Lend-Lease
Lend-Lease was a program of the United States Federal government during World War II which enabled the United States to provide the Allied nations with war material while the US was still officially a neutral country. The Lend-Lease program began in March 1941, nine months before the US entered the war in December of 1941. Lend-Lease came on the heels of Cash and Carry, following correspondence between Winston Churchill and Franklin Roosevelt on the economic status of Britain and their inability to pay for and transport materials as they once did. It ended soon after V-J Day, on September 2, 1945. This program was the first large step away from American isolationism and towards international involvement since the end of WWI.
Political Background
The Lend-Lease program came into existence with the passage of the Lend-Lease Act of March 11, 1941, which permitted the President of the United States to "sell, transfer title to, exchange, lease, lend, or otherwise dispose of, to any such government [whose defense the President deems vital to the defense of the United States] any defense article". It thus extended Cash and carry and modified the sense of neutrality. The value of the items to be lent were not to exceed $1,300,000,000 in total. Roosevelt approved US$1 billion in Lend-Lease aid to Britain on October 30, 1941. Britain did not need to repay the main debt, only the amount for supplies in Britain when Lend-Lease was terminated in 1945 (this was still happening even before the act was passed).
The program was administered by Harry Hopkins and proved essential in funding the war efforts of Britain and China, and of great assistance as well to the Soviet Union.
The act, generally known as "lend-lease" is officially "Further to promote the defense of the United States, and for other purposes.". See [1] for the text of the act. More information, and images of the text, from [2].
Earlier, the 1940 Destroyers for Bases Agreement had seen fifty obsolete destroyers transferred to the Royal Navy and the Royal Canadian Navy in exchange for base rights in the Caribbean and Newfoundland.
In exchange for Lend-Lease the British had to accept that they would not export any Lend-Lease matériel and agree not to export British-made products which were similar to Lend-Lease materials. The United States sent officials to Britain to police these requirements and to make sure British industry was geared to war production instead of exports. This had the effect that by 1944 British exports were 31 per cent of what they were in 1938. When the Bill for Lend-Lease was passed in the American House of Representatives it was given the 'symbolic number' 1776, the date of American independence from Britain [3].
Administration
There remains considerable accounting dispute about the exact sums involved. Historians estimate that payments to the major recipients included about $14 to $20 billion to Britain; $9-10 billion to the Soviet Union; France, $3.5 billion; and China and India, $2.2 billion, for a total of $48 billion. Reverse Lend Lease summed to $8 billion going to the US, mostly in the form of leases on British naval bases, and in-kind goods and services used by US forces in Britain, Australia and elsewhere. The moneys were not to be repaid, except for supplies overseas when Lend-Lease terminated.
Significance
Lend-Lease was a critical factor in the eventual success of the Allies in World War II, particularly in the early years when the United States was not directly involved and the entire burden of the fighting fell on other nations, notably those of the Commonwealth, and after June 1941 the Soviet Union. Although Pearl Harbor and the German Declaration of War brought the US into the war in December 1941, the task of recruiting, training, and equipping US forces, and then transporting them to the war zones could not be completed immediately. Through 1942, and to a lesser extent 1943, the other Allies continued to be responsible for most of the fighting, and the supply of military equipment under Lend-Lease was a significant part of their success. In 1943-44, about a fourth of all British munitions came through Lend-Lease. Aircraft comprised about one fourth of the shipments to Britain, followed by food, land vehicles, and ships.
Even after the United States forces in Europe and the Pacific began to reach full-strength in 1943–1944, Lend-Lease continued. Most remaining belligerents were largely self-sufficient in front-line equipment (such as tanks and fighter aircraft) by this stage, but Lend-Lease provided a useful supplement in this category even so, and Lend-Lease logistical supplies (including trucks, jeeps, landing craft, and above all the Douglas DC-3 transport aircraft) were of enormous assistance.
Much of the aid can be better understood when considering the economic distortions caused by the war. Most belligerent powers cut back on production of nonessentials severely, concentrating on producing weapons. This inevitably produced shortages of related products needed by the military or as part of the military/industrial economy.
For example, the USSR was highly dependent on trains, yet the desperate need to produce weapons meant that fewer than 20 new locomotives were produced in the USSR during the entire war. In this context, the supply of 1,981 US locomotives can be better understood. Likewise, the Soviet air force was almost completely dependent on US supplies of very high octane aviation fuel. Although most Red Army tank units were equipped with Soviet-built tanks, their logistical support was provided by hundreds of thousands of high-quality US-made trucks. Indeed by 1944 nearly half the truck strength of the Red Army was US-built. Trucks such as the Dodge 3/4 ton and Studebaker 2.5 ton, were easily the best trucks available in their class on either side on the Eastern Front. US supplies of waterproof telephone cable, aluminium, and canned rations were also critical.
