the difficulty of considering the items in isolation and without knowledge as to the American attitude on the broader problem of the British financial position.

Sir David Waley stated that this was the last day of his service in Washington and that he was leaving saddened by the direction in which he believed that certain aspects of the relations between our two countries were tending. He added he believed earlier in the year, at the time when he discussed reverse Lend Lease of raw materials with Mr. Stettinius,76 that we were moving toward a true pooling of our resources in the common task of the war. He believed that the decision to include raw materials to the United States in reverse Lend Lease from the British was an important step in this direction and had greatly strengthened the principle.77 He felt that the present proposal was a step in the opposite direction by this Government at a time when his Government was moving forward along the pooling principle. He stressed and acknowledged the great generosity with which this Government had acted toward his Government and stated his apprehension that this basic and important fact might be obscured by raising proposals to eliminate matters from Lend Lease without clarifying the general position of this Government toward the British [Page 39] Government’s statement of its financial position. He asked whether it would not be possible for the Secretary of the Treasury to communicate with the Chancellor of the Exchequer78 stating in general his agreement with the position taken by the Chancellor in his memorandum, and that it was our intention to permit the dollar balance situation to run along.

The Secretary of the Treasury replied that he and his associates had given a great deal of consideration to the matter referred to, that he was anxious to eliminate the source of friction between the two Governments, and that therefore his approach to the present matter was not from the point of view of the dollar balances but from the point of view of eliminating the items referred to because of the considerations referred to by Mr. Crowley.

Sir David Waley said that this statement would be important for the Chancellor to know. After some discussion it was agreed that the Secretary of the Treasury would give Sir David Waley a letter to the Chancellor stating that the matter had been the subject of discussion at the meeting this morning, and that Sir David Waley was apprised of the Secretary’s views and would communicate them to the Chancellor.

Mr. White stated that a reply had been sent to the Chancellor regarding his memorandum stating in general that the United States Treasury would be at all times willing to discuss the matter with representatives of the British Treasury. The Secretary of the Treasury asked Mr. White to send to the Ambassador a complete dossier of the correspondence.

Mr. Ben Smith stated that after obtaining instructions from London, he would be glad to discuss the items referred to with Mr. Crowley and stressed the importance of reaching agreement in regard to them and of preventing so far as possible statements appearing in the press that agreement had been reached prior to the actual reaching of an agreement. Such statements, he said, had appeared in the past and had caused him and his ministers considerable embarrassment.

The meeting was concluded at 11:15.


We believe that certain questionable items such as the following should be discontinued from Lend-Lease:

Shipments of capital goods such as machinery, installations, etc., effective as soon as possible.
Off-shore purchases such as Iceland fish, Caribbean sugar, oil from outside the United States, etc.
Civilian goods for Jamaica, Southern Rhodesia, the Middle East, etc.
Pulp and paper.
Tobacco for the armed forces.
Certain other controversial items.

Certain other Controversial Items:

Under this category are included such items as those parts of the rental or charter of vessels which are open to question, agricultural machinery and other types of equipment which have a relatively long life, certain raw, semi-fabricated and fabricated materials whose end use is subject to question, items procured from one part of the British Commonwealth for lend-leasing to another part in the same or similar form, and items lend-leased to the British Empire for which the United States has to make substantial imports from third countries, etc.

  1. United Kingdom Treasury representative, British Supply Council, Washington.
  2. United Kingdom Minister Resident in Washington for Supply.
  3. Memorandum dated January 4, p. 33.
  4. British Chancellor of the Exchequer until his death on September 20, 1943.
  5. See memorandum by the British Treasury, September 14, 1943, Foreign Relations, 1943, vol. iii, p. 82.
  6. Mr. Stettinius had been Lend-Lease Administrator prior to becoming Under Secretary of State on October 4, 1943.
  7. For information concerning the exchange of notes effecting agreement on the transmission of raw materials as reciprocal aid, December 17 and 27, 1943, see bracketed note, Foreign Relations, 1943, vol. iii, p. 107.
  8. Sir John Anderson.