Lend-Lease

The Lend-Lease policy, formally titled An Act to Further Promote the Defense of the United States, (Pub.L. 77â€"11, H.R. 1776, 55 Stat. 31, enacted March 11, 1941) was a program under which the United States supplied Free France, Great Britain, the Republic of China, and later the USSR and other Allied nations with food, oil, and materiel between 1941 and August 1945. It was signed into law on March 11, 1941 and ended in September 1945. In general the aid was free, although some hardware (such as ships) was returned after the war. In return, the U.S. was given leases on bases in Allied territory during the war.

A total of $50.1 billion (equivalent to $656 billion today) worth of supplies were shipped, or 17% of the total war expenditures of the U.S. In all, $31.4 billion went to Britain, $11.3 billion to the Soviet Union, $3.2 billion to France, $1.6 billion to China, and the remaining $2.6 billion to the other Allies. Reverse Lend-Lease policies comprised services such as rent on air bases that went to the U.S., and totaled $7.8 billion; of this, $6.8 billion came from the British and the Commonwealth. The terms of the agreement provided that the materiel was to be used until time for their return or destruction. In practice very little equipment was returned. Supplies that arrived after the termination date were sold to Britain at a large discount for £1.075 billion, using long-term loans from the United States. Canada operated a similar program called Mutual Aid that sent a loan of $1 billion and $3.4 billion in supplies and services to Britain and other Allies. The United States did not charge for aid supplied under this legislation.

This program effectively ended the United States' pretense of neutrality and was a decisive step away from non-interventionist policy, which had dominated United States foreign relations since 1931.

Historical background

Following the surrender of France in June 1940, Britain and its Commonwealth were the forces engaged in war against Nazi Germany. Britain had been paying for its material in gold under "cash and carry", as required by the US Neutrality Acts of the 1930s, but by 1941 it had liquidated so many assets that it was running short of cash.

During this same period, the U.S. government began to mobilize for a war, instituting the first-ever peacetime draft and a fivefold increase in the defense budget (from $2 billion to $10 billion). In the meantime, as the British began running short of money, arms, and other supplies, Prime Minister Winston Churchill pressed President Franklin D. Roosevelt for American help. Sympathetic to the British plight but hampered by the Neutrality Acts, which forbade arms sales on credit or the loaning of money to belligerent nations, Roosevelt eventually came up with the idea of "Lend-Lease". As one Roosevelt biographer has characterized it: "If there was no practical alternative, there was certainly no moral one either. Britain and the Commonwealth were carrying the battle for all civilization, and the overwhelming majority of Americans, led in the late election by their president, wished to help them." As the President himself put it, “There can be no reasoning with incendiary bombs.”

In December, 1940 President Roosevelt proclaimed the U.S. would be the "Arsenal of Democracy" and proposed selling munitions to Britain and Canada. Isolationists were strongly opposed, warning it would lead to American involvement in what was seen by most Americans as an essentially European conflict. In time, however, opinion shifted as increasing numbers of Americans began to see the advantage of funding the British war against Germany, while staying out of the hostilities themselves.

The American position was to help the British but not enter the war. In early February 1941 a Gallup poll revealed that 54 percent of Americans were in favor without qualifications of Lend-Lease. A further 15 percent were in favor with qualifications such as: "If it doesn't get us into war," or "If the British can give us some security for what we give them." Only 22 percent were unequivocally against the President's proposal. When poll participants were asked their party affiliation, the poll revealed a sharp political divide: 69 percent of Democrats were unequivocally in favor of Lend-Lease, whereas only 38 percent of Republicans favored the bill without qualification. At least one poll spokesperson also noted that, "approximately twice as many Republicans" gave "qualified answers as ... Democrats."

Opposition to the Lend-Lease bill was strongest among isolationist Republicans in Congress, who feared the measure would be "the longest single step this nation has yet taken toward direct involvement in the war abroad." When the House of Representatives finally took a roll call vote on February 9, 1941, the 260 to 165 vote fell largely along party lines. Democrats voted 238 to 25 in favor and Republicans 24 in favor and 135 against.

The vote in the Senate, which took place a month later, revealed a similar partisan divide. 49 Democrats (79 percent) voted "aye" with only 13 Democrats (21 percent) voting "nay." In contrast, 17 Republicans (63 percent) voted "nay" while 10 Senate Republicans (37 percent) sided with the Democrats to pass the bill.

President Roosevelt signed the Lend-Lease bill into law on 11 March 1941. It permitted him 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, and in October to the Soviet Union. Roosevelt approved US $1 billion in Lend-Lease aid to Britain at the end of October 1941.

This followed the 1940 Destroyers for Bases Agreement, whereby 50 US Navy destroyers were transferred to the Royal Navy and the Royal Canadian Navy in exchange for basing rights in the Caribbean. Churchill also granted the US base rights in Bermuda and Newfoundland gratis, allowing British military assets to be redeployed.

