Lend-Lease, Enthralling Enterprise

Lend-lease has been a powerful and supple instrument of national policy. One is tempted to call it “ingenious.” In substance, however, it has many precedents. The extension of economic aid by one nation to others in the interest of its own security is a familiar practice. Lend-lease was ingenious in two respects. First, it was beautifully devised to obtain political acceptance in the United States in the spring of 1941. It plowed a way between straight loans and outright gifts. It excluded the private gain from international financing which had helped to obscure our true relationship to the war of 1914-18. Secondly, it was flexible and forward looking enough to meet future contingencies and do service after our entry into the war as a full belligerent.

Mr. Stettinius did not invent lend-lease. He first heard of it, in embryonic form, in the fall of 1940 when the President suggested that the United States might lend merchant ships to Great Britain. He gives the credit for lend-lease to an interplay of ideas between the Treasury and the White House. Mr. Stettinius administered lend-lease from August, 1941, until he became Under Secretary of State in 1943. His own peculiar contribution was a combination of tact, energy, resourcefulness, and executive efficiency. He created a small, compact organization. Perhaps better than any other administrator in Washington he mastered the art of obtaining prompt co-operation from other agencies, avoiding the competitive bureaucratic growth to which all governments are so readily subject. But, also, he understood the purpose of lend-lease, especially its initial purpose, which was by transfusion of economic strength to enable the surviving anti-Axis forces to hold the line while we mobilized our full strength. When, on October 1, 1941, the Russians put in a four-alarm call for military barbed wire—4,000 tons of it, enough to stretch from Moscow to Sydney, Australia, and back again—he stripped the American and British armies and our industrial warehouses. On October 10, vessels carrying our share of the barbed wire cleared American ports for Europe.

Mr. Stettinius reveals for the first time many of the incidents which made lend-lease an enthralling enterprise. His finger lay on the pulse of the war. Merely to list the forms in which lend-lease has been extended would fill many pages. Lend-lease sent food and seed to Britain, Russia, and North Africa. It armed the merchant ships of the smaller United Nations, and trained the gun crews for them. It equipped the British-trained Dutch troops which have guarded the oil refineries in the Dutch West Indies. It trained Chinese pilots. It built or enlarged American shipyards. It put up factories and repair stations in Russia, Eritrea, the Middle East, and North Africa. It helped to keep the British fleet in repair and modernized part of the surviving French Navy. It shipped planes, tanks, and guns by the thousands and explosives by the thousands of tons.

As Mr. Stettinius emphasized, lend-lease was not the first stage of our aid to the nations fighting the Axis. Before the war broke out in Europe we had accepted British and French orders for airplanes and other military equipment and had granted modest financial aid to the Chinese. After a brief interruption caused by the automatic provisions of the Neutrality Act, these purchases and deliveries were re: sumed under the cash and carry system. The British and French purchases were not on a large scale. They could have afforded much more, but both governments underrated German military strength and were obsessed with the idea of a cheap defensive war. When the French fell, the British took over their orders in the United States. Substantial French financial assets were frozen. And, contrary to Mr. Stettinius’s impression, the British had not by any means exhausted their capacity to pay when Mr. Roosevelt proposed lend-lease. They had left many billions of dollars of foreign holdings which they could have marketed in this country, although they were near the bottom of their supply of assets which could be converted readily into cash without serious loss. Mr. Roosevelt knew that their most immediate need was not money but the assurance of the long-term and practically unlimited industrial backing of the United States. He hoped too that a prompt and sweeping expression of our intent to support other nations fighting the Axis would stiffen other nations which had not yet been conquered.

When the President proposed lend-lease, the R. A. F. had temporarily saved England by beating off the daylight assaults of the Luftwaffe. But the Germans had turned to night-bombing with no small success. How long the British could stand up alone against the Nazis was an open question. Although at intervals from January through March, 1941, Washington and London received reliable information that Hitler intended to invade Russia in early summer, no one could be sure that the attack would actually materialize, that he would not make demands to which the Russians would yield, and that, if attacked, the Russians would be able to escape complete defeat. Japan had reaffirmed and tightened its alliance with Germany and Italy.

Actually, throughout 1941 the chief contribution of lend-lease to the outer ramparts of our defense was morale, the confidence that came from the assurance of long-term and growing aid. Most deliveries to the British during this critical year were on pre-lend-lease contracts. It was not until 1942 that lend-lease began to flow out in abundance to all parts of the Allied world. And in the same year began what has become known as “reverse lend-lease.” In volume, of course, it is small compared with the outgo from the United States, but in Australia and New Zealand it has offset most of our direct financial contributions—not counting our far larger and incalculable contribution in driving back the Japanese and saving the Antipodes from invasion—and on the part of the British it has been generous within their means.

In proposing lend-lease, the President said that he wanted to get rid of the “silly old dollar mark.” Lend-lease accounts are kept in dollars, however, although many items, both outgoing and incoming, can be valued only arbitrarily in money. The President withdrew a statement which somehow crept into one lend-lease report that we did not expect to receive any repayment. It was made plain from the start that we did not expect reimbursement in cash, but there are other forms of compensation, ranging from raw materials to the acceptance of economic and political policies which Washington considers essential to the preservation of the peace. Whether the recipients of lend-lease will feel any obligation to repay it in any form is doubtful, to say the least. If in the settlements, especially of such matters as international airways, communications, shipping, and military bases, the recipients of lend-lease prove to be hard bargainers, we may yet see a revival, in substance, of the quarrel over war debts which followed the war of 1914-18.

In its refinements, lend-lease is already presenting some nice problems. Who should liquidate the factories and repair facilities which we lend-leased to the British in the Middle East? The British or ourselves? Should we permit the British to give or lend-lease weapons or supplies to Iran, or should we insist on doing it ourselves, if it is to be done, since Britain is our lend-lease debtor? Should we build, on lend-lease, for the British in India a naval base which will last 25 years or should we insist that they get along with temporary facilities such as we have found adequate in the South Pacific? Should we modernize the British fleet on lend-lease? These and many similar problems are now being examined. They were not yet pressing while Mr. Stettinius was administering lend-lease, both because our own military strength had not yet been fully deployed and because the Allied governments had not yet begun to think so concretely about the postwar world.

But these practical problems are secondary. Even though they may become raw material for domestic political controversy, they will not obscure the great accomplishments of lend-lease. A more effective instrument of national policy seldom has been devised. Through the middle of 1943, where Mr. Stettinius’s account ends, it involved a gross dollar outlay of less than thirteen billion. Seldom has so much been achieved with so little.