841.51/12–1445: Telegram

The Ambassador in the United Kingdom (Winant) to the Secretary of State

13127. Personal to the President, Acting Secretary Acheson and Assistant Secretary Clayton. In reading this message please see my 12988 of Dec 11 and my 13069 of Dec 13.58 Also Emb’s 13126 report on the debate.59

[Page 197]

The debate last night in the Commons in support of the motion to accept the loan, the Bretton Woods Agreement and the proposal for an international trade organization had more vigor, positiveness and drive on the Labor side than any meeting since the new govt took office. The Conservative position of abstaining, while adopting a more critical attitude, on the ground that the govt should take full responsibility since they were not parties to the negotiations and not kept currently informed on the negotiations, I felt was political and weak. The Conservative leadership failed to keep over 70 members from voting against the resolution. Yesterday afternoon I sent the following letter to Mr. Churchill:

“In reading the record of yesterday’s debate it seemed to me that there was an omission in the statement of facts on the Conservative side that could be misunderstood in the US.

Under lend-lease if you include exports from the US to the UK and services rendered the contribution under lend-lease totals to something over 20 billion dollars. The reverse lend-lease contributed by the UK totals to something under 5 billion dollars.

These figures have reference to lend-lease operations for the period which ended on the cancellation of lend-lease on V–J Day. During that period you were Prime Minister of England, Mr. Eden was Minister of Foreign Affairs, and Sir John Anderson was Chancellor of the Exchequer.

In the agreements which are being considered under the Govt’s motion of approval are the loan, the Bretton Woods Agreement and the commercial policy proposals. There is, however, also included a final settlement of lend-lease accounts. No mention of this has up to this time been made by the Conservative ex-Ministers.

It is my opinion that not only the ‘principles applying to mutual aid in the prosecution of the war against aggression’ should be brought to the attention of the House of Commons but also the Lend-Lease Act passed by the Federal Congress which is binding upon the administration. This act also reflects American opinion.

Under section 3 of this act, paragraph (5) [sub]section (b), appears the following language:60

‘The terms and conditions upon which any such foreign govt receives any aid authorized under subsection (a) shall be those which the President deems satisfactory, and the benefit to the U[nited] S[tates] may be payment or repayment in kind or property or any other direct or indirect benefit which the President deems satisfactory: provided, however, that nothing in this paragraph shall be construed to authorize the President to assume or incur any obligations on the part of the U[nited] S[tates] with respect to post war economic policy, post war military policy, or any post war policy involving international relations except in accordance with established constitutional procedure.’

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There was a writing off of ‘those things that were consumed, lost or destroyed’61 and an acceptance of the obligations that ‘in the final determination of the benefits to be provided to the U[nited] S[tates] of America. …62 the terms and conditions thereof shall be such as not to burden commerce between the two countries but to promote mutually advantageous economic relations between them and the betterment of world wide economic relations’. There is also a clause63 in the master agreement between the US and the UK that ‘the Govt of the U[nited] K[ingdom] will return to the U[nited] S[tates] of America at the end of the present emergency as determined by the President of the United States of America, such defense articles transferred under this agreement as shall not have been destroyed, lost or consumed, and as shall be determined by the President to be useful in the defense of the United States of America or of the Western Hemisphere or to be otherwise of use to the United States of America’.

There is similar language in the act passed by the Congress.

Over and above reverse lend-lease, the obligations under article VII, and the stipulation to write off ‘those things that were consumed, lost or destroyed’ there was still the unsettled balance of several billions to be settled by mutual agreement.

The arrangements which are now before the House of Commons and under consideration under the resolution put forward by the Govt include the ‘complete and final settlement’ of lend-lease and reciprocal aid. The failure by ex-Ministers to recognize this concession by the [Page 199] US Govt, which is considerably greater than the total loan, does not give a fair picture of the general settlement.

You have always been the first to recognize the extent of the contribution made under lend-lease and reciprocal aid. I remember your reference to this act as ‘the most unsordid act in human history’.64 It is because I know that you would not knowingly ignore this large item on the credit side of the final settlement that I call this omission to your attention.”

