Lot 60–D 137: Box 1

Memorandum of a Meeting of the Secretary of the Treasury (Vinson) and the Assistant Secretary of State for Economic Affairs (Clayton) With a Sub-Committee of the House Committee on Appropriations

Secretary Vinson made a statement giving the reasons for presenting the problem of “Plan A” to the Committee. He said that various statements had been made to the Committee on Appropriations by Government officials to the effect that the North West European countries had promised to pay for the civilian supplies furnished by the military after D–Day. These statements to the Committee were made principally by General Hilldring and Dean Acheson after the Congress had voted appropriations to the Army for the procurement of the civilian supplies. The supplies were given on the basis of military necessity and were limited to the “disease and unrest” formula. The agreements by the North West European countries to pay had been made when their governments were still in exile but the supplies would have been furnished by the military forces even though the promise to pay had not been given. Furthermore, these were the same kind of supplies that were later transferred to the North West European countries under lend-lease arrangements and the same kind of civilian supplies that were given throughout the war to England and Russia. On D–Day there were no lend-lease agreements which would have permitted the transfer of the supplies under lend-lease. He pointed out that the problem that was now facing us was the over-all lend-lease settlement with the French. In these discussions we were concerned with helping France particularly at this time and the facts were that if we insisted on payment by the French we would in effect be forced to increase the aid we were giving to France in the form of loans or other assistance.

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Secretary Vinson then posed the choice that was before the government. He said that we could “forgive” the obligation of the French to pay for Plan A or we could ask the French to fund the amount into long-term credits and pay over a period of perhaps 30 years. The Secretary also pointed out that the treatment we accorded to France on Plan A would also be accorded to the other North West European countries.

The Secretary then analyzed the whole of “Plan A” giving the statistics and pointing out that $370 million went to Italy and there was little possibility of collecting from Italy. Supplies also went to the Balkans and there was little possibility of those countries ever paying for their Plan A supplies. Forcing the North West European countries to pay might be interpreted therefore as discrimination against these Allies. The Secretary also pointed out that we might run into some complications in “forgiving” this obligation because we were tied up with the British and Canadians in Plan A (all three countries gave the supplies and the supplies were pooled before being transferred by the combined military headquarters to the recipient countries).

After Secretary Vinson’s statement there was considerable discussion on the part of the Congressmen with a number of questions asked. The Congressmen seriously contemplated the choice between funding and forgiving the obligations. After some discussion, great emphasis was given to the point that supplies similar to “Plan A” were going to England and Russia at the same time on straight lend-lease; that if we insisted on payments from France, Belgium and Holland, we would be discriminating against them in favor of the big lend-lease countries. One argument which impressed the Congressmen was the fact that France had received only $150 million straight lend-lease of civilian supplies whereas she had given to the U.S. about $800 million in reverse lend-lease, note being taken at the same time of the $2,200 million of military lend-lease given to France. These figures were compared with the total lend-lease aid to England and Russia. The Committee was given all the figures as to the amounts of money that were owed to us under Plan A and the amounts owed to U.K. and Canada.

The opinion of the Congressmen was then polled and all of the Congressmen agreed that under the circumstances that the U.S. Government should be generous and that pressing the North West European countries for payment would not be fair to them. They were unanimously of the opinion that the proposal of the government was desirable.

Mr. Clayton then told the Committee about the proposal to advance to Italy the dollar equivalent of the lire expenditures of our [Page 912]troops in Italy for the procurement of supplies and services. He explained the general background of the need of Italy for dollars and in view of the restricted funds now available in the Export-Import Bank it was very important that in addition to any small amount we might have available for loans that we proceed with a program to provide them with dollars to which they may be deemed entitled, and to be used for the purchase of essential supplies in this country.

The members of the Committee discussed the political aspects of making these dollars available to Italy. They put great emphasis upon the fact that Italy was an enemy of the U.S., that they fought our troops and a large number of Americans were killed by Italians. They recognized that Italy needed aid and they called attention to the $375 million of Plan A supplies which went to Italy. (Some Congressmen expressed the view that the request for $1,250 million for the Export-Import Bank was too modest.) They also called attention to a large amount of UNRRA aid that would go to Italy in which the U.S. was the chief contributor. They thought that these large sums were an adequate expression of America’s attitude towards Italy. They said they understood the need to help Italy but they suggested instead of making a “gift” of dollars to Italy that we lend them money for which they would be under the obligation to repay. The Congressmen said they did not think that the cost of occupation was in the same category. They asked whether England and Canada and other Allies with military forces in Italy were going to give dollars for occupation costs and they were told that they probably would not follow the U.S. Questions were raised as to the comparability of supplies purchased by the U. S. Army with the reciprocal aid given to us by the allied countries for lend-lease agreements.

There was a poll taken among the Congressmen and it was generally agreed that in their opinion we should not voluntarily offer to pay her for occupation costs but find other ways in which to assist Italy.