[Second Report Under the Act of March 11, 1941 (Lend-Lease Act)]
[From the U.S. Government Publishing Office, www.gpo.gov]
SECOND REPORT
UNDER
THE ACT OF MARCH 11, 1941 (Lend-Lease Act)
LETTER OF TRANSMITTAL
The President of the Senate.
The Speaker of the House of Representatives.
I am submitting this report pursuant to Section 5 (b) of the Lend-Lease Act of March 11, 1941, which provides that the President report to the Congress every 90 days on the operations under that act.
The Lend-Lease Act was passed by the Congress just 183 days ago. One hundred and sixty-seven days ago, the Congress appropriated 7 billion dollars to carry out our national policy of giving every possible material assistance to the countries resisting aggression.
The effective expenditure of this large sum in furtherance of our announced policy has presented tasks of large proportions. We have surveyed the needs of the countries we are aiding. We have correlated this program of aid with the procurement programs of our own Army and Navy. We have arranged with our industries for the production of the great quantities of material involved.
The War Department, the Navy Department, the Treasury Department, the Agriculture Department, and the Maritime Commission are the agencies principally charged with the actual procurement of the supplies. They are now far along with their task.
Over 6% of the 7 billion dollars appropriated have now been allocated, upon the recommendation of these agencies, for specific materials and services. Their procurement machinery has been constantly at work, locating producers and placing contracts. Over 3^ billion dollars of legal commitments have already been made. Contracts will soon be placed for the entire 7 billion dollar appropriation.
Contracts have been placed and work has started on nearly a billion dollars of bombardment aircraft. New ways have been started and work is in progress for about one-half a billion dollars of new merchant shipping. New facilities to speed the production of guns, ammunition, and other defense articles have been started under contracts totaling about $262,000,000. Over $430,000,000 has been allocated, and over $250,000,000 has been obligated, for the purchase of milk, eggs, and other agricultural products.
Daily the aid being rendered is growing. Through the month of August the total dollar value of defense articles transferred and defense services rendered, plus expenditures for other lend-lease purposes, amounted to $486,721,838.
412628—41----1 (I)
II
Food and steel and machinery and guns and planes have been supplied in increasing quantities. Agricultural commodities worth $110,606,550 have been transferred to the countries we are aiding. We have transferred to the United Kingdom more than 44 million pounds of cheese, more than 54 million pounds of eggs, more than 89 million pounds of cured pork, more than 110 million pounds of dried beans, and more than 114 million pounds of lard. We have transferred to them more than 3 million barrels of gasoline and oil. We have sent them many tanks. Merchant and naval ships and other transportation equipment are being transferred in growing amounts.
A substantial number of cargo ships and tankers have been chartered to the use of those countries whose defense is vital to our own. Our yards are repairing allied merchant ships. We are equipping allied ships to protect them from mines; and we are arming them, as much as possible, against aircraft, submarines, and raiders.
We have also, by repairing and outfitting their warships, helped the British and allied navies keep clear the vital sea lanes upon which depends continued resistance to Axis piracy. The repair of the battleship Malaya and the aircraft carrier Illustrious are outstanding examples of this naval assistance.
Over the whole range of technical and material assistance required by modem warfare, we are, under the lend-lease program, rendering effective help. Important defense information is being supplied to Britain and the other nations fighting the Axis powers. Our technicians are instructing the Allies in the assembly, operation, and maintenance of the tools coming from our factories. Across the United States and across Africa, our plane ferry service is linking the arsenals of America with democracy’s outposts in the Middle East. On our airfields, thousands of British pilots are being, and will continue to be, trained, and already we are preparing a similar program to help the Chinese.
We have supplied equipment for the Yunnan-Burma Railroad and for the Burma Road in order to speed the flow of arms and materials to the heroic Chinese people. In addition to materials of war, we are furnishing China with medicine and technical assistance to fight the ravages of malaria. A military mission has also been dispatched to China in connection with the supplying of lend-lease aid.
The 7 billion dollars appropriated for purchasing defense articles has been available less than 6 months, and actual transfers from these funds have necessarily been limited to articles which could be purchased in a finished state or produced in that time. The speed with which future lend-lease transfers will be made depends largely on the speed with which our industries deliver the goods. The rate of our production must be accelerated, and every step to achieve that end must and will be taken.
Ill
These lend-lease deliveries are not, of course, the only materials which have been moving from our shores to the countries resisting aggression. Prior to the Lend-Lease Act, large contracts were placed here by Great Britain and by other countries from their own resources. Deliveries under these contracts are moving across the sea along with lend-lease articles. The true measure of the volume of war supplies moving from our shores is reflected in our total exports. Thus, since the beginning of the war, about $4,400,000,000 worth of goods have been exported to the British Empire.
Figures alone cannot show the significance of our help. Americans may be justly proud of the way in which the tools they have forged are standing up when tested under fire. An American-made flyingboat spotted the Bismarck and American-made bombers blasted the Scharnhorst and the Gneis enau, and they have helped make possible the great raids of the R. A. F. in the Battle of Germany. In the wars; of the Western Desert, fighter planes from our factories are in the vanguard of the attack and hundreds of our tanks stand ready to help rout the Nazi scourge from the African continent.
The British Empire has received the bulk of our aid. But we have also extended assistance to the many other countries engaged in the same struggle. China and the Dutch East Indies are receiving ever increasing quantities of supplies. The exiled governments of the countries under the Nazi yoke are sharing in the program. We are already outfitting Polish troops who are training in Canada for action overseas. We are also providing, directly or indirectly, aid for the Dutch, the Norwegians, the Greeks, the Belgians, and the Yugoslavs. We know that every group which yields to or collaborates with the Nazis makes our own defense that much more difficult. Likewise each group that resists Nazi aggression helps to keep the war from our own hemisphere.
The defense of the Western Hemisphere has been a prime consideration in our lend-lease program. Not only are we helping the European countries which stand athwart the Nazi path toward the Western Hemisphere, but we are also giving direct lend-lease aid to the countries of this hemisphere. We are strengthening Iceland, where our troops and ships now stand guard over the approaches of the North Atlantic, and we have already embarked upon a comprehensive program of material aid to the countries of Central and South, America to strengthen the common defense of our good ne ghborhood.
The gallant resistance of the Russian people has been of enormous help to all peoples resisting the Nazi war machine. It has completely upset the Nazi time schedule and has destroyed the myth of Nazi invincibility. We are using the energies of our Government to make available supplies which are urgently needed by Russia. By speeding deliveries and by arranging the quickest transportation of American
IV
materials, we are moving to strengthen the important Russian front. The Soviet Government’s purchases here are being made with its own funds through its regular purchasing agency.
The people of the United States know that we cannot live in a world dominated by Hitlerism. They realize that there can be no real peace, no secure freedom until we have destroyed the evil forces which seek to work us woe. Through their chosen representatives, they have declared a firm and unalterable policy to build up an impregnable defense for this hemisphere, and to furnish unstinted material aid to the countries fighting against Nazi aggression and tyranny.
We are not furnishing this aid as an act of charity or sympathy, but as a means of defending America. We offer it because we know that piecemeal resistance to aggression is doomed to failure; because the ruthless war machine which now bestrides the continent of Europe can be combatted only by the combined efforts of all free peoples and at all strategic points where the aggressor may strike.
The lend-lease program is no mere side issue to our program of arming for defense. It is an integral part, a keystone, in our great national effort to preserve our national security for generations to come, by crushing the disturbers of our peace.
To those peoples who are gallantly shedding their blood in the front lines of this struggle, we must offer not only a shield but a sword, not merely the means to permit the stalemate of protracted defense, but the tools of a final and total victory.
This country has evolved the greatest and most efficient industrial system in history. It is our task to turn the workshops of our industry into mighty forges of war—to outbuild the aggressors in every category of modern arms. Only in this way can we build the arsenal of democracy.
On this task we are now engaged with ever increasing vigor. Planes, tanks, guns, and ships have begun to flow from our factories and yards, and the flow will accelerate from day to day, until the stream becomes a river, and the river a torrent, engulfing this totalitarian tyranny which seeks to dominate the world.
Franklin D. Roosevelt.
The White House,
September 11, 19^1.