Repayment
Large quantities of goods were in Britain or in transit when Washington suddenly and unexpectedly terminated Lend-Lease on September 2 1945. These were sold for about 10 cents on the dollar with payment to be stretched out for 50 years at 2% interest. [Kindleberger p 415] According to Hansard, the record of note for the debates that take place in the UK the Houses of Parliament, the debate in the Commons on 28 February 2002 shows that the UK expected to complete its repayment of its monetary debt to the USA on 31 December 2006, over 61 years from the conclusion of World War II:
"Bob Spink: To ask the Chancellor of the Exchequer (1) what outstanding liabilities there are to the United Kingdom of lend-lease loan facilities arranged during the Second World War; [38441]…"
"Ruth Kelly: The information is as follows."…
"Under the Agreement the loans would be repaid in 50 annual instalments commencing in 1950. However the Agreement allowed deferral of annual payments of both principal and interest if necessary because of prevailing international exchange rate conditions and the level of the United Kingdom's foreign currency and gold reserves. The United Kingdom has deferred payments on six occasions. Repayment of the war loans to the United States Government should therefore be completed on 31 December 2006, subject to the United Kingdom not choosing to exercise its option to defer payment.
As at 31 March 2001 principal of $346,287,953 (£243,573,154 at the exchange rate on that day) was outstanding on the loans provided by the United States Government in 1945. The Government intend to meet its obligations under the 1945 Agreement by repaying the United States Government in full the amounts lend [sic] in 1945. "
Similarly, Hansard records from a debate that took place in the House of Lords on 8 July 2002 that:
"Lord Campbell of Croy: My Lords, is this payment part of the lend-lease scheme under which the United States supplied munitions, vehicles and many other requirements including food and other provisions that were needed badly by us in the last part of the war?
Lord McIntosh of Haringey: My Lords, I referred to lend-lease in the context of the generosity of the United States throughout that period. However, the debt that we are talking about now is separate; it was negotiated in December 1945.
Lord Stoddart of Swindon: My Lords, will the noble Lord remind me as to exactly how much the loan was, and how much we have repaid since then in principal and interest?
Lord McIntosh of Haringey: My Lords, the loan originally was £1,075 million, of which £244 million is outstanding. The basis of the loan is that interest is paid at 2 per cent. Therefore, we are currently receiving a greater return on our dollar assets than we are paying in interest to pay off the loan. It is a very advantageous loan for us. "
Quotes
Franklin Roosevelt, eager to assure public consent for this controversial plan, explained to the public and the press that his plan was comparable to one neighbor's lending another a garden hose to put out a fire in his home. "What do I do in such a crisis?" the president asked at a press conference. "I don't say……, 'Neighbor, my garden hose cost me $15; you have to pay me $15 for it.' …I don't want $15 — I want my garden hose back after the fire is over."
With this explanation the public was overwhelmingly in favor of the new bill although the mainstream was at that time (before the attack on Pearl Harbor) mostly against a participation of the US in the war and favored isolationism.
US deliveries to USSR
The list 1 below is the amount of war material shipped to the Soviet Union through the Lend-Lease program. It is the total amount of matériel from the beginning to September 30 1945.
Aircraft.............................14,795 Tanks.................................7,056 Jeeps................................51,503 Trucks..............................375,883 Motorcycles..........................35,170 Tractors..............................8,071 Guns..................................8,218 Machine guns........................131,633 Explosives..........................345,735 tons Building equipment valued.......$10,910,000 Railroad freight cars................11,155 Locomotives...........................1,981 Cargo ships..............................90 Submarine hunters.......................105 Torpedo boats...........................197 Ship engines..........................7,784 Food supplies.....................4,478,000 tons Machines and equipment.......$1,078,965,000 Noniron metals......................802,000 tons Petroleum products................2,670,000 tons Chemicals...........................842,000 tons Cotton..........................106,893,000 tons Leather..............................49,860 tons Tires.............................3,786,000 Army boots.......................15,417,000 pairs
See also
References
- Allen, R.G.D. "Mutual Aid between the US and the British Empire, 1941—5", in Journal of the Royal Statistical Society no. 109 #3, 1946. pp 243-77 online at JSTOR detailed statistical data
- Clarke, Sir Richard. Anglo-American Economic Collaboration in War and Peace, 1942-1949. Oxford, 1982.
- Dawson, Raymond H. The Decision to Aid Russia, 1941: Foreign Policy and Domestic Politics (1959)
- Dobson, Alan P. U.S. Wartime Aid to Britain, 1940-1946 London, 1986.
- Herring Jr. George C. Aid to Russia, 1941-1946: Strategy, Diplomacy, the Origins of the Cold War (1973)
- Kimball, Warren F. The Most Unsordid Act: Lend-Lease, 1939-1941 (1969).
- Kindleberger, Charles P. A Financial History of Western Europe (1984)
- Louis, William Roger. Imperialism at Bay: The United States and the Decolonization of the British Empire, 1941-1945. 1977.
- Milward, Alan S. War, Economy and Society (1975)
- Reynolds, David. The Creation of the Anglo-American Alliance 1937-1941: A Study on Competitive Cooperation (1981)
- Sayers, R. S. Financial Policy, 1939-45 (1956). One of the official British histories
- Sherwood, Robert E. Roosevelt and Hopkins, an Intimate History (1948). Pulitzer Prize winner.
- Taylor, A. J. P. Beaverbrook 1972.
- Thorne, Christopher. Allies of a Kind: The United States, Britain and the War Against Japan, 1941-1945 1978.
- Woods, Randall Bennett. A Changing of the Guard: Anglo-American Relations, 1941-1946 (1990)
- Twenty-first Report to Congress on Lend-Lease Operations, pg 25.