Memorandum by Mr. Joseph J. O’Connell, Jr., General Counsel Department of the Treasury, to Mr. Robert W. Maxwell, Commissioner of Accounts, Department of the Treasury

On January 10, 1947, the Chief of the Accounting and Bookkeeping Division1 of the General Accounting Office informed you by letter that he was returning unsigned certain warrants transferring payments by various foreign governments to special accounts for expenses in connection with the so-called lend-lease pipeline agreements. He stated that in his opinion Congress had intended, under Public Law 521, 79th Congress, that lend-lease shipments should stop on December 31, 1946. Thereafter, representatives of the Russian Government contended both to the State Department and the Bureau of Federal Supply that title to various lead-lease material had passed to the Russian Government on or before December 31, 1946. I determined, after careful consideration, that title to certain of such material had passed in the light of the agreement of October 15, 1945, with the Russian Government, namely, material which the Russians had been notified was available for delivery to them and as to which either of the following had happened on or before December 31: (a) the lapse of three months which, pursuant to the agreement, made title pass automatically, or (b) the issuance of letters of acceptance or shipping [Page 657] instructions by the Russians. Together with Mr. Chester Lane of the State Department and Mr. Clifton E. Mack of the Bureau of Federal Supply, I called upon the Comptroller General2 and informed him of this determination, and subsequently Mr. McFarland3 of that office telephoned me and said that the Comptroller General would interpose no objection provided that no appropriated funds were expended. This required further clarification since it would be necessary to incur some expense in connection with loading goods from warehouses, including Army depots, and also in connection with the issuance of shipping instructions by the Bureau of Federal Supply, and other administrative expenses such as documentation, audit, etc. On January 31, 1947, I had another telephone conversation with Mr. McFarland and obtained the assurance that expenditures of this kind were not included in the class deemed objectionable by the Comptroller General. Mr. McFarland said he understood that the Bureau of Federal Supply would reimburse the War Department for loading expenses, and in turn bill the Russian Government. I am informed that in accordance with this opinion the Bureau of Federal Supply is releasing to the Russians all material covered by the pipeline agreements to which title passed on or before December 31.4

Joseph J. O’Connell, Jr.
  1. J. Darlington Denit.
  2. Lindsay C. Warren.
  3. John C. McFarland, General Counsel, General Accounting Office.
  4. In his memorandum of December 5, reviewing the facts surrounding the export of Lend-Lease material to the Soviet Union early in 1947, Mr. Cardozo wrote in part: “The decision to permit the Soviet Government after December 31, 1946, to take custody of those items in the pipeline which were covered by paragraph B of Schedule II of the Agreement of October 15, 1945, was based entirely on legal conclusions.… Despite the conclusion by the members of the legal division of OFLC [Office of the Foreign Liquidation Commissioner] in the State Department and by members of the General Counsel’s staff in the Treasury Department, and members of the staff of the Chief Counsel of the Bureau of Federal Supply, that, under the circumstances then existing, the Russian position was justified, action on their contention was taken only after prior explicit clearance with the Comptroller General and his General Counsel.… The fact that these deliveries to Soviet custody were still taking place was also communicated to members of Congress and committee staffs from time to time.” (861.24/12–547)