Administration

President 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 Leo Crowley became head of the Foreign Economic Administration which absorbed responsibility for Lend-Lease.

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

The program ended in September, 1945.

Significance

Lend-Lease would help the British and Allied forces win the battles of future years; the help it gave in the battles of 1941 was trivial. In 1943â€"1944, about a quarter of all British munitions came through Lend-Lease. Aircraft (in particular transport aircraft) comprised about a quarter 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 1943â€"1944, Lend-Lease continued. Most remaining allies 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 motor vehicles and railroad equipment) 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 severely on production of non-essentials, concentrating on producing weapons. This inevitably produced shortages of related products needed by the military or as part of the military-industrial complex.

The USSR was highly dependent on rail transportation, but the war practically shut down rail equipment production: only about 92 locomotives were produced. 2,000 locomotives and 11,000 railcars were supplied under Lend-Lease. Likewise, the Soviet air force received 18,700 aircraft, which amounted to about 14% of Soviet aircraft production (19% for military aircraft).

Although most Red Army tank units were equipped with Soviet-built tanks, their logistical support was provided by hundreds of thousands of U.S.-made trucks. Indeed by 1945 nearly two-thirds of the truck strength of the Red Army was U.S.-built. Trucks such as the Dodge 3/4 ton and Studebaker 2½ ton were easily the best trucks available in their class on either side on the Eastern Front. American shipments of telephone cable, aluminum, canned rations, and clothing were also critical.

Quotations

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 â€" I want my garden hose back after the fire is over." To which Robert Alphonso Taft, Republican Senator from Ohio, responded: "Lending war equipment is a good deal like lending chewing gum. You don't want it back." In practice, very little was returned except for a few ships.

Joseph Stalin, during the Tehran Conference in 1943, acknowledged publicly the importance of American efforts during a dinner at the conference: "Without American production the United Nations [the Allies] could never have won the war."

US deliveries to the 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 and other minerals)
• first protocol period from 1 October 1941 to 30 June 1942 (signed 1 October 1941), these supplies were to be manufactured and delivered by the UK with US credit financing.
• 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. On 20 September 1945 all Lend-Lease to the Soviet Union was terminated.

Delivery was via the Arctic Convoys, the Persian Corridor, and the Pacific Route.

The Arctic route was the shortest and most direct route for lend-lease aid to the USSR, though it was also the most dangerous. Some 3,964,000 tons of goods were shipped by the Arctic route; 7% was lost, while 93% arrived safely. This constituted some 23% of the total aid to the USSR during the war.

The Persian Corridor was the longest route, and was not fully operational until mid-1942. Thereafter it saw the passage of 4,160,000 tons of goods, 27% of the total.

The Pacific Route opened in August 1941, but was affected by the start of hostilities between Japan and the US; after December 1941, only Soviet ships could be used, and, as Japan and the USSR observed a strict neutrality towards each other, only non-military goods could be transported. Nevertheless, some 8,244,000 tons of goods went by this route, 50% of the total.

In total, the US deliveries through Lend-Lease amounted to $11 billion in materials: over 400,000 jeeps and trucks; 12,000 armored vehicles (including 7,000 tanks, about 1,386 of which were M3 Lees and 4,102 M4 Shermans); 11,400 aircraft (4,719 of which were Bell P-39 Airacobras) and 1.75 million tons of food.

Roughly 17.5 million tons of military equipment, vehicles, industrial supplies, and food were shipped from the Western Hemisphere to the USSR, 94% coming from the US. For comparison, a total of 22 million tons landed in Europe to supply American forces from January 1942 to May 1945. It has been estimated that American deliveries to the USSR through the Persian Corridor alone were sufficient, by US Army standards, to maintain sixty combat divisions in the line.

The United States gave to the Soviet Union from October 1, 1941 to May 31, 1945 the following: 427,284 trucks, 13,303 combat vehicles, 35,170 motorcycles, 2,328 ordnance service vehicles, 2,670,371 tons of petroleum products (gasoline and oil), 4,478,116 tons of foodstuffs (canned meats, sugar, flour, salt, etc.), 1,900 steam locomotives, 66 Diesel locomotives, 9,920 flat cars, 1,000 dump cars, 120 tank cars, and 35 heavy machinery cars. One item typical of many was a tire plant that was lifted bodily from the Ford Company's River Rouge Plant and transferred to the USSR. The 1947 money value of the supplies and services amounted to about eleven billion dollars.

British deliveries to the USSR

In June 1941 within weeks of the German invasion of the USSR the first British aid convoy set off along the dangerous Arctic sea routes to Murmansk arriving in September. It was carrying 40 Hawker Hurricanes along with 550 mechanics and pilots of No. 151 Wing to provide immediate air defence of the port and train Soviet pilots. After escorting Soviet bombers and scoring 14 kills for one loss, and completing the training of pilots and mechanics, No 151 Wing left in November their mission complete. The convoy was the first of many convoys to Murmansk and Archangelsk in what became known as the Arctic convoys. Between June 1941 and May 1945 3,000+ Hurricanes were delivered to the USSR along with 4,000+ other aircraft, 5,000+ tanks, 5,000+ anti-tank guns and 15 million pairs of boots in total 4 million tonnes of war materials including food and medical supplies were delivered. The returning ships carried the gold that the USSR was using to pay the US.

