611.50A31/22a: Telegram
The Secretary of State to the Consul at Reykjavik ( Kuniholm )
51. At a meeting on September 5 the Icelandic Government Trade Delegation was informed that careful study had been given to the problem raised by the desire of the British to continue their heavy purchases of Icelandic fish and other products while at the same time decreasing their exports to Iceland and transferring to the United States the principal burden of supplying Iceland’s needs and the tonnage necessary to carry such supplies from the United States to Iceland. After consideration of several possibilities the conclusion had been reached that the procedure which would best meet the needs of the British for Icelandic produce and the needs of Iceland for dollar exchange would be one under which the United States Government would purchase in Iceland in United States dollars, from Lend-Lease appropriations charged to British account as defense aid, supplies of mutton, fish, fish oil, et cetera, which would then be moved from Iceland to the United Kingdom under shipping arrangements to be made by the British Government. The Delegation was informed that the details of the quantities and value of such purchases would have to be worked out in consultation between Great Britain, Iceland and ourselves but that we felt that this procedure would provide Iceland with the necessary dollar exchange to cover increased purchases in this country. The Delegation was also informed that the British Government had already indicated its approval in principle.
The Chairman of the Delegation indicated that the procedure would be satisfactory to the Icelandic Government.
In your discretion you may orally inform the appropriate Icelandic authorities of the foregoing.