The Foreign Economic Administrator (Crowley) to the Assistant Secretary of State (Clayton)85
Dear Mr. Clayton: I wish to take this opportunity to report to you on the activities of the Lend-Lease Committee which has been negotiating with the British and of which I have been Chairman.
The Lend-Lease Top Committee held one combined meeting with the British. This meeting was held on September 13 and the following matters were discussed:
- 1.
- The British representatives stated that reverse lend-lease in general had ended on V–J Day but that they were prepared to issue instructions for the continuance of reverse lend-lease which would parallel the U.S. instructions for the continuance of lend-lease. The [Page 150] U.S. representatives accepted this statement of the U.K. Government but stated that the manner of settlement for supplies and services furnished by the U.K. and Colonies after V–J Day should be a matter for further discussion. Following the instructions of the US/Top Committee, I stated that the U.S. was of the opinion that the supplies and services furnished by the U.K. and Colonies to the U.S. after V–J Day should not be paid for in cash, but should be offset against the sums which the U.K. would owe to the U.S. for the pipeline and inventory.
- 2.
- There was considerable discussion of the terms and conditions upon which the U.K. would pay for the items selected from pipeline. Following the directive of the US/Top Committee, I stated that the British would have to pay for these, either in cash or on 3(c) terms, i.e., over a period of 30-years with interest at 2–⅜% per annum. The British representatives accepted the liability to pay for such items but wished to defer for further consideration, the terms and conditions upon which they would make payment.
On September 20, 1 had a conversation with Lord Keynes at which we had further discussions of the terms and conditions upon which the U.K. might obtain items selected from the pipeline and the entire civilian inventory. Members of my staff and of Lord Keynes’ staff subsequently prepared drafts of an exchange of letters between myself and Lord Keynes covering the substance of this conversation. These letters have never been finalized for reasons with which you are familiar, but copies of the latest drafts of them are attached hereto as Exhibits I and II.87
The other activities of the Lend-Lease Committee have been carried on by Sub-Groups. The following Sub-Groups were organized:
| Sub-Group 1 | –Pipeline and Inventory |
| Sub-Group 1(a) | –Petroleum |
| Sub-Group 2 | –Ships |
| Sub-Group 3 | –Military Lend-Lease and Reverse Lend-Lease |
| Sub-Group 3(a) | –Shipping Services |
| Sub-Group 4 | –Capital Goods and Installations |
| Sub-Group 5 | –Lend-Lease Settlement |
Sub-Groups 1 and 3 have been the most active because the subjects assigned to them for discussion required decisions most urgently. They have held several meetings with the British and have appointed combined working parties to investigate and report on several technical subjects. Each has prepared a report on its activities, copies of which are attached hereto as Exhibits III and IV.87
[Page 151]I wish to call your particular attention to the paragraph on the top of page 4 of Sub-Group 3’s report which states that the Army and Navy are requiring cash in advance for certain supplies and services furnished to the U.K. Military, instead of allowing collection to be made through the offsetting arrangements. If this situation is not remedied, the offsetting principle may break down and we may be forced to pay cash for supplies and services received from the U.K. and Colonies.
The other Sub-Groups held no meetings with the British. Sub-Groups 1(a) and 2 did, however, hold several interagency meetings to develop a U.S. position for presentation to the British. Copies of the documents that they have agreed for presentation to the British and of the minutes of their meetings are attached hereto as Exhibits V and VI.88
Sub-Groups 4 and 5 have not held any interagency meetings as the matters assigned to them did not require as urgent settlement as the matters assigned to the other Sub-Groups. Informal discussions have been held among members of Sub-Group 5 at which it has been suggested that claims arising out of the war which the U.S. has against the U.K. and which the U.K. has against the U.S. must be presented for settlement during the current negotiations if they are to receive the consideration that should be accorded them. It would be my recommendation that this principle be adopted by you as you carry forward in the discussions.
I shall, of course, be happy to make available to you any further information which is in my possession and which will be of assistance to you in concluding the negotiations.
Sincerely,