Lend-Lease

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Lend-Lease was the given name of the program under which the United States of America supplied the United Kingdom, the Soviet Union, China, France and other Allied nations with vast amounts of war material between 1941 and 1945 in return for, in the case of Britain, military bases in Newfoundland, Bermudas, and the British West Indies. It began in March 1941, over 18 months after the outbreak of the war in September 1939.

A total of $50.1 billion (equivalent to nearly $700 billion at 2007 prices) worth of supplies were shipped: $31.4 billion to Britain, $11.3 billion to the Soviet Union, $3.2 billion to France and $1.6 billion to China. Reverse Lend Lease comprised services (like rent on air bases) that went to the U.S. It totaled $7.8 billion, of which $6.8 billion came from the British and the Commonwealth. Apart from that, there were no repayments of supplies that arrived before the termination date, the terms of the agreement providing for their return or destruction. (Supplies after that date were sold to Britain at a discount, for £1,075 million, using long-term loans from the U.S.) No lend lease money went to Canada, which operated a similar program that sent $4.7 billion in supplies to Britain and Soviet Union. ^[1]

This program is not seen as a decisive step away from American non-interventionism since the end of World War I and towards international involvement. In sharp contrast to the American loans to the Allies in World War I, there were no provisions for postwar repayments. However, some historians are of the opinion that it was an attempt to bolster Britain and the other allies as a buffer to prevent the necessity of America becoming involved against Nazi Germany.

Contents 1 Political Background 2 Administration 3 Significance 4 Repayment 4.1 Size and repayment terms of the British debt 5 Quotations 6 US deliveries to USSR 7 Reverse Lend-lease 8 See also 9 References 9.1 Notes 9.2 Bibliography 10 Further reading 11 External links

[edit] Political Background

Lend-Lease came into existence with the passage of the Lend-Lease Act of 11 March 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". In April, this policy was extended to China as well.^[2] Roosevelt approved US $1 billion in Lend-Lease aid to Britain at the end of October, 1941.

Earlier, there was an entirely different program in 1940, the Destroyers for Bases Agreement whereby 50 USN destroyers were transferred to the Royal Navy and the Royal Canadian Navy in exchange for basing rights in the Caribbean and Newfoundland.

Everett Dirksen, at the time a Republican U.S. Representative, was able to secure the passage of an amendment to the Lend-Lease bill by introducing the resolution while 65 of the House's Democrats were at a luncheon. Section (3)(c) of the Act thus provided that "after the passage of a concurrent resolution by the two Houses before June 30, 1943, which declares that the powers conferred by or pursuant to subsection (a) are no longer necessary to promote the defense of the United States, neither the President nor the head of any department or agency shall exercise any of the powers conferred by or pursuant to subsection (a)" ^[3]

[edit] Administration

Franklin Roosevelt set up the Office of Lend-Lease Administration in 1941, appointing steel executive Edward R. Stettinius as head. In September 1943 he was promoted to Undersecretary of State, and banker Leo T. Crowley became head of Lend Lease which then became part of Crowley's Foreign Economic Administration.

Lend-Lease aid to Russia was nominally managed by Stettinius. Roosevelt's Soviet Protocol Committee, dominated by Harry Hopkins and General John York, who were totally sympathetic to the provision of "unconditional aid." Until 1943, few Americans objected to Russian aid.^[4]

[edit] 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 Axis Declarations of War brought the US into the war in December 1941, the task of recruiting, training, equipping US forces and transporting them to 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 (in particular transport 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 C-47 transport aircraft)^{[citation needed]}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 only about 92 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 enhanced by 18,700 aircraft, which amounted to about 14% of Soviet aircraft production (19% for military aircraft)^[5].

Although most Red Army tank units were equipped with Soviet-built tanks, their logistical support was provided by hundreds of thousands of US-made trucks. Indeed by 1945 nearly two-thirds of the truck strength of the Red Army was US-built. Trucks such as the Dodge ¾ ton and Studebaker 2.5 ton, were easily the best trucks available in their class on either side on the Eastern Front.^[6] US supplies of telephone cable, aluminium, canned rations and fur boots were also critical, the latter providing a crucial advantage in the winter defence of Moscow.

Lend Lease was a critical factor that brought the US into the war, especially on the European front. Hitler cited the Lend-Lease program and its significance in aiding the Allied war effort when he declared war on the US on 11 December 1941.

[edit] Repayment

Large quantities of goods were in Britain or in transit when Washington suddenly and unexpectedly terminated Lend-Lease on September 2, 1945. Britain needed to retain some of this equipment in the immediate post war period. As a result the Anglo-American loan came about. Lend-lease items retained were sold to Britain at the knockdown price of about 10 cents on the dollar giving an initial value of £1,075 million. Payment was to be stretched out over 50 years at 2% interest. ^[7] . The final payment of $83.3 million (£42.5 million) due on 31 December 2006 (repayment having been deferred on several occasions) was made on 29 December 2006, it being the last working day of the year. After this final payment Britain's Economic Secretary, Ed Balls, formally thanked the US for its wartime support.