SECOND REPORT
UNDER
THE ACT OF MARCH 11, 1941
(LEND-LEASE ACT)
(V)
CONTENTS
Page
Chapter I. The Measure of Aid_____________________________________ 1
Chapter II. General Summary of Lend-Lease Operations______________ 3
Chapter III. Lend-Lease Operations____________________________________ 7
1. Procurement Procedures________________________________________ 7
2. Allocations, Obligations, and Expenditures__________________1 9
3. Transfers____________________________________________________ 15
4. Exports_________________________________j___________________ 17
Chapter IV. Distribution of Lend-Lease Materials Abroad___________ 18
Chapter V. Scope of Lend-Lease Aid Rendered_______________________ 21
1. British Food Program__________________________________________ 21
2. Shipping-Activities_■__________________________________________ 22
3. Variety of Aid Made Available__________________________________ 23
4. China.______________________________________________________ 23
5. Governments in Exile___________________________________________ 24
- 6. Belgium_________________________________________________________ 25
7. The Netherlands_______________________________________________ 25
8. The American Republics_________________________________________ 25
9. Foreign Representation_________________________________________ 26
Appendix I. Memorandum on Distribution of Lend-Lease Materials
Abroad_____________________________________________________________ 29
Appendix II. Methods Evolved to Expedite Defense Aid_______________ 31
(vn)
Chapter I
THE MEASURE OF AID
This is the second 90-day report to the Congress on operations under the Lend-Lease Act. It describes the position of lend-lease with respect to exports of defense aid rendered ; it gives a general summary of lend-lease operations as well as an account of defense aid received by various countries for our defense; further, it describes the scope of lend-lease aid rendered.
Prior to the passage of the Lend-Lease Act, the British and other foreign governments had placed contracts with American suppliers for the production of planes, tanks, guns, machine tools, and other defense articles. Large sums of money were expended for the expansion of existing facilities and for the creation of new plants. By January 1941 over 3 billion dollars of British contracts alone had been placed in the United States. These foreign orders strengthened our own defense by increasing our productive armament capacity.
The process of elimination of European countries on a “one by one” basis created a danger which the United States could not afford to ignore. As the threat of aggression pressed ever closer to our security, experience demonstrated that only through the united efforts and united resources of the remaining free nations of the world could our own freedom be preserved. By the passage of the Lend-Lease Act on March 11, 1941, this country proclaimed its intention to supply defense articles to any nation which, in using them, could contribute effectively to the defense of the United States.
Present operations under the Lend-Lease Act cannot alone give a true picture of the part being played by the United States in strengthening resistance to aggression wherever it is found. Today, the true measure of the aid rendered by American shops and farms to the countries resisting aggression is represented by the combination of aid under the Lend-Lease Act and of materials delivered pursuant to contracts placed by the governments of the countries from their own resources. The following charts are illustrative of this aid:
(1).
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2
UNITED STATES EXPORTS*
TO THE BRITISH EMPIRE AND EGYPT
Chapter II
GENERAL SUMMARY OF LEND-LEASE OPERATIONS
Much, progress has been made in implementing the objectives of the Lend-Lease Act since March 11, 1941. As of August 31, 5,373 requests for defense articles and services had been received by the Division of Defense Aid Reports from 12 different countries.
Tables showing requisitions received, by countries, and distribution of requisitions received, by cognizant United States agencies, follow:
/
Requisitions received through Aug. 31, 1941
Requisitions received
Country Lend- Cash reim- Total
Lease bursement
Belgium____________ ___________________________________________ 18 18
Brazil___________________________________________________________ 46 10 56
Chile___________________________________________________________ 22 22
China___________________________________________________________ 320 320
Colombia______________________________________________________ 1 1
Cuba__________________________________________________________ 49 49
Dominican Republic_______________________________________-___ 41 27 68
Greece__________________________________________________________ 16 16
Netherlands____________________________________________________ 7 29 36
Norway________________________________________________________ 7 1 [8
Poland_______________________ ______ ____________________ 32 32
United Kingdom_______________________________________________ 4,736 11 4,747
Total_____________________________________________________ 6,295 78 5,373
Distribution of requisitions by cognizant United States agencies
Country War Treas- Maritime Navy Joint Agri- Other1 Total
ury Commis- Aircraft culture
sion Com-
mittee
Belgium_________________________ 18 18
Brazil___________________________ 65 1 56
Chile____________________________ 22 22
China___________ _______________ 159 134 17 8 2 320
Colombia_______________________ 1 1
Cuba___________________________ 33 11 5 49
Dominican Republic____________ 39 29 68
Greece___________________._____ 7 2 7 16
Netherlands_____________________ 29 6 1 36
Norway_________________________ 4 3 1 8
Poland__________________________ 32 32
United Kingdom................ 2,634 891 448 374 213 158 29 4,747
Total..........____________ 3,032 1,025 467 425 227 158 39 6,373
¹ Includes.requisitions cancelled and held.
(3)
4
All requests for lend-lease aid are carefully scrutinized and checked by the Division of Defense Aid Reports, by the Bureau of the Budget, and by the staff of the procuring agency concerned, i. e., either the Army, Navy, Maritime Commission, Department of Agriculture, or Treasury Procurement Division. All items not essential to the successful prosecution of the war effort are eliminated. The governments receiving lend-lease aid have been scrupulous to limit their requests to vital needs. No requests for such items as living or administrative expenses of any foreign purchasing commission or agency have been made.
Total allocations under the Lend-Lease Act which amounted to $4,277,412,879 as of May 31, had increased to $6,281,237,421 by August 31, or from 61 percent to 90 percent oi the available appropriation. Thus, 90 percent of the appropriation has been allocated on the basis of specific requisitions and has passed from the stage of planning into active procurement operations Within 6 weeks no funds should remain to meet requests which already total much in excess of unallocated balances.
Obligations as of August 31 totaled $3,555,587,895, or three and one-half times the May 31 figure of $995,015,322. Furthermore, whereas on May 31 obligations were only 23 percent of allocations, on August 31, 57 percent of allocations had been obligated.
Exports of defense articles provided under lend-lease during the 3 months ended August 31, 1941, totaled eight times such exports in the period between March 11 and May 31, 1941, indicating the steadily accelerating pace of defense aid.
Total defense articles exported under the act during the period from March 11 through August 31, 1941, were valued at $190,447,670, of which 89 percent were exported in the 90 days ended August 31. During the period from March 11 to June 1, 1941, exports amounted to only 29 percent of transfers made. During the period of June 1 through August 31, 1941, however, exports were 98 percent of transfers made. This demonstrates the fact that lend-lease goods are now being transported and absorbed by shipping very nearly as rapidly as they are being made available.
A graphic presentation of progress under the Lend-Lease Act and of the relationship of exports to transfers is given in the pages following.
5
CHART OF PROGRESS
UNOER AN ACT TO PROMOTE THE DEFENSE OF THE UNITED STATES
6
TRANSFERS AND EXPORTS UNDER LEND-LEASE ACT
Chapter III
LEND-LEASE OPERATIONS
1. PROCUREMENT PROCEDURES
The administration of the Lend-Lease Act and its related activities is the duty of the Division of Defense Aid Reports in the Office for Emergency Management of the Executive Office of the President. Through this office flow the.actual requisitions for defense-articles, the recommendations of the various operating departments, as well as the control records of all allocations, transfers, contracts, and shipments.
If a requisition is approved and an allocation of funds is made by the President, procurement is undertaken by the department concerned in accordance with its normal procurement procedure. The necessary priorities to insure prompt delivery are arranged through the procuring agency. Additions to facilities, if necessary, are worked out with the appropriate authorities, and the transportation of the finished goods is planned with the assistance of transportation specialists in various fields. Official action on such requisitions can only be taken if, on the one hand, a formal request has been made by the properly accredited representative of the foreign government, and, on the other, a formal recommendation with respect to this request has been submitted by the United States Government agency best qualified to deal with the particular item.
In addition to the foregoing, a foreign country in the lend-lease area may file a requisition with the Division of Defense Aid Reports for the purchase of a specific item on a “cash reimbursement” basis. This system of purchasing provides for the procurement of an item in precisely the same way as that used for other lend-lease operations, with the exception that the foreign government deposits cash with the United States Treasury against the value of the goods to be purchased.
The use of the lend-lease mechanism for the making of such purchases is beneficial to the United States defense program because, under such a system, foreign orders, even though paid for in advance, become United States Government contracts under the supervision and control of United States Government agencies. This obviates the need for separate foreign priority ratings as well as limiting the chances for conflicting production, exorbitant prices, and the misuse of raw materials, labor, and plant facilities.
