Lend-Lease

Lend-Lease, or lease-lend, was the programme by which the USA provided the bulk of its aid to nations fighting Germany, Italy, and, eventually, Japan during the Second World War. In lieu of credits and loans, the US Government supplied to over 38 nations whatever goods were certified by President Roosevelt as ‘in the interest of national defense’. The only legal limitations were his own judgement, and the need for Congressional appropriations to pay for the goods. Repayment was to be as ‘the President deems satisfactory’, an extraordinarily broad grant of authority (both quotations from the text of the legislation).

The need for a scheme like Lend-Lease lay in the experience of the USA in the aftermath of the First World War. Whatever the facts, Americans perceived European actions after that conflict as a rejection of US leadership. That frustration, combined with the international crisis of the great depression, made Americans reluctant to get involved in Europe's political crises—even adamantly against doing so—a policy popularly labelled ‘isolationism’, but better called nationalism.

In the midst of the economic collapse of the 1930s, and as Mussolini and Hitler began to threaten the status quo, Congress constructed a series of legislative barriers designed to prevent the nation from being drawn into a European war by greedy industrialists and bankers as had supposedly happened in 1917. The Neutrality Acts initially prevented belligerents from purchasing war materials in the USA, while the Johnson Debt-Default Act prohibited nations from borrowing money if they had not paid all their First World War war debts—something only Finland had done. By the time hostilities began in Europe in 1939, Roosevelt and his closest advisers had privately chosen sides, but saw no need to move the nation towards intervention, particularly in the face of intense domestic opposition. As a result, the neutrality laws were modified enough to permit nations at war to buy even military goods, but only on a strict (pay) cash-and-carry (them in your own ships) basis. British and French preparedness benefited, as did the American economy.

But cash was in increasingly short supply in the western European ‘democracies.’ The depression had seen a collapse of international trade, a situation that worsened with the disruption of war. Then, in June 1940, the French surrender left the UK facing Germany and Italy alone. Preparing to combat an invasion of the British Isles as well as defending key positions in North Africa and the Middle East strained British financial resources to the limit, and beyond.

But Americans, even Roosevelt, found it difficult to believe that the vast British Empire was short of cash. Not until Churchill instructed treasury officials to open the books to the Americans did Roosevelt and his treasury secretary, Henry Morgenthau Jr., conclude that the UK had to have some kind of credits, loans, or subsidies. After all, Roosevelt and most Americans still hoped to avoid all-out involvement in the war, but that depended on the UK's success—or at least survival.

Substantial American aid to the UK faced two hurdles. The Johnson Debt-Default Act seemed small, even silly, in the shadow of German militarism, but Americans remained embittered by their First World War experience and viewed the refusal of the Europeans to pay their debts as a serious breach of faith. Underlying that resentment was the fear that aid would bring the nation into war rather than help to avoid it. One of Roosevelt's advisers told him: ‘It seems to me that we Americans are like the householder who refuses to lend or sell his fire extinguisher to help put out the fire in the house that is right next door’ (Kimball [see below], p. 77). But anti-interventionist Senator Burton Wheeler warned that ‘you can't put your shirt-tail into a clothes wringer and then pull it out suddenly while the wringer keeps turning’ (ibid., p. 58).

Events suggest that both were correct—the USA was being shortsighted in not helping put out a fire that might spread, yet that help once extended constituted an economic declaration of war that virtually ensured American involvement. But in the autumn of 1940, Roosevelt still temporized. Public opposition to intervention, inadequate military preparedness, and a sneaking suspicion that the expected German invasion of England (see SEALION) would succeed all blended to make him cautious. He had stretched presidential authority as far as he dared, or wanted, with the destroyers-for-bases agreement and special government loans to expand American war production plants. Yet British officials, from the ambassador to treasury representatives, came to Washington with their hands out. ‘Britain's broke,’ warned the British ambassador, Lord Lothian (1882–1940), and Morgenthau agreed. Assets such as India, the Suez Canal, and post-war trade prospects did not translate into cash. Churchill, while writing one of his histories a year earlier, had summed it up: ‘Money—above all, ready money. There was the hobble which cramped the medieval kings; and even now it counts somewhat’ (The Birth of Britain, London, 1956, p. 474).

