[Enclosure]
Memorandum by the War Shipping
Administrator (Land) for the Secretary of State
[Washington,] August 29,
1945.
We should like to direct your attention to the desirability of
including in any long-range financial arrangements with foreign
governments some specific assurance that they will not use their
control of imports and exports in a manner prejudicial to the
American Merchant Marine.
The need for such assurance was clearly brought to our attention
when the announcement was made concerning the termination of
Lend-Lease aid in the field of shipping.13 There
were immediate indications that the European governments through
their control of their import and export commodity programs
would insist upon the use of their own vessels exclusively in
order to conserve dollar exchange. To permit time to work out a
solution of this problem, Lend-Lease aid in this field was
extended for a period of 30 days after V–J Day.14
As you undoubtedly know, the United States Government has spent
over 15 billion dollars in its merchant shipbuilding
introduction [production?] program and now owns approximately 50
million deadweight tons of shipping. Over 240,000 seamen are
employed in this industry. Before the war, the United States
carried approximately 25% of imports and exports in its own
bottoms. It has been our objective to increase this figure to
approximately 50% for the post-war period. In view of the
probable elimination of German and Japanese merchant fleets,
such an increase in the American participation in shipping
probably can be accomplished without reducing the size of the
pre-war operations of our Allies. On the other hand, if our
Allies insist on destroying free trade in shipping in favor of
controlled international economy, it would be difficult even to
restore American shipping to its pre-war basis, let alone the
achievement of a reasonable increase to reflect the growth of
the American shipping position during the war.
[Page 112]
Our objective seems modest. During the three pre-war years,
1937–1939, approximately 25% of all imports and exports of the
United States were carried on American vessels, and a fleet of
approximately 3 million deadweight tons was sufficient for this
purpose. This constituted about 25% of the total American
merchant marine. During the post-war years if we have a merchant
marine of 50 million deadweight tons and even if we succeed in
our objective of carrying 50% of all imports and exports in
American vessels, only between 10 to 15% of our total fleet will
be needed for this purpose, leaving a staggering surplus for
other disposition. Naturally, under these circumstances, we are
very anxious that post-war international and economic relations
bearing upon the utilization of American ships should be as free
from foreign control and domination as possible.
This program also has a very direct impact on our internal
economic structure. As stated above, over 240,000 seamen are now
employed in our ocean fleet. Even under the most favorable
prospects, a large part of our fleet will be laid up. Job
opportunities will decline drastically in this field, as well as
in the related fields, such as ship repairs, which are dependent
upon the operation of our vessels. Strong repercussions from
sea-going labor unions are almost certain to follow the
inauguration of restrictive practices by foreign governments
which result in a further diminution of employment
opportunities. The steamship industry, which has invested
substantial sums of money in the development of the merchant
fleet, is likewise affected. But above all else, the Congress of
the United States, which has sanctioned the investment of
billions of dollars in the construction of the fleet and the
development of a long-range American merchant marine through a
series of programs dating back to the last war, is certain to
react violently against any practices which would stultify the
achievement of our national objectives for a reasonable and
equitable participation in the world’s international
shipping.
If one objective of rehabilitating the economies of our Allies is
the re-establishment of world trade on a free and open market
basis, it must necessarily follow that the same principles
should be applied to shipping and that specific assurance should
be obtained from our Allies to the effect that restrictive
economic practices looking toward the achievement of reasonable
objectives of the United States in the field of shipping will
not be applied by them and that American vessels will be allowed
a 50% participation in our services to sterling areas. We
believe that the desirability of this proposal would be
self-evident to you but if you should desire further
elaborations, we shall be glad to discuss the matter in
person.15
[Page 113]
[On August 30, President Truman transmitted the Twentieth Report to Congress on Lend-Lease
Operations, covering the period ending June 30,
1945; for text, see House Document No. 279, 79th Cong., 1st
sess. In this document, the President emphasized that
lend-lease aid which had been consumed in the course of the
war should not be considered a debt; see especially in this
regard, pages 39–43 of the Twentieth
Report.
On the following day, August 31, Secretary of State Byrnes
pointed out that this did not mean that lend-lease debts
were to be cancelled forthwith, pending future determination
of settlements with each country. Secretary Byrnes’
comments, along with the President’s letter of transmittal
for the Twentieth Report, are printed
in Department of State Bulletin,
September 2, 1945, pages 332–333.
On September 1, President Truman proclaimed September 2 as
V–J Day. Transfer of materials under straight lend-lease
terms thus terminated at 12:01 a.m., September 2.]