(7)
8
During the 3 months ended August 31, 1941, there occurred the first so-called “cash reimbursement” transactions under the Lend-Lease Act. A total of $4,206,440 was deposited with the United States Treasury during the period by four countries to cover purchases of defense articles procured for them by United States Government agencies. These deposits were distributed by countries and by procuring United States Government departments as follows:
Country Cognizant department Total
War Navy
Brazil____________--- ------------------------------- $1,170,000.00
Canada__________________i--------------------------- $1,170,000.00 $597,900.00 597,900.00
Dominican Republic_________________________________--- 1,660,090.65 126,766.22 126,766.22
The Netherlands________________________________________ 651,684.00. 2,311,774.65
Total--------------------------------------------- 2,830,090.65 1,376,350.22 4,206,440.87
Besides these two procurement operations under the provisions of the Lend-Lease Act, the Division of Defense Aid Reports has assisted foreign governments in the lend-lease area in making direct cash contracts with American suppliers for the purchase of defense articles. Certain countries, such as the Netherlands East Indies and China, have continued to place cash orders in the United States.
In order that such direct cash operations may be made more effective, foreign governments file a Purchase Negotiation Report for the purpose of securing an allocation of production capacity, adequate priority ratings, and information as to sources of supply. The Division of Defense Aid Reports clears all Purchase Negotiation Reports with the Office of Production Management which, in turn, coordinates the views of the War and Navy Departments with its own, so that a composite recommendation may be made to the foreign government requesting such help.
During the period since March 11th close to 1,200 Purchase Negotiation Reports were received by the Division of Defense Aid Reports. Of these, around two-thirds were filed on behalf of The Netherlands, around 10 percent on behalf of China, and the remainder by other countries.
In connection with the foregoing, it should be pointed out that in some instances Purchase Negotiation Reports are filed by such countries as the United Kingdom and China where the particular items involved may not be “lend-leasable” or where as an administrative matter a direct cash transaction is desirable.
9
2. ALLOCATIONS, OBLIGATIONS, AND EXPENDITURES
Allocations of defense-aid funds are made on the basis of recommendations from the cognizant United States Government agencies. The agencies are then empowered to obligate the money so provided for the procurement contemplated by the related requisitions. The Defense Aid Supplemental Appropriation Act, 1941, made $7,000,-000,000 available for lend-lease purposes.¹ Of this amount, $6,281,237,421, or approximately 90 percent, had been allocated and $3,555,587,895 obligated by August 31, 1941. On May 31 expenditures totaled $68,078,942 and increased to $388,912,155 on August 31.²
Total allocations, obligations, and expenditures at August 31 by individual agencies and by appropriation categories are shown in the tables below:
Allocations, obligations, and expenditures under the Defense Aid Supplemental Appropriation Act, 1941, by departments, as of Aug. SI, 1941
Department or agency Allocations Obligations Expenditures
War Department ________________________________ $3,741,418,274 $2,247,892,241.87 $45,210,506.45
Navy Department_______________________________ 1,105,743,081 318,568,905.12 34,541,071.31
Maritime Commission _____________________ 651,864,023 617,149,075.43 183,931,680.65
Treasury Department -_____I______________________ 348,495,118 120,453,401.55 14, 568,804.21
Department of Agriculture ______________________ 433,411,925 251,442,610.43 110,609,049.89
Federal Security Agency 140,000
Department of State - ______________________ 15,000
Executive Office of the President_________________ 25,000 5,480.89 5,270.89
Office for Emergency Management_______________ 100,000 73,557.36 43,108.90
Bureau of the Budget_____________________________ 25,000 2,622.75 2,622.75
Total......... --- 6,281,237,421 3,555,587,895.40 388,912,115.05
Allocations, obligations, and expenditures under the Defense Aid Supplemental Appropriation Act, 1941, by appropriation categories, as of Aug. 31, 1941
Appropriation category Allocations Obligations Expenditures
Ordnance and ordnance stores____________________ $1,422,145,460 $584,476,115.46 $16,663,550.79
Aircraft and aeronautical material________________ 2,027,398,269 1,347,140,839.54 19,297,791.66
Tanks and other vehicles_________________________ 394,032,238 222,247,262.50 9,252,525.81
Vessels and other watercraft_____________________ 699,496,490 588,277,440.71 109,617,971.87
Miscellaneous military equipment________________ 112,741,205 55,862,860.69 6,290,855.73
Facilities and equipment.-------------------- 501,913,530 262,160,386.01 41,202,695.68
Agricultural, industrial, and other commodities... 975,008,578 428,471,283.00 152,476,446.07
Testing, reconditioning, etc., of defense articles____ 130,092,571 65,163,231.89 32,672,182.33
Services and expenses_____________________________ 13,350,506 1,463,123.44 1,231,670.37
Administrative expenses....______________________ 5,058,574 325,352.16 206,424.74
Total________________________________________ 6,281,237,421 3, 555,587,895.40 388,912,115.05
¹ Of this amount, $13,000,000 was used to reimburse the Treasury Department for Coast Guard vessels transferred to the United Kingdom, leaving $6,987,000,000 available for allocation.
J Expenditures represent that part of obligated funds to which a claim has been established by a supplier on the basis of articles or services either completed or in process.
412628—41---------3
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The significance of these allocations and obligations can best be illustrated by an analysis of the variety and types of defense articles to which they relate. For example, a billion and a quarter dollars has been allocated for bombers; over a half billion for ammunition; over a half billion for merchant shipping; over $350,000,000 for food; and over $200,000,000 for tanks and combat vehicles. About $440,-000,000 has been allocated for the development of facilities for the production and distribution of defense articles, which will be a permanent addition to our defense plant.
Almost a billion has already been obligated for the production of bombers; almost a half billion for merchant shipping; over a quarter billion for ammunition; and over $125,000,000 for tanks.
The following table shows how lend-lease funds have been allocated and obligated for various types of equipment, commodities, and services.
Allocations, obligations, and expenditures under the Defense Aid Supplemental Appropriation Act, 1941, by appropriation categories and purpose classifications, as of Aug. 31, 1941
Appropriation category and purpose classification Allocations Obligations Expenditures
Ordnance and stores:
Ammunition:
Small-arms ammunition__________________ $113,349,476.00 $69,542, 589.48 $610.36
Artillery ammunition_____________________ 439,331,951.00 181,394,905.43 5,407,006.58
Aircraft bombs and pyrotechnics_________ 20,161,560.00 4,673,942.77 836,722.80
Torpedoes ______________________ 7,000,000.00
Explosives, propellent powders, and mis- 19,944,430.00
cellaneous ammunition_________________ 4,032,195.68 810,244.46
Subtotal_____________________________ 599,787,417.00 259,643,633.36 7,054,584.20
Ordnance material:
Small arms and infantry weapons_________ 121,888,772.00 36,019,754.92 1,958,552.83
Artillery material- ______________________ 90,623,426.00 52,396,396.03 90,789.67
Antiaircraft material___________________ 357,480. 500.00 112,442,242.21 4,278,514.00
Aircraft armament _________________- 132,525,250.00 87,149,657.93 1,126,033.83
Miscellaneous fire control 32,062, 554.00 2,590,241.73
Waval mins 15,208,850.00 30,000,000.00
Torpedo equipment 2,932,000.00 286,300.00
Mine equipment__________________________ 4,506,000.00 3,896,628.25 719,491.81
Miscellaneous ordnance and ordnance
stores - - _______________ 1,170,766.00
Subtotal ____________________________ 758,398,118.00 324,781,221.07 8,173,382.14
Armor f naval) 15,000,000.00
Stock fund and shop expense---Army (net! 51,261.03 11,240.59
General procurement expense 6,831,000.00
Working fund for emergency purchases 400,000.00
TT nd i stributed 41,728,925.00 1,424,343.86
Total __________________________________ 1,422,145,460.00 584,476,115.46 16,663,550.79
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Allocations, obligations, and expenditures under the Defense Aid Supplemental Appropriation Act, 1941, by appropriation categories and purpose classifications, as of Aug. 31, 1941—Continued
Appropriation category and purpose classification Allocations Obligations Expenditures
Aircraft and aeronautical material:
Aircraft:
Bombardment___________________________ $1,286,175,700.00 $913,878,518.12
Pursuit, interceptor and fighter___________ 241,672,000.00 174,708,990.06 $3,995,034.94
Observation _ ___________________________ 19,823,000.00 26,314,548.00 6,948.12
Transport, utility, and other______________ 50,147,000.00 48,896,797.46 2,548,934.36
Training_____________________-____________ 112,147,070.00 71,044,250.28 209,103.12
Subtotal____________________________ 1,709,964,770.00 1,234,843,103.92 6, 760,020.54
Aircraft---Engines, spare parts and accessories:
Spare engines and engine parts____________ 98,828,346.00 55,096,411.06 302,634.79
Spare propellers and spare propeller parts--- 47,000,000.00 30,074,172.09 1,210,756.96
Accessories and other parts.______________ 11,170,191.00 5,591,602.38 1,352,755.63
Subtotal_________________■______________ 156,998,537.00 90,762,185.53 2,866,147.38
General aeronautical supplies and equipment.