[edit] Size and repayment terms of the British debt

The original size of the debt and repayment terms (including deferments) can be ascertained from the debates in the Commons on 28 February 2002 and House of Lords on 8 July 2002 as recorded in Hansard:

"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 installments 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 £243,573,154 [$346,287,953 at the exchange rate on that day] was outstanding on the loans provided by the United States Government in 1945. The Government intends 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:

"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."

[edit] Quotations

Franklin D. Roosevelt, eager to ensure 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." ^[8]

[edit] US deliveries to USSR

American deliveries to the Soviet Union can be divided into the following phases:

• "pre Lend-lease" 22 June 1941 to 30 September 1941 (paid for in gold)
• first protocol period from 1 October 1941 to 30 June 1942 (signed 1 October 1941)
• second protocol period from 1 July 1942 to 30 June 1943 (signed 6 October 1942)
• third protocol period from 1 July 1943 to 30 June 1944 (signed 19 October 1943)
• fourth protocol period from 1 July 1944, (signed 17 April 1945), formally ended 12 May 1945 but deliveries continued for the duration of the war with Japan (which the Soviet Union entered on the 8 August 1945) under the "Milepost" agreement until 2 September 1945 when Japan capitulated. 20 September 1945 all Lend-Lease to Russia was terminated.

The list ¹ below is the amount of war matériel shipped to the Soviet Union through the Lend-Lease program from its beginning until 30 September 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
Non-ferrous 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	15,417,001 pairs

Delivery was via the Arctic Convoys, the Persian Corridor, and the Pacific Route. The Pacific Route was used for about half of Lend-Lease aid: by convoy from the US west coast to the Soviet Far East, via Vladivostok and the Trans-Siberian railway; see [1]. After America’s entry in the war, only Soviet (or Soviet-flagged) ships were used, and there was some interference by Japan with them. The Alaska-Siberia Air Route, known as Alsib [2], was used for air deliveries and passengers.

[edit] Reverse Lend-lease

Reverse Lend-lease or Reciprocal Aid was the supply of equipment and services to the United States, eg the British Austin K2 military ambulance. From Canada the Fairmile launches for anti-submarine use and Mosquito photo-reconnaissance aircraft. New Zealand supplied food to United States forces in the South Pacific, and constructed airports in Nandi, Fiji. In 1945-46 the value of Reciprocal Aid from New Zealand exceeded that of Lend-lease, though in 1942-43 the value of Lend-lease to New Zealand was much more that of Reciprocal aid. The UK also supplied extensive material assistance to US forces stationed in Europe, for example the USAAF was supplied with hundreds of Spitfire MkV and MKVIII fighter aircraft.

"The cooperation that was built up with Canada during the war was an amalgam compounded of diverse elements of which the air and land routes to Alaska, the Canol project, and the CRYSTAL and CRIMSON activities were the most costly in point of effort and funds expended. [...] The total of defense materials and services that Canada received through lend-lease channels amounted in value to approximately $419,500,000. [...] Some idea of the scope of economic collaboration can be had from the fact that from the beginning of 1942 through 1945 Canada, on her part, furnished the United States with $1,000,000,000 to $1,250,000,000 in defense materials and services. [...] Although most of the actual construction of joint defense facilities, except the Alaska Highway and the Canol project, had been carried out by Canada, most of the original cost was borne by the United States. The agreement was that all temporary construction for the use of American forces and all permanent construction required by the United States forces beyond Canadian requirements would be paid for by the United States, and that the cost of all other construction of permanent value would be met by Canada. Although it was not entirely reasonable that Canada should pay for any construction that the Canadian Government considered unnecessary or that did not conform to Canadian requirements, nevertheless considerations of self-respect and national sovereignty led the Canadian Government to suggest a new financial agreement. [...] The total amount that Canada agreed to pay under the new arrangement came to about $76,800,000, which was some $13,870,000 less than the United States had spent on the facilities."^[9]

[edit] See also

• Military production during World War II
• Lend-Lease Sherman tanks
• Arctic convoys of World War II
• Persian Corridor
• Battle of the Atlantic (1939-1945)
• Cash and carry (World War II)
• Atlantic Charter

[edit] References

[edit] Notes

[edit] Bibliography

[edit] Further reading

George Racey Jordan, USAF (Ret.), with Richard L. Stokes, From Major Jordan’s Diaries (Harcourt, Brace and Company, 1952). Major Jordan was a Lend-Lease expediter and liaison officer with the Russians, from May 1942 to June 1944, at both the Newark Airport, NJ and at Gore Field at Great Falls, Montana. His experiences and records were the focus of Congressional hearings in December, 1949 and March, 1950, since materiel and information were delivered to the Soviet Union which were not directly related to waging war, but rather related to atomic weapons research and building Soviet industry after the war. See, for example, the discussion of Major Jordan and Lend-Lease in: Herbert Romerstein and Eric Breindel, The Venona Secrets: Exposing Soviet Espionage and America’s Traitors (Regnery, 2000) ISBN 0-89526-275-4.

[edit] External links

• Official British history of Lend-Lease
• See [3] for the text of the act.
• Lend-Lease to the Soviet Union
• The Voice of Russia on the Allies and Lend-Lease Museum, Moscow
• Official New Zealand war history of Lend-lease, from War Economy
• Official New Zealand war history; termination of Mutual Aid from 21 December 1945, from War Economy