Memorandum by the Acting Secretary of State to President Truman
The Brazilian lend-lease program was carried out under an agreement35 for the payment to us by Brazil of 35 percent of the cost of the material furnished. When lend-lease deliveries were discontinued on [Page 445] V–J Day, there was in inventory or procurement in this country for Brazil about $2,000,000 worth of materials, roughly half of which was industrial equipment and half air force and ordnance supplies, including three large coastal defense gun-carriages. The gun-carriages were, and are, uncompleted, and their completion would cost about $600,000.
The Department of State proposes to offer these materials to Brazil, as a bulk transfer and in their present condition, on the terms of the original agreement, i.e., at 35 percent of cost. I am satisfied that this is a reasonable overall figure and that the offer is consistent with the good relations with respect to military programs now existing between the Governments.
There is good reason to believe that the proposed pipeline transfer and settlement on this basis will be acceptable to Brazil if we can arrange for the subsequent completion of the gun-carriages by the War Department, the entire cost of such completion to be defrayed by Brazil in cash. If such a completion cannot be arranged, I anticipate on the one hand that Brazil would not be willing to pay 35 percent for the uncompleted carriages, and on the other hand that we could not see our way clear to eliminate the gun-carriages from the sale and accept 35 percent for the remainder of the materials which are commercially more saleable.
Your specific approval of the proposed transfer and settlement is requested for two reasons: First, because the transfer might otherwise appear to violate your directive to the Joint Chiefs of Staff of September 5, 1945 concerning the termination of lend-lease deliveries;36 second, because the proposed completion of the gun-carriages by the War Department may most appropriately be accomplished under the Act of June 15, 1940 (H.J. Res. 367, 54 Stat. 396), which authorizes sales of military equipment of this nature to the other American republics only upon Presidential approval.37