Construction for storage of materials, etc._____ 24,177,000.00 15,447,233.34 446,371.61
Modernization and reconditioning of com- 14,583,500.00 3,080,775.43 272.90
pleted aircraft _____________________________ 25,000,000.00 3,007,541.32 96,406.43
General procurement expense_________________
Undistributed_______________________________ 96,674,462.00 9,128,572.80
Total______________________________________
2,027,398,269.00 1,347,140,839.54 19, 297, 791.66
Tanks and other vehicles:
Ordnance vehicles:
Tanks ____.______-_______;______________
Other ordnance combat vehicles (except
tanks) ________________________________
Ordnance tractors and special vehicles____
Miscellaneous ordnance automotive sup- 182,173,000.00 128,783,277.00
plies, spare parts, Components, acces- 18,215,000.00 13,885,600.00
sories, etc. (for ordnance combat and 6,405,400.00 1,422.31
noncombat vehicles)______---____________ 50,371,064.00 18,549,604.22 2,344,753.40
Subtotal ____________________________ 257,164,464.00 161,219,903.53 2,344,753.40
Other than ordnance vehicles:
Trucks __________________________________
Automobiles______________________.____________ 50,471,694.52 4,624,916.38
Other automotive vehicles------_______ 554,918. 27 491,559.80
Miscellaneous automotive supplies, spare 5,475,562.44 369,555.73
parts, components, accessories, etc. (for 81,663,625.00 4,525,183.74
other than ordnance vehicles)__________..... 865,499.00
Storage---Handling and packing of defense 7,583,150.00
articles_________________________________i_____ 15,469,913.00
Subtotal__________________________________ 182,592.00
105,764,779. 00 61,027,358.97 5,486,031.91
General procurement expense_________________ 2,277,000.00
Undistributed_______________________________ 28,825,995.00 1,421,740. 50
Total_____________________ _________________
394,032,238.00 222,247,262. 50 9,252,525.81
; ---------
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Allocations, obligations, and expenditures under the Defense Aid Supplemental Appropriation Act, 1941, by appropriation categories and purpose classifications, as of Aug. 31, 19^1—Continued
Appropriationi;ategory and purpose classification Allocations Obligations Expenditures
Vessels and equipment for vessels: $14.854,000.00 $557.01 $557.01
Watercraft: 92,642,000.00 31,440,244.94 863,027.62
Combatant_______________________________ 508,422,800.00 493,913,344. 54 69,211,833.54
Naval auxiliary and small craft___________
Merchant_________________________________ 615,918,800.00 525,354,146.49 70,075,418.17
Subtotal_______________________:________
Equipage__ ______________________________ 47,457,690.00 28,134, 594.22 4,753,853.70
Rental charter of vessels______________________ 35, 711,500.00 34,788,700.00 34,788,700.00
Working fund for emergency purchases_______ 400,000.00
Undistributed________________________________ 8,500.00
Total ______________________________________
699,496,490.00 588,277,440.71 109,617,971.87
Miscellaneous military equipment, supplies and
materials, quartermaster equipment, supplies,
and materials:
Clothing______________________________________ 1,509,193.00
Equipage___________________________________ 4,701,579.00 630,389.88 3,014.49
Kitchen, mess, and field baking equipment--- 557,335.00 3,769,253.57 1,137,523.80
Tractor cranes_______________________________ 1,158,637.00 451,997.60 4,110.50
Fuel .. ____________________________________ 5,012,700.00 25,034.43 25.034.43
Provisions____________________________________ 570,000.00 1,616.68 1,616.68
Storage---Handling and packing of defense 459,809.00 2,730.79 2,730.79
articles _____________________________________ 10,544,670.00 3, 390, 595.96 54,990.32
Miscellaneous quartermaster supplies_________ 24,513,923.00 8, 271,618.91 1,229,021.01
Subtotal____________________________________
Medical equipment, supplies and material________
Signal equipment, supplies and material__________ 830,538.00
Chemical warfare equipment, supplies and mate- 62, 894,159.00 39,996,083.14 1,912,921.65
rial ____________________________________________ 6,266,536.00 4,223,891.06 874,490.34
Engineer equipment, supplies and material_______ 8,631,201.00 3,371,267.58 300,361.95
Air Corps equipment, supplies and material__ 3, 567,664.00
Undistributed _________________________________ 6,037,184.00 1.974,060.78
Total______________________________________
112,741,205.00 55,862,860.69 6, 290, 855.73
Facilities and equipment for production:
Acquisition of land and appurtenances________ 49,194,005.79 39,531,080.74
Rental of appurtenances and facilities_________
Buildings:
On Government-owned property_________ 56,640,133.00
On other than Government-owned prop- 23,000.00
erty ____________________________________ 126,645, 729.00 114,429,952.22 ------------------
504,138.00 504,138.00
Subtotal______________________-_____________ 127,149,867.00 114,934.090. 22
Machinery and equipment including that for
transfer_____________________________________ 306,911.21
Investment in facilities not owned by agency: 65,378,757.00 38,095,518.09
Investment in facilities owned by Defense 53,294,189.00 53,294,189.00
Plant Corporation__________________________
General procurement expense
U ndistributed_______________________________. 199,427, 584.00 6,642,582.91 1,364,703. 73
Total.. ____________________________________ 501,913,530.00 262,160,386.01 41,202, 695.68
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Allocations, obligations, and expenditures under the Defense Aid Supplemental Appropriation Act, 1941, by appropriation categories and purpose classifications, as of Aug. 31, 1941—Continued
Appropriation category and purpose classification Allocations Obligations Expenditures
Agricultural, industrial, and other commodities
and articles:
Agricultural products---Foodstuffs:
Dairy products and eggs.- _ _____________ $98,373,500.00 $62,790,066.33 $33,921,408.81
Meat, fish, fowl_________________________ 121,048,300.00 66,900,300.00 26,367,807.80
Fruits, vegetables, and nuts______________ 83, 306,000.00 26,011,812.24 12,107,641.19
Grain and cereal products_________________ 10,438,500.00 7,728,312.80 4,774,2 3.12
Sugar, chocolate, and saccharine products. 263,800.00 245,800.00 180,313.44
Lard, fats, and oils_______________________ 29,150,000.00 16,164,945.47 11,784,428.32
Other foodstuffs not classified above._____ 12,795,600.00 4,213,643.96 981,775.18
Subtotal_______________________________ 355,375,700.00 184,054,880.80 90,117,587.86
Agricultural products---Other than foodstuffs:
Cotton___________________________________ 6,897,040.00
Tobacco _______________________________ 37,758,000.00 29,490,400.00 13,591,922.40
Other _________________________________ 37,427,920.00 37,427,920.00
Subtotal________________________________ 614, 595.00 150,000.00
75,800,515.00 67,068,320.00 20.488,962.40
Machinery, equipment, materials, and sup-
plies:
Machine tools. __________________________
Agricultural implements__________________
Road building equipment, materials, and
supplies _________________ 226,086.47
Electrical equipment, materials, and sup- 66,900.00 6,376.80 829,848.58
plies _______________________-______ 7,263,714.00 4,235,267.07 37^ 744.59
Fire-fighting equipment, materials, and 6,788,694.00 5,052,443.40 335,631.37
supplies________________________________ 5, 580,123.00 764,075.26 84,736.40
Railroad equipment, materials, and sup- 1,492,920.00 629,061.79 18,446.80
plies____________________________________ 16, 360,000.00 598,612.43 4,303.00
Other _________________________________ 13,085,301.10 5,151,047.57
U ndistributed____________________________ 1,678,750.00 4,958.00
Subtotal________________________________ 52, 316,402.10 16,441,842.32 1,536,797.21
Minerals:
Iron and steel_____________________________
Copper and brass________________________ 128,783,948.40 53,460,341.40 5,206,102.82
Aluminum_______________________________ 17,974,766.00 1,761,001.58 574,880.03
Zinc ____________________________________ 1,178,162.00 147, 326.10 4,823.96
Lead__________________________________ 20,907, 500.00 3,759, 728. 67 1,848,947.46
Other metals and alloys___4_______________ 936,000.00 689,011.14 170,011.14
Nonmetailic minerals __ 13,713,896.00 6,947,241.48 579,294.62
Subtotal _____________________________ 8,430, 500.00
191,924,772.40 66,764, 650. 37 8, 384,060.03
Chemicals:
Nitrates _ ____ _________ 500,000.00
