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Lend-Lease Contracts (Cancellation)

Volume 413: debated on Friday 24 August 1945

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I propose, with the permission of the House, to make a statement about Lend-Lease.

I am informed that the President of the United States has issued a directive exercising his powers under the Lend-Lease Act to order all outstanding Lend-Lease contracts to be cancelled and to provide that stocks and deliveries procured under the Act must now be paid for either in cash or through credit arrangements to be negotiated. I understand that this applies to stocks of food and other supplies already in this country, as well as to those in transit or to be delivered under existing contracts. There is, however, an indication of a possible continuance of a limited range of Lend-Lease for military purposes.

The House will, I think, expect me to make some statement about the resulting situation. The system of Lend-Lease from the United States, Mutual Aid from Canada, and the accumulation of sterling by the sterling area countries have been an integral part of the war organisation of the Allies. In this way it has been made possible for us in this island to mobilise our domestic man-power for war with an intensity unsurpassed elsewhere, and at the same time to undertake expenditure abroad on the support of military operations over a widely extended area, without having to produce exports to pay for our imports of food and raw materials or to provide the cash we were spending abroad. The very fact that this was the right division of effort between ourselves and our Allies leaves us, however, far worse off, when the sources of assistance dry up, than it leaves those who have been affording us the assistance. If the role assigned to us had been to expand our exports so as to provide a large margin over our current needs which we could furnish free of charge to our Allies, we should, of course, be in an immeasurably stronger position than we are to-day.

We had not anticipated that operations under the Lend-Lease Act would continue for any length of time after the defeat of Japan. But we had hoped that the sudden cessation of this great mutual effort, which has contributed so much to victory, would not have been effected without consultation, and prior discussion of the difficult problems involved in the disappearance of a system of so great a range and complication. We can, of course, only demobilise and reconvert gradually, and the sudden cessation of a support on which our war organisation has so largely depended, puts us in a very serious financial position.

Excluding altogether the munitions which we have been receiving under Lend-Lease and Canadian Mutual Aid and will no longer require, our overseas outgoings on the eve of the defeat of Japan were equivalent to expenditure at the Tate of about £2,000,000,000 a year, including the essential food and other non-munitions supplies which we have received hitherto under Lend-Lease but must now pay for. Towards this total in the present year, 1945, our exports are contributing £350,000,000 and certain sources of income, mainly temporary, such as receipts from the U.S. Forces in this country and reimbursements from the Dominions for war expenditure which we have incurred on their behalf, £450,000,000. Thus the initial deficit with which we start the task of re-establishing our own economy and of contracting our overseas commitments is immense.

As I have said, we have not yet had an opportunity of discussing the resulting situation with the U.S. Administration. Mr. Brand, the Treasury representative in Washington, has, however, received a letter from the Foreign Economic Administrator inviting us to enter into immediate conversations to work things out in the manner which will best pro- mote our mutual interests. I am, therefore, inviting Lord Halifax to return to Washington accompanied by Lord Keynes and Mr. Brand and officials of the other Departments to take part in such conversations.

Reciprocal aid on the part of the United Kingdom, or Reverse Lend-Lease as it is sometimes called, which, according to the Reciprocal Aid Agreement with the United States, is; provided on the same terms as Lend-Lease aid, will of course conform to the same dates of partial or complete termination as Lend-Lease. I much hope, however, that the President will accept arrangements by which shipping and food and any other supplies still required by our Forces overseas and by the American Forces overseas can continue to be furnished for a limited period under the Lend-Lease and Reciprocal Aid Agreements respectively. It would seem reasonable to regard such supplies and services arising directly out of the war as belonging to the common war effort, and, as I have said, there is an indication in the communication which has reached us that the American Administration may so regard them.

I earnestly hope that the House, in view of the fact that negotiations on these complicated issues axe about to start, will agree that the matter should not be the subject of Debate to-day.

The very grave and disquieting statement which the Prime Minister has just made to us must overshadow our minds. I agree with him entirely that a Debate of a discursive character arising before these issues have been properly weighed by the House might easily be detrimental to our national interest, which always must claim the allegiance of Members wherever they sit, and I think I can give my assurance on behalf of the hon. Gentlemen who are associated with me on this side of the House that we shall not touch upon this matter in the forthcoming Debate on the Adjournment. Words or phrases might be used which would hamper the task of our negotiators in the difficult matters which lie before them. I think the utmost restraint should be practised, not only in the House, but, if I may say so, also out of doors, in all comments on the American situation at the present time. I cannot believe that it is the last word of the United States; I cannot believe that so great a nation whose Lend-Lease policy was characterised by me as "the most unsordid act in the history of the world," would proceed in a rough and harsh manner to hamper a faithful Ally, the Ally who held the fort while their own American armaments were preparing.

I think we might have no interruption from the hon. Gentleman who seats himself in such an unsuitable position. I say that I hope indeed that this very great burden and strain will be eased as a result of the discussions which are proceeding, and I give my support to the Prime Minister in the request he has made to the House.