Memorandum by Mr. George E. Truesdell of the Division of Lend-Lease and Surplus War Property Affairs

Last July Congress appropriated funds for the liquidation of the lend-lease “pipeline” agreements. In the Appropriation Act, however, a provision was inserted prohibiting the use of any of these funds for any expense incident to the shipment abroad of any commodities after December 31, 1946. As of the latter date, transfers under lend-lease “pipeline” agreements to about a dozen countries had aggregated slightly over a billion dollars, of which about $233 millions had gone to the U.S.S.R. There remains to be transferred to the foreign governments about $25 millions worth of material. Approximately $17 millions of this material is covered by the “pipeline” agreement of October 15, 1945, with the U.S.S.R.

As a result of the proviso attached to the Appropriation Act last July, the transfers have been suspended. The Department took the position that completion of the deliveries in accordance with the agreements with the other governments was very important. Congress was not in session last fall when a decision had to be reached as to future action. Therefore, a plan was evolved whereby the foreign governments were asked to deposit funds to be used for the expenses for which the appropriation, under the proviso in the Appropriation Act, could not be used. The Comptroller General, however, ruled that those deposits could not be used unless an expression of opinion was obtained from Congress indicating that such use would not violate Congressional intent.

As a consequence Mr. Clayton appeared before the House Appropriations Committee and Mr. Thorp1 appeared before the Senate Appropriations Committee to ask for such an expression of opinion or legislation if necessary. No response has been received from either [Page 668] Committee. We have now received a cable from Secretary Marshall,2 in the form attached hereto, asking that Congressional leaders be informed confidentially that his hand will be strengthened in dealing with the Soviet representatives if he is given authority to decide whether or not “pipeline” deliveries will be continued. He indicates that such action by Congress would prevent default or delay in connection with transfers to countries other than the U.S.S.R. The Secretary wishes to be free to make a decision on the Soviet “pipeline” transfers in accordance with the response of the Soviet Government to United States proposals regarding general lend-lease settlement negotiations. He will then be able to decide what action to take in connection with the Soviet transfers in the light of the Soviet Government’s response to proposals for opening lend-lease settlement negotiations.

Proposed Legislation for Pipeline Problem

The provision of Public Law 521 which has created our pipeline problem reads as follows:

defense aid—lend-lease

Liquidation: Not to exceed $5,500,000 of the funds made available by title II of the Second Deficiency Appropriation Act, 1945, and other Acts mentioned in said title for carrying out the provisions of an Act to promote the defense of the United States, approved March 11, 1941, are hereby continued available during the fiscal year 1947 for the liquidation of the activities under said Act of March 11, 1941, said sum to be derived from the amounts appropriated for the several categories for which appropriations have been made as may be determined by the Secretary of State or such official as he may designate: Provided, That the amount named herein shall not be available for any expense incident to the shipment abroad of any commodities after December 31, 1946.

Our present suggested amendment is the following:

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That Title I of an Act “Making appropriations to supply deficiencies in certain appropriations for the fiscal year ending June 30, 1946, and for prior fiscal years, to provide supplemental appropriations for the fiscal year ending June 30, 1946, to provide appropriations for the fiscal year ending June 30, 1947, and for other purposes”, in the paragraph under the heading “Defense Aid—Lend-Lease” is amended by striking out “year 1947” and inserting in lieu thereof “years 1947 and 1948” and by striking out “Provided, That the amount named herein shall not be available [Page 669] for any expense incident to the shipment abroad of any commodities after December 31, 1946”, such amendment to take effect for all purposes as of July 23, 1946.

  1. Willard L. Thorp, Assistant Secretary of State for Economic Affairs.
  2. Not printed. This telegram 978, Kosmos 11, from Moscow on March 24, 5 p. m., was in reply to the Department’s telegrams 613 and 614 of March 21, and is here fully summarized. (861.24/3–2447)