Phosphates___ _________________________ 12,850,000.00 4,446,047.72 636,057.37
Other_________ ..._____________________ 13,912,041.00 6,939,583.19 667,415.58
Subtotal________________________________ 27, 262,041.00 11,385,630.91 1,303,472.95
Petroleum and coal products____________________ 6,455,673.82
Timber products ____ _________________________ 65,037,199.00 28,942, 720.02
Equipment, materials, and other charges for naval 13,937,480.00 2,993,726. 86
and military bases_____________________________ 88,790,000.00 24, 587,209.90 11,734,998.06
Civilian medical supplies_________________________ 3,954,483.00 1,221,100.50 141,120.00
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Allocations, obligations, and expenditures under the Dejense Aid Supplemental Appropriation Act, 1941, by appropriation categories and purpose classifications, as of Aug. 31, 1941—Continued
Appropriation category and purpose classification Allocations Obligations Expenditures
All other commodities and articles not otherwise
classified _____,______________________________
Training of personnel___________________________ $40, 507, 708. 50 $12,429,641.79 $261,045.02
Outfitting vessels -_____________________________ 764,820.00 11,862,627.12 11,862,627.12
Working fund for emergency purchases___________ 16,378,120.00 718,932.41 190,101.60
General procurement expense 10,000,000.00
Undistributed 10,000.00
Total_______________________________________ 32,949,337.00
975,008, 578.00 428,471,283.00 152,476,446.07
Servicing of defense articles:
Vessels-..___________________________________ 63,344,243.85 32,084, 513.24
Other defense articles_________________________ 99,052,903.00 90,000.00 43,358.16
Defense-aid stores____________________________ 20,976,468.00 1,728,988.04 544,310.93
Undistributed____________________ ___________ 10,000,000.00
Total________________ _____________________ 63.200.00
130,092,571.00 65,163,231.89 32,672,182. 33
Miscellaneous services and expenses:
Transportation and freight________________ ' _ 1,208,470.39
Miscellaneous and contingent expenses________ 3,394,700.00 253,104.95 1,028,228. 57
Survev of port facilities_______________________ 5,570,806.00 1,548.10 192,699.18
Undistributed_________________ _____________ 25,000.00 300.00
Total. _____________________________________ 4,360,000.00 10,442.62
13,350, 506.00 1,463,123.44 1,231,670. 37
Administrative expenses__________________________ 5,058, 574.00 325,352.16 206,424. 74
Grand total_________________ _______________ 6,281,237,421.00 3,555,587,895.40 388,912,115.05
As noted in the table above, during the period from March 11 through August 31, 1941, $501,913,530 was allocated for facilities and equipment, of which $61,431,593 was allocated for the procurement of machine tools needed by Britain and China.
Funds for additional facilities were distributed among the War Department, Navy Department, Treasury Department, and the Maritime Commission, and covered a total of 86 projects in this country plus tools for export. The distribution of these funds and projects among the several departments was as follows:
Department Amount Number of
allocated projects
Maritime FACILITIES IN THE UNITED STATES $50,000,000 15
Naw 97,980.000 33
War’.___________ ------------.....-------------------------------------------- 292, 501,937 38
Treasurv MACHINE TOOLS FOR EXPORT
278, 591
61,153,002
Total 501,913,530 86
15
An analysis of allocations for facilities, by agencies and subclassifications follows:
ALLOCATIONS FOR FACILITIES
War Department:
Ordnance Department_________________________$152, 330, 000
Air Corps___________________________________ _ 102, 141, 737
Chemical Warfare____________________________ 16, 677, 200
Corps of Engineers______,___________________ 6, 000, 000
Quartermaster Corps_________________________ 15, 000, 000
Machine tools_______________________________ 61, 153, 002
Transportation items________________________ 353, 000
$353, 654, 939
Navy Department:
Bureau of Ordnance__________________________ 57, 720, 000
Bureau of Ships_____________________________ 2, 685, 000
Bureau of Yards and Docks___________________ 575, 000
Bureau of Aeronautics_______________________ 37, 000, 000
97, 980, 000
Maritime Commission:
Additional ship ways___________________________ 49, 200, 000
Plant for turbines_____________________________ 800, 000
50, 000, 000
Treasury Department:
Machine tools______
278, 591
278, 591
Total
501, 913, 530
With the help of lend-lease funds, the productive capacity of this country has thus been increased tremendously. Facilities for bombs, for planes, and for ships are now being built. Shipways in nine States are now under construction and are scheduled for completion by the end of this year.
3. TRANSFERS
Defense articles transferred to foreign governments totaled $246,-394,372 at August 31, 1941, in contrast to only $75,202,426 at May 31, 1941. These figures include defense articles procured under the Defense Aid Supplemental Appropriation Act, 1941, and defense articles procured with appropriât’ons made prior to March 11, 1941. Summary of such transfers by departments and categor es is as follows:
16
Defense articles transferred under the Lend-Lease Act, by departments, as of Aug. 31, 1941
Department or agency From appropria- From Defense Total
tions made prior Aid Supplemen-
to Mar. 11, 1941 tal Appropriation
Act
War Department ___________ _____________________ $60,377,531.52 $14,024,216.07 $74.401,747. 59
Navy Department________________________________ 13,683,283.39 7,358,646.18 21,041,929. 57
Maritime Commission ________________________ 10,492,908.01 2,057,124.83 12, 550.032.84
Treasury Department____________________________ 13,256,000.00 14,538,111.41 27,794, 111. 41
Department of Agriculture________________________ 110,606,550.26 110,606,550.26
Total.___________.------------------------- 97,809,722.92 148,584,648.75 246,394,371.67
Defense articles transferred under the Lend-Lease Act, by appropriation categories, as of Aug. 31, 1941
Appropriation category From appropria- From Defense Total
tions made prior Aid Supplemen-
to Mar. 11,1941 tal Appropriation
Act
Ordnance and ordnance stores ____________-___ $41,791,789.90 $3,314,651.24 $45,106,441.14
Aircraft and aeronautical matetial________________ 3,924,025.14 4,952,704.43 8,876,729.57
Tanks and other vehicles _______________________ 16,570,807.18 7,830,785.31 24,401, 592.49
Vessels and other watercraft______________________ 31,936,636. 71 1,889,004.46 33,825,641.17
Miscellaneous militarv equipment________________ 3,531,837.81 1,157,934.51 4,689.772.32
"Facilities and equipment 318,671.56 318,671.56
Agricultural, industrial, and other commodities 128,465,806.41 128,465.806.41
Testing, reconditioning, etc., of defense articles--- 54,626.18 641,140.83 695,767.01
Services and expenses.___________________.._______ 13,950.00 13 950.00
Total_______________________________________ 97,809,722.92 148,584,648.75 246,394.371 67
To maintain an accurate record of defense articles transferred to other nations, the Division of Defense Aid Reports has established a standard procedure for all cooperating departments and agencies with respect to receipts required from foreign governments in connection with such transfers.
In addition to transfers of defense articles amounting to $246,394,-371, the aid already rendered has included completed defense services and partial transfers on defense projects totaling $78,169,377. This aid is made up of the following items:
Item Amount
(1) Testing and reconditioning of vessels and other defense articles.---1------------------ $15,211,683.89
(2) Outfitting vessels with agricultural, industrial, and other commodities-------------- 11,862,627.12
(3) Equipage, supplies, and material for vessels----------------------------------------- 4,571,368.78
(4) Rental And oh ar ter hire of vessels ____ _______________________________________ 34,788,700.00
(5) Military and naval bases _ _ _____________________-_______________________________ 11,734,998.06
78,169,377.85
17
The nature of these items is such that their true importance cannot be gained from a mere examination of their titles and value. Accordingly, a fuller description is given in Chapter V of such of these items as may be appropriately discussed, consideration being had for the necessity of withholding information of military value.