Neither Mr. Churchill nor any other Conservative ex-Minister mentioned the cancellation of lend-lease obligations. Mr. Bevin did use this material. Mr. Churchill, however, incorporated the following sentence in his statement:

“Whatever complaint we made about these present proposals and whatever misgivings and they are very serious, are aroused in our breasts by them the generosity and championship by the US of the cause of freedom will ever stand forth as a monument of human virtue and of future world hope.”65

He told me afterwards that he could not get agreement within his party to support the resolution, that he would have liked to have freed members and voted for the resolution himself but that he recognized the necessity of accepting the arrangements made and felt that by asking for abstention he would influence the action in the House of Lords in which there are only 25 Labor peers.

The vote was taken at 10:30 last night with 345 voting for and 98 against.

I spent an hour afterwards with Bevin discussing his Moscow trip. He left this morning by plane. I know he wants to work in complete cooperation with Secretary Byrnes.

  1. Neither printed; in these telegrams Ambassador Winant commented on the attitudes of the Labor and Conservative Parties regarding the agreements with the United States (841.51/12–1145, 12–1345).
  2. Telegram 13126, December 15, 5 p.m., from London, not printed; but for the debates of December 12 and 13, see Parliamentary Debates, House of Commons, 5th series, vol. 417, col. 421 and col. 641, respectively.
  3. Reference here is to section 3, subsection (b) of the Lend-Lease Act, March 11, 1941, 55 Stat. 32, as amended by the Act of May 17, 1944, 58 Stat 223. Paragraph 5 was part of subsection (a) and its insertion here is an obvious error.
  4. See article V of the Preliminary Agreement between the United States and the United Kingdom regarding principles applying to mutual aid in the prosecution of the war against aggression, signed at Washington, February 23, 1942; for text, see Department of State Executive Agreement Series No. 241, or 56 Stat. (pt. 2) 1433.

    The policy of writing off the cost of material consumed or used up in the war effort had long been the generally accepted unofficial policy of the U.S. Government, although not stated explicitly. In May 1945, the Secretary of State’s Staff Committee approved a draft document (SC–110a) recommending that no direct financial payment be sought for lend-lease material used in the war effort, but that indirect benefits under article VII be sought (Lot 122, Boxes 13147 and 13148, Staff Committee Minutes, May 12 and 17, 1945). A subsequent version of this draft document, dated August 13, 1945, maintained the principle of not requesting direct payment for lend-lease supplies employed in the common war effort (History of Lend Lease, Part II, Chapter II, Exhibit 109, Tab 8e). President Truman’s “Twentieth Report to Congress on Lend-Lease Operations,” submitted August 30, cited on p. 113, broadly outlined U.S. policy in similar terms. Finally, the report, drafted November 2, 1945, of the U.S. Working Group on Capital Goods, Installations and Intangible Benefits in connection with the British lend-lease settlement stated its agreement with the British position, “that they have no obligation to make settlement for goods lost, destroyed, or consumed in the war.” (History of Lend Lease, Part II, Chapter II, Exhibit 109, Tab 7d) This policy, upon which was based the British lend-lease settlement, was stated precisely in a letter from Secretary of State Byrnes to Senator James M. Mead, of New York, March 7, 1946, as follows: “First, the settlement did not establish any financial obligation on the part of either country for lend-lease or reciprocal aid goods which were lost, destroyed, or consumed during the war. Such goods and services were used to defeat our enemies, thus achieving the primary purpose of lend-lease and reciprocal aid. Neither country profits financially at the expense of the other as a result of such mutual action, since both were devoting maximum shares of their national output to war production …” For complete text, see p. 87 of report cited in footnote 26, p. 173.

  5. Omission indicated in the original; this subquotation is from article VII of the Preliminary Agreement.
  6. Reference is to article V of the Preliminary Agreement.
  7. See Parliamentary Debates, House of Commons, 5th series, vol. 410, col. 76.
  8. Parliamentary Debates, House of Commons, 5th series, vol. 417, col. 718.