841.24/9–145
The British Prime Minister (Attlee) to President Truman
We received early this morning (Saturday) from the representatives of the British Treasury in Washington a report of a discussion which they had had with Mr. Crowley, the Foreign Economic Administrator, yesterday, 31st August, on the arrangements to be made for Lend-Lease supplies in the immediate future.
I am informed that Mr. Crowley has made it plain that any supplies which we need from the pipeline should be taken up either on payment of cash or on credit terms which he had already indicated, that is credit for thirty years at 2⅜th per cent. I understand that he was not prepared to await the settlement of the terms of payment until our special mission had arrived in Washington within the next few days or to agree that we should consider these credit terms as applying to the supplies coming forward within the next few weeks. He was willing however to agree that if we accepted the credit on the terms and conditions he had indicated this would be on the understanding that these conditions should be reviewed in the over-all financial discussions which were about to be undertaken with the United States Government and, if deemed desirable, would be brought into line with the decisions resulting from those discussions. Our representatives requested a reply from us within a few hours and informed us that notice had been given by the United States Administration to the Inland Transport Authorities not to load any more supplies for the United Kingdom meanwhile.
[Page 114]You will remember that at Potsdam on 24th July Mr. Churchill wrote to you16 that very important questions affecting Lend-Lease and the financial arrangements to be made after Lend-Lease would be coming up and that we wanted to send an authoritative mission to Washington early in September to discuss the matter with your representatives. You agreed to this and informed Mr. Churchill17 that you were sending Mr. Clayton, an Assistant Secretary of the State Department, to London to discuss the position with us, and to make a report to you.
Mr. Clayton came to London and had several discussions both with my ministerial colleagues and with senior officials. An agenda for the discussions in Washington was worked out in agreement with Mr. Clayton and his colleagues. This agenda covered in the first place Lend-Lease, the financial arrangements after Lend-Lease, and also the lines upon which further developments on commercial policy could be worked out on the principles which we have been discussing with representatives of the United States Administration over the last year or so. One of the items included under the heading Lend-Lease was “terms for continued delivery of non-munitions pipeline.”
During the progress of those discussions we were advised that the Foreign Economic Administrator had indicated that Lend-Lease supplies coming forward must be accepted on terms to be determined by the United States Administration. As this was contrary to the expectations we had formed from the correspondence between you and Mr. Churchill in Potsdam, representations were made by our Embassy in Washington and we also raised the matter direct with Mr. Clayton. On the 21st August Mr. Clayton wrote to us in the following terms:
“The Secretary of State has informed me that the President has approved an amendment to the August 17th Lend-Lease directive whereby countries such as the United Kingdom which have not entered into 3(c) agreements, may obtain delivery of goods in the pipeline upon agreement to pay for them on terms to be mutually agreed on.”
I must make it plain to you that none of us here had understood that letter to imply that within a few days we should be informed of the terms under which the supplies in the pipeline could go forward to us and that meanwhile orders would be given to the Inland Transport Authorities to suspend the loading of supplies for the United Kingdom. Nor can I believe that this action by the Foreign Economic Administration was in your mind when you authorized the Secretary of State to send us the communication of the 21st August.
[Page 115]You are aware that in the immediate future the maintenance of the physical flow of supplies from the United States, both of food and of certain essential raw materials, is necessary for the maintenance of the living conditions of this country. You have probably also been informed by Mr. Clayton of the general financial position in which we find ourselves because our war effort took a certain shape as part of the combined war plans. I referred to this matter in my statement to Parliament on Friday, August 24th.
It is impossible for our Government to give an answer to the proposals of the Foreign Economic Administration within a matter of a few hours, and you will not misunderstand me if I say that the preparation of a suitable answer would not be made easier for me by the knowledge that instructions had been given to suspend the loading of supplies for the United Kingdom.
I hope therefore that you may feel able to give an urgent directive that supplies in the pipeline coming forward for shipment, say within the next month, may proceed to the United Kingdom and that the terms and conditions of payment for such supplies will be discussed and agreed between the United States Administration and the special mission which has been sent to Washington for this purpose. We have recognized that with V–J Day Lend-Lease as we have known it, and as you have described it in your recent striking report to Congress, is at an end. We have realized that in some form or other we shall henceforward have to pay for the urgent supplies that we need from the United States. Therefore it is hardly necessary for me to assure you that if these supplies for the next month come forward to us, as I have suggested, they will be paid for.