4. EXPORTS
Defense articles have been exported to the theaters of war, and to the industrial centers of the nations resisting aggression throughout the world. While 70 percent of total exports have gone to the United Kingdom, substantial assistance has also been given to the allied fighting forces in the Middle East. In summary, the value of defense articles exported to the various areas was as follows:
Exports of lend-lease cargoes, Aug. 31, 1941
United King-
Category dom, Middle Western Others Total
East, and Hemisphere
Africa
Ordnance and ordnance stores______________________ $35,498,809 $3,000 $273,712 $35,775,521
Aircraft and aeronautical material__________________ 6,016,145 1,903,098 6,016,145
Tanks and other vehicles___________________________ 26,260,631 28,163,729
Vessels and other watercraft________________________ 2,313,720 2,313,720
Miscellaneous military equipment_________________ 104,017 256,088 2,058,102 104,017
Agricultural, industrial, and other commodities____ 115, 760,348 118,074,538
Total________________________________________ 185,953,670 259,088 4,234,912 190,447,670
During the month of August 1941, 574,671 tons of lend-lease cargoes cleared United States ports for the United Kingdom and the Middle East.
Chapter IV
DISTRIBUTION OF LEND-LEASE MATERIALS ABROAD
The policy of the Division of Defense Aid Reports in regard to the use and distribution of lend-lease materials which have been delivered to a foreign country has been carefully explored.
The practical application of this policy has been the subject of friendly negotiation for several weeks with His Majesty’s Government in the United Kingdom. On September 10, 1941, a formal memorandum covering the agreement reached between our two governments was handed to our Ambassador by Mr. Anthony Eden.¹ i
This memorandum contains two basic assurances by the British. The first assurance is that lend-lease materials which might be available for reexport have been and will be used within the Empire, and then only for needs essential to the war effort. This assurance was required and freely given because it was the will of Congress and the American people that goods lend-leased to a country should be used by that country in the war effort. It has, therefore, been the policy, and His Majesty’s Government have assured us that lend-lease articles themselves have not, and will not be, reexported.
The second basic assurance contained in this memorandum is that the British will not permit exports of materials similar to those lend-leased to them, in any manner which will enable their exporters to enter new markets or to extend their trade at the expense of United States exporters. The entire British export trade is restricted to the irreducible minimum necessary to supply or obtain materials essential to the war effort. Additional restrictions are imposed upon the export of materials similar to those obtained by the British under the Lend-Lease Act where there is a shortage of such materials in the United States.
We have recognized that the United States cannot supply the British Empire through lend-lease with everything that Britain needs for its war effort. There are essential articles that the British must obtain here which do not come within the scope of the act and there are also many things which they must obtain in other countries. Payment for these necessities can only be made through the medium of British exports. Lend-lease policy, as expressed in the September
¹ The full text of the memorandum agreement is set forth in the appendix.
(18)
19
10 memorandum, recognizes this necessity, while at the same time affording the maximum protection to the interests of the United States.
Despite this policy, charges have been made, particularly in the three or four months after the passage of the act on March 11, 1941, that the British have been using lend-lease materials to compete with United States exporters in foreign markets, particularly in South America. These charges are without foundation, as a few facts will help to demonstrate.
The Defense Aid Supplemental Appropriation Act, 1941, was enacted on March 27, 1941. Requests for raw materials and articles available for re-export were not filed for some considerable time thereafter and shipments of such articles, e. g., semifinished steel, tinplate, etc., did not begin until mid-July or later. Thus it is almost impossible that lend-lease materials could have been fabricated and re-exported when these charges were made. The competition complained of was clearly competition from Britain’s own products, and occurred at a time when Britain was rapidly depleting her own capital resources in America in order to pay for her war supplies.
This competition is steadily decreasing. British exports have declined precipitately in volume since 1937. For example, United Kingdom exports of iron and steel manufactures to points outside the Empire dropped 70 percent from 1937 to 1940. Exports of machinery and cotton piece goods each dropped 60 percent in the same period. The first 6 months of 1941 showed an even more drastic decline. For this period exports of iron and steel manufactures dropped a further 51 percent from the already low level of 1940, exports of machinery dropped a further 46 percent, and exports of cotton piece goods dropped a further 55 percent. Thus in the first 6 months of 1941 the exports of these three major categories of articles were only 14.7, 21.6, and 18.2 percent, respectively, of their 1937 level.
The memorandum of September 10, 1941, also deals with another aspect of the distribution of lend-lease materials abroad as to which the Division of Defense Aid Reports has felt a responsibility.
It has been the policy of the Division that lend-lease. goods are not to be used to further any private or local interests in the countries to which they are transferred. In the great majority of cases this possibility of private gain is not present, since most types of defense articles are used or distributed directly by the government to which they are transferred. In a number of cases, however, e. g., spare parts for tractors, trucks, and machinery, etc., ordinary commercial
20
channels of distribution are used. It would be unwise and impracticable to superimpose a new system of government distribution upon existing commercial distribution systems, merely to take care of a relatively small portion of items being supplied under lend-lease.
In cases of commercial distribution, the Division requires, not only that existing commercial channels of distribution provide the most efficient and economical method of transmitting the defense materials to the persons by whom they are to be used, but also that no profiteering will be permitted and that there will be no discrimination against United States firms. Moreover, in the special case of food, free distribution is to be made through Government agencies wherever this is practicable. This policy, which has been consistently followed, was officially recognized in the September 10 memorandum of agreement.
Chapter V
SCOPE OF LEND-LEASE AID RENDERED
A mere recital of figures indicative of the over-all progress of the Defense Aid Program obscures the variety of assistance which has been rendered to nations whose war effort is contributing directly to the security of the United States. Only by translating these figures into food, and ships, and vital raw materials, and an infinite variety of necessary services, as well as into airplanes, and guns, and tanks, and shells, can there come a full realization of the impact of this program on the present world struggle against oppression.
1. BRITISH FOOD PROGRAM
In the case of the United Kingdom, for instance, hundreds of thousands of tons of food have gone safely across the North Atlantic to maintain the health and stamina of British workingmen and British soldiers. The army of today, more than ever before, depends upon the workingmen behind the lines who produce the instruments of modern war. The American farmers have contributed much to the maintenance and expansion of Britain’s war effort and through this to the defense of the United States.
The food program reflects interesting changes in the United Kingdom’s sources of supply of agricultural products since the war began. In the pre-war period, the United States supplied to the United Kingdom primarily such items as tobacco, cotton, and fresh fruits. Now, however, with the Northern European sources of food cut off, the United States is being called upon for more of the essential foodstuffs such as fats and protein foods. Because of the shipping situation, including the shortage of refrigerated space, emphasis is on concentrates, and thus dried or canned fruits are shipped rather than the fresh products.
Some of the more important items delivered through August 31,
were:
Amount delivered
Cheese______________________ ________________ 44,538,120 pounds.
Dried eggs___________________ _________________ 2,877,317 pounds.
Frozen eggs__________________ ________________ 23,124,750 pounds.
Dry skim milk_______________ _________________ 12,590,617 pounds.
Evaporated milk_____________ ________________ 2,957,796 cases.
Canned meat________________ __________________ 21,541,281 pounds.
Cured pork__________________ __________________ 89,741,480 pounds.
Dried beans__________________ _________________ 110,948,900 pounds.
One of the chief problems in this field has been the difficulty in supplying to the United Kingdom large quantities of commodities not (21)
22
ordinarily produced in excess of our own domestic requirements. In a number of cases the United States has in the past depended upon substantial imports of such commodities for its own use. The Department of Agriculture has proceeded on the assumption that this problem must be solved through increased production and has, therefore, embarked on an energetic campaign to this end.
2. SHIPPING ACTIVITIES
Food and other products, however, cannot reach the United Kingdom or her fighting forces in other parts of the world‘Unless transportation is provided. Ships are being made available to Great Britain and China from the American merchant marine, operated in some cases by American companies and American seamen where the Neutrality Act allows. Vessels of Great Britain, Greece, Norway, Belgium, and Yugoslavia, have been repaired, fueled, provisioned, and fitted out with mine protection and defense equipment to enable them to transport defense articles.