Significant numbers of British Churchill and Matilda tanks along with US M3 Lee were shipped to the USSR after becoming obsolete on the African Front. The Churchills, supplied by the arctic convoys, saw action in the siege of St Petersburg and the battle of Kursk. while tanks shipped by the Persian route supplied the Caucasian Front. With the USSR giving priority to the defence of Moscow for domestically produced tanks this resulted in 40% of tanks in service on the Caucasian Front being Lend-Lease models.

Reverse Lend-lease

Reverse Lend-lease or Reciprocal Aid was the supply of equipment and services to the United States, e.g. the British Austin K2/Y military ambulance. From Canada came 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 Nadi, Fiji.

In 1945â€"46 the value of Reciprocal Aid from New Zealand exceeded that of Lend-Lease, though in 1942â€"43 the value of Lend-Lease to New Zealand was much more than that of Reciprocal Aid. Britain also supplied extensive material assistance to American forces stationed in Europe, for example the USAAF was supplied with hundreds of Spitfire Mk V and Mk VIII 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."

Canadian aid to the allied effort

Britain's lend-lease arrangements with its dominions and colonies is one of the lesser known parts of World War II history.

Canada did not use a term like "lend lease" but it did give Britain gifts totaling $3.5 billion during the war, plus a zero-interest loan of $1 billion; Britain used the money to buy Canadian food and war supplies. Canada also loaned $1.2 billion on a long-term basis to Britain immediately after the war; these loans were fully repaid in late 2006.

The Gander Air Base (RCAF Station Gander) located at Gander International Airport built in 1936 in Newfoundland was leased by Britain to Canada for 99 years because of its urgent need for the movement of fighter and bomber aircraft to Britain. The lease became redundant when Newfoundland became Canada's tenth province in 1949.

Most American Lend-Lease aid comprised supplies purchased in the U.S., but Roosevelt allowed Lend-Lease to purchase supplies from Canada, for shipment to Britain, China and Russia.

Repayment

Congress had not authorized the gift of supplies delivered after the cutoff date, so the U.S. charged for them, usually at a 90% discount. Large quantities of undelivered goods were in Britain or in transit when Lend-Lease terminated on 2 September 1945. Britain wished to retain some of this equipment in the immediate post war period. In 1946, the post-war Anglo-American loan further indebted Britain to the U.S. Lend-Lease items retained were sold to Britain at 10% of nominal value, giving an initial loan value of £1.075 billion for the Lend-Lease portion of the post-war loans. Payment was to be stretched out over 50 annual payments, starting in 1951 and with five years of deferred payments, at 2% interest. The final payment of $83.3 million (£42.5 million), due on 31 December 2006 (repayment having been deferred in the allowed five years), was made on 29 December 2006 (the last working day of the year). After this final payment Britain's Economic Secretary to the Treasury formally thanked the U.S. for its wartime support.

Tacit repayment of Lend-Lease by the British included several valuable technologies, including those related to radar, sonar, jet engines, nuclear weapons, antitank weaponry, rockets, superchargers, gyroscopic gunsights, submarine detection, self-sealing fuel tanks, and plastic explosives. Many of these were transferred by the Tizard Mission. The official historian of the Office of Scientific Research and Development, James Phinney Baxter III, wrote: "When the members of the Tizard Mission brought the cavity magnetron to America in 1940, they carried the most valuable cargo ever brought to our shores."

While repayment of the interest-free loans was required after the end of the war under the act, in practice the U.S. did not expect to be repaid by the USSR after the war. The U.S. received $2M in reverse Lend-Lease from the USSR. This was mostly in the form of landing, servicing, and refueling of transport aircraft; some industrial machinery and rare minerals were sent to the U.S. The U.S. asked for $1.3B at the cessation of hostilities to settle the debt, but was only offered $170M by the USSR. The dispute remained unresolved until 1972, when the U.S. accepted an offer from the USSR to repay $722M linked to grain shipments from the U.S., with the remainder being written off. During the war the USSR provided an unknown number of shipments of rare minerals to the US Treasury as a form of cashless repayment of Lend-Lease. This was agreed before the signing of the first protocol on 1 October 1941 and extension of credit. Some of these shipments were intercepted by the Germans. In May 1942, HMS Edinburgh was sunk while carrying 4.5 tonnes of Soviet gold intended for the U.S. Treasury. This gold was salvaged in 1981 and 1986. In June 1942, SS Port Nicholson was sunk en route from Halifax, Canada to New York, allegedly with Soviet platinum, gold, and industrial diamonds aboard. However, none of this cargo has been salvaged, and no documentation of it has been produced.