On April 14, the President, under the Lend-Lease Act, authorized the Maritime Commission to expend $500,000,000 for the construction of new ships and $50,000,000 for shipbuilding facilities. The Commission promptly thereafter entered into contracts to build 212 vessels, including 112 of the Liberty type, 72 tankers, and 28 fast cargo vessels of different sizes and speeds, adapted to the needs of American foreign commerce and designed by the Maritime Commission under its long-range construction program. Since the original allocation, the 72 tankers contracted for under lend-lease have been increased to 87. In addition to the larger cargo vessels and tankers, the Commission is also currently negotiating lend-lease contracts for 36 small coastwise vessels, 16 small tankers, and 26 harbor tugs.
It is estimated that the entire lend-lease ship construction program will be completed by the end of December 1943, with the heaviest deliveries occurring in the second, third, and fourth quarters of 1942, and the first quarter of 1943, during which time lend-lease vessel deliveries will average one a day. The lend-lease program, of course, is separate from the Maritime Commission’s other emergency programs under which there are being constructed 1,090 cargo vessels and tankers.¹
Through charter and freighting arrangements, there had also been made available out of the American merchant marine a large number of cargo vessels and tankers for the transportation of defense articles under lend-lease up to September 1, 1941.
¹ The First Supplemental Appropriation Act for the fiscal year 1942 empowers the Maritime Commission to acquire and construct merchant vessels through appropriations and contract authorizations in a total amount of $1,698,650,000. This appropriation act also empowers .the President,. When he deems it in the interest of the defense of the United States, to lease under the provisions of the Lend-Lease Act any of the ships acquired or constructed under such authorization or appropriation.
23
3. VARIETY OF AID MADE AVAILABLE
These vessels have carried many cargoes, since the achievement of a maximum war effort requires far more in the way of supplies than merely arms and ammunition. The supplying of essential machine tools or critical raw materials to British users may well result in 10 or 100 times their value in terms of arms and ammunition eventually finding its way to Britain’s battle fronts. To this end, critical examination has been and is being made of the war effort of the entire British Empire, so that the most efficient use possible may be made of United States resources in promoting its defense through maintaining the productive capacity of others.
In the strictly military field, the United States has benefited through the military secrets which have been freely disclosed to this Nation. From such information have been evolved jointly designed weapons, combining the best thought of the armed forces of this country and of Great Britain, and incorporating the result of actual combat experience which otherwise it would be impossible to secure.
Through the Lend-Lease Act we have also helped to break down the barriers of time and space which obstruct the prompt delivery of the products of our factories to the battle front. The Air Corps Ferrying Command, financed with lend-lease funds, has undertaken the task of flying the bombers and pursuit planes which our factories are producing under British and lend-lease contracts to points in the east where the bombers are taken over by the British for flight to England, and the smaller craft are broken down for shipment.
The work of lend-lease funds in delivering the implements of War is not confined to this continent. Planes are soon to be ferried to the Middle East and an air transport service is to be established to return the ferry personnel and carry the spare parts and materials necessary for the effective delivery of these aircraft.
As more and more airplanes are made available to the Royal Air Force by increased production here and in the British Empire, the need for pilots mounts steadily. Arrangements have been made to train thousands of young British pilots here in the United States, so that when they return to England they can take their places in the front lines and be fully equipped to fly modern American planes. This training has already begun. It will be carried on in Army, Navy, and private air schools, and the aircraft, fuel, and equipment are being provided through lend-lease.
4. CHINA
In the case of China, as with Britain, a major task has been to improve, extend, and make secure the long communication lines over which defense articles must be delivered. Cargo vessels have been supplied by the United States Maritime Commission to carry needed
24
goods over the long voyage to Rangoon, Burma, the principal remaining port of entry into Free China.
Overland transport into Free China requires the use of highways, railroads, waterways, and airlines. Fundamental steps have been taken to strengthen these vital routes. Paving materials have been delivered and applied to the resurfacing of China’s life-line, the Burma Road, and a growing fleet of lend-lease trucks is in operation on Chinese arteries of military and essential civilian supply. Regular shipments of gasoline, motor oils, spare parts, and tires are being provided to service these trucks and other vehicles.
China’s virtually limitless manpower, which built the Burma Road unaided, is now harnessed to lend-lease equipment and materials, in the tremendous job of rushing a railroad through malarial Yunnan Province. Under the direction of the United States Public Health Service, a mission is being sent to protect the lives and health of workers on this vital project.
The protection of China’s highways and railroads, her airfields and cities from wanton aerial attack requires fleets of modern fighter planes. Lend-lease contracts have been concluded during the past quarter to reinforce the Chinese Air Force by early shipments of this class of equipment.
To advise and consult with Chinese authorities concerning the use of the defense articles already provided them under lend-lease procedure, as well as those scheduled for future delivery, there has been organized a military mission, which is even now proceeding to Free China. It is expected that the observations of this mission, and conferences with the leaders of the armed forces of China, will determine the types of defense equipment best adapted to the actual conditions of warfare in that country, and will insure the effective use of the equipment provided.
5. GOVERNMENTS IN EXILE
In providing for our defense, full consideration has also been given to the requirements of those European countries now occupied by the aggressor. These nations are represented politically by governments in exile; physically, by civilian workers, soldiers, and sailors operating throughout the world for a common cause.
Poland stands out as the first country overrun by the invader. Poles from the United States and Canada are joining together in a Canadian training camp, preparing to take their part in their country’s fight. And from this country, guns, ammunition, and clothing are being supplied to the Polish Government for this venture under the terms of the act. Also, the Polish merchant marine has received the -equipment necessary to carry on under the dangerous conditions imposed by modern warfare at sea.
25
Greek troops, after the brave defense of their country, managed to escape in some numbers to British territory in the Middle East. Here they are re-forming their units, re-equipping themselves with the United States material now reaching that area in increasing quantity and preparing to meet the enemy anew.
Yugoslavia is also represented by a Middle East Legion, toughened by experience and ready to use the military and naval equipment as made available to it under the Lend-Lease Act.
Norway is represented principally by her merchant sailors. American degaussing cable today protects Norwegian ships against mines, United States-supplied guns have been installed on decks against aircraft and submarine attack, and in shipyards from the Caribbean to Maine, Norwegian ships are today being repaired after suffering-bomb and shell damage in the vital job of transporting the goods.
6. BELGIUM
Only in the case of Belgium and the Netherlands, among the occupied nations, does there still exist free national soil which these governments can defend. The Belgian Congo has obtained from this country scout cars, machine guns, aircraft, and hospital equipment, among other items, for the use, not only of its troops regularly stationed there, but of free Belgians who are re-forming their lines in that free territory.
7. THE NETHERLANDS
The Netherlands is showing that in her colonies in the East and West Indies, and in Surinam, there is being maintained the spirit of stolid resistance which the world has come to expect of this people. The Netherlands East Indies are a strong force for peace in the Pacific. Furthermore, the world looks to this Empire for a large part of its supplies of rubber; of bauxite, from which comes the aluminum for our airplanes; of tin; and of quinine. To enable these territories to protect themselves, we have made available to The Netherlands Government the use of our strained productive facilities. For such products as The Netherlands have obtained they have paid in cash. There have been shipped to the Indies from the United States arms and ammunition of all kinds; bomber, fighter, and trainer aircraft; naval boats and tanks; as well as a wide assortment of commercial goods urgently needed for the minimum existence level of this island territory cut off from its home source of supplies.
8. THE AMERICAN REPUBLICS
In furtherance of the strategic requirements for adequate defense of this Nation through complete defense of the Western Hemisphere, steps are being taken to provide the other American Republics with the equipment and materials vitally needed as insurance against
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aggression. This decision follows an extensive analysis of the various essential requirements of each individual country, as well as of its relative position in the total defense of the Western Hemisphere.
Naturally, the bulk of current production must go to those nations which are now actively resisting aggression and to the building up of the defenses of the United States. Yet, it has been found necessary to develop a broad program of aid to the American Republics whiçh will assure to them the material required for the development of a dynamic defense.
Through the cooperation of the Departments of State, War, and Navy, these programs are rapidly being reduced to lend-lease requisitions, and these requisitions will be implemented by the necessary allocations of funds and placement of orders as rapidly as possible.
In this connection it should be noted that two of the American Republics, Brazil and the Dominican Republic, have already utilized lend-lease facilities and paid over a million and a quarter dollars to secure military supplies on a cash reimbursement basis.
9. FOREIGN REPRESENTATION
The Division of Defense Aid Reports maintains constant relations with the representatives of those countries whose defense the President has found to be essential to that of the United States. Programs of those nations for the continuous expansion of their war effort are constantly before us for integration with the United States program as a whole, and the lend-lease program in particular.
To carry out a program as large and as broad in scope as the lend-lease program would be impossible without the benefit of “on the spot” reports from competent United States representatives. In the administration of the lend-lease program, liberal use has been made of the diplomatic, military, and naval missions abroad. In addition, there have been established in the United States Embassy at London, and at the United States Legation at Cairo, Egypt, full-time representatives serving the lend-lease program. These sources of information will shortly be augmented by the military mission which is now en route to China.
APPENDICES
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Appendix I
MEMORANDUM ON DISTRIBUTION OF LEND-LEASE MATERIALS ABROAD
Foreign Office, S. W. 1,
10th September, 1941.
My Dear Ambassador: With reference to the conversations about lend-lease material which have recently taken place in London and in which you have participated, I enclose a memorandum on the policy of His Majesty’s Government in the United Kingdom with regard to exports from this country and with regard to the distribution here of lend-lease material. I shall be glad if you will transmit it to your Government.
Yours sincerely,
Anthony Eden.
His Excellency The Honourable John G. Winant.
London, September 10, 1941.
Dear Mr. Eden: Thank you for your letter of September 10th, enclosing a memorandum on United Kingdom export policy and on the distribution of lend-lease material. I have caused the memorandum to be transmitted immediately to Washington for the information of my Government.
Sincerely yours,
John G. Win ant.
The Right Honorable Anthony Eden, M. C. M. P., etc., etc., etc., Foreign Office, S. W. 1.
MEMORANDUM
1. All materials which we obtain under the Lend-Lease Act are required for the prosecution of the war effort. This principle governs all questions of the distribution and use of such goods and His Majesty’s Government have taken and will continue to take action to secure that these goods are not in any case diverted to the furtherance of private interests.
Export Policy
2. Lend-lease materials sent to this country have not been used for export and every effort will be made in the future to ensure that they are not used for export, subject to the principle that where complete physical segregation of lend-lease materials is impracticable domestic consumption of the material in question shall be at least equal to the amounts received under lend-lease.
3. His Majesty’s Government have not applied and will not apply any materials similar to those supplied under lend-lease in such a way as to enable their exporters to enter new markets or to extend their export trade at the expense of United States exporters. Owing to the need to devote all available capacity and man-power to war production, the United Kingdom export trade is restricted to the irreducible minimum necessary to supply or obtain materials essential to the war effort.
4. For some time past, exports from the United Kingdom have been more and more confined to those essential (I) for the supply of vital requirements of overseas countries, particularly in the sterling empire; (II) for the acquisition of foreign exchange, particularly in the Western Hemisphere. His Majesty’s Government have adopted the policy summarized below:
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(I) No materials of a type the use of which is being restricted in the United States on the grounds of short supply and of which we obtain supplies from the United States either by payment or on Lend-Lease terms will be used in exports with the exception of the following special cases:
(a) Material which is needed overseas in connection with supplies essential to the war effort for ourselves and our Allies, and which cannot be obtained from the United States.
(b) Small quantities of such materials needed as minor though essential components of exports which otherwise are composed of materials not in short supply in the United States.
(c) Repair parts for British machinery and plant now in use, and machinery and plant needed, to complete installations now under construction, so long as they have already been contracted for.
Steps have been taken to prevent the export (except to Empire and Allied territories) of such goods which do not come within the exceptions referred to in (a), (b), and (c) above.
(II) Materials similar to those being provided under lend-lease which are not in short supply in the United States will not be used for export in quantities greater than those which we ourselves produce or buy from any source.
Distribution in the United Kingdom of Lend-Lease Goods
5. The general principle followed in this matter is that the remuneration received by the distributors, whatever the method of distribution, is controlled and will be no more than a fair return for the services rendered in the work of distribution. The arrangements rigorously exclude any opportunity for a speculative profit by private interests from dealing in lend-leased goods. In most cases, lend-leased supplies will be distributed through organizations acting as agents of His Majesty’s Government in the strict sense of the term and not as principals. Where for strong practical reasons this cannot be done a full explanation will be supplied to the United States administration and their concurrence sought beforehand in any alternative arrangements proposed. The justification for retaining existing channels of distribution operating under strict Government control, is that the creation of elaborate new organizations in their place would inevitably result in loss of efficiency and the wasteful use of manpower, and retard the war effort. In the distribution of lend-lease goods there will be no discrimination against United States firms.
6. Food is a special case. Only .some 5 or 6 percent in tonnage of the total British food supply is coming from the United States and without great practical complications it would be impossible to have a separate system for the distribution of lend-leased food. Food distribution is carried out in the United Kingdom by wholesalers, to whom the Government sells food as principals. In fact, the Ministry of Food has established a close control over all distributive margins so that neither the wholesalers nor the retailers receive any greater remuneration than is adequate to cover the cost of the services performed. No food obtained on lend-lease terms is or will be sold at uncontrolled prices. Thus the general arrangements as regards the issue of lend-leased food fit into His Majesty’s Government’s policy of stabilizing the whole price level of foodstuffs, a policy to which the Government contributes £100 millions a year.
7. In some cases direct free distribution is practicable and will be adopted. For example, some milk products (including lend-leased supplies from the United States) are distributed direct and free of charge to children and others in need through schools, clinics and hospitals. The distribution is undertaken by State agencies and the cost of the distribution is borne by the Government.
September 10, 1941.
Appendix II
METHODS EVOLVED TO EXPEDITE DEFENSE AID
Included in the first report to the Congress by the Division of Defense Aid Reports was a comprehensive description of the procedure being followed in carrying out the Lend-Lease Act, together with samples of the principal forms being used. Since the first report, there has been careful consideration of additional methods which would expedite the supplying of aid to countries resisting aggression. Among recent developments in procedure are the following:
Revolving Funds
Modern war moves with increasing rapidity and the theaters of war change overnight. With these changes come urgent requirements for new types of material and new weapons.
To meet these critical requirements, whether it be a machine tool to replace one destroyed by enemy action, or special equipment for desert operations, there have been established by the direction of the President revolving funds for the War, Navy, and Treasury Departments with which to finance immediately such urgent requests as are recommended for approval by the cognizant departments and endorsed by the Executive Officer of the Division of Defense Aid Reports.
By this authorization it is possible to initiate procurement with lend-lease funds within 24 hours after an urgent request is received from a country desiring lend-lease aid.
Blanket Allocations
Included in the lend-lease program are approved projects for supplying vast quantities of the same general type of defense articles. These include programs for basic raw materials such as steel which maintain the tempo of production abroad; for ship repairs which keep in service merchant and combat vessels; and for aircraft accessories which maintain the fighting efficiency of the combat air forces. These requirements cannot be particularized in advance even though the program as a whole can be closely estimated.
To provide funds for immediate action, as such requirements are made known by cable and overseas telephone, a series of blanket allocations has been made to various departments, carefully restricted as to total amount and purpose, but so established that the recipient of lend-lease aid can draw down these supplies or services as needed by direct application to the cognizant department.
Accelerated Transfer Directive Procedure
In accordance with the act of March 11, 1941, defense articles remain in the custody of the United States Government during the period of production and may not be transferred to a foreign government without the specific authorization of the President. Careful controls have been established so that such directives are issued only for limited periods and they are therefore subject to regular review by the President.
However, the exigencies of war and the availability of shipping space often make it imperative that transfer authorization be issued more quickly than would
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be possible if the requests were processed completely. To meet this requirement the President has delegated to the Executive Officer of the Division of Defense Aid Reports authority in urgent cases to authorize the transfer of all but a limited list of especially critical items.
This power has, of course, been used sparingly, but its existence has been invaluable in the few times that it has been necessary to invoke it.
Simplified Adjustment Technique
In the operation of a program as large and as broad in scope as the lend-lease program, productive efficiency and the rate of delivery can often be improved by minor adjustments upward or downward in the quantity of specific items being procured. To process such adjustments through the same procedure as the original authorization would work a tremendous hardship on the cognizant departments and discourage their efforts in the direction of accelerating the program as a whole.
To encourage the use of such adjustments by simplifying the manner in which they can be made, the President has authorized the Executive Officer of the Division of Defense Aid Reports to approve such adjustments.