By early December 1940, Roosevelt was ready to act. SEALION had been postponed, rumours had surfaced of a German move towards the Balkans and the USSR (though the British insisted they were still Hitler's primary target), and full American aid held out the promise of success without having to send American troops to fight in Europe. The president instructed his cabinet to come up with a solution, then left for a short Caribbean cruise. Churchill, by then in regular telegraphic correspondence with Roosevelt, added his eloquent plea: ‘You may be assured that we shall prove ourselves ready to suffer and sacrifice to the utmost for the Cause, and that we glory in being its champion. The rest we leave with confidence to you and to your people, being sure that ways and means will be found which future generations on both sides of the Atlantic will approve and admire.’ Grand phrases aside, the prime minister promised a fight to the end if only (and perhaps only if ) the Americans would provide the wherewithal.

Ten days later, on 17 December, at a carefully planned presidential press conference, the fire-hose analogy resurfaced as Roosevelt suggested a way to give the UK that wherewithal, without calling it loans, credits, or subsides. He claimed he had a new idea that would get ‘rid of the silly, foolish old dollar sign’, proposing that the USA should lend its garden hose to help its neighbour put out the fire—and if the hose were damaged in the fight, then there would be ‘a gentleman's obligation to repay in kind’ instead of an invoice for the dollar amount.

A few days later, on 29 December, Roosevelt put Churchill's grand if unrealistic commitment into specific terms, arguing that the USA should become the ‘Arsenal of Democracy’. Secretary of War Henry Stimson warned that ‘we cannot permanently be in the position of toolmakers for other nations which fight’, but Americans seemed comforted by the thought of protecting their security without having to go to war. The unlikelihood of the UK having the strength to defeat Hitler (as opposed to merely surviving) was raised only by the so-called isolationists, who were already tarred as unrealistic appeasers or even as pro-Nazi (see America First Committee).

Putting the fire-hose concept into legislation was the treasury department's job, though Roosevelt attached two broad guidelines. First, the debate in and out of Congress was to appear full and unrestricted—though that did not mean full candour on his part. The president needed broader public support as he moved to aid the UK, and only a ‘Great Debate’ would give him the mandate he sought. Second, Roosevelt wanted a bill that gave him the widest possible latitude to decide what nations to aid, what goods to send, and what to ask as repayment.

He got pretty much what he wanted. The debate over H.R. 1776 (so numbered by the Parliamentarian of the House to make it sound more patriotic) was long and full, and served to heighten public awareness of the geopolitical crisis in Europe. Congress did require that Lend-Lease appropriations be made annually and that regular reports be submitted, thus establishing some semblance of oversight. But administration spokesmen refused to discuss the possibility of military intervention or even the need to use US warships to convoy Lend-Lease goods—a refusal that was as much a matter of indecision within the government as it was a desire to avoid the issues. Opponents unsuccessfully tried to prohibit aid to the USSR and attached a meaningless statement that the legislation did not authorize convoying, but on 11 March 1941 the bill passed easily in a vote that generally followed party lines, as Democrats overwhelmingly supported the president.

At that point, Lend-Lease took on two separate lives. The first was as an extraordinary aid programme that supplied the sinews of war to the Grand Alliance and others; the second was what is best called the politics of Lend-Lease. The programme was a remarkable success as a straightforward subsidy for US allies. As American war production expanded in what was truly an economic revolution, Lend-Lease provided the means and organization to deliver the goods. The Office of Lend-Lease Administration (OLLA, officially created in August 1941), briefly headed by Roosevelt's alter ego Harry Hopkins, and then by businessman and later secretary of state Edward Stettinius, handled its task with great enthusiasm and reasonable efficiency. As with so much in the Roosevelt administration, initiative was more important than official channels, and OLLA took charge.

The logistics of Lend-Lease delivery were as crucial to the programme as production, and a good deal more difficult. The physical task of delivering hundreds of thousands of tons of goods was staggering. Merchant ships carried the bulk of the matériel from the USA in convoys, much of it to British ports for trans-shipment to its final destination. Shipments to the USSR were usually taken by the Arctic convoys from the UK to Murmansk in the north, or from the USA to the Persian Gulf and thence by a new rail line built from Persia into the USSR. Lend-Lease aircraft were flown across the Atlantic, usually ferried by civilian pilots—some of them women (see Atlantic Ferry Organization); those heading for the USSR or the Middle East were ferried across central Africa (see Takoradi air route) though some were flown from Alaska across the Bering Strait. Lend-Lease for China as well as for Anglo-American forces fighting in South and South-East Asia went through Indian ports, which proved serious bottlenecks that required the expansion of rail and road facilities. At the outset, Lend-Lease was limited by two factors: US production could not meet the demands of the American military, and merchant shipping was in very short supply. By 1943, both those limits were overcome as shipments reached $10 billion that year and $11 billion the next.

After the Normandy landings in June 1944 (see OVERLORD), a second set of limits began to affect the programme. Stettinius had relied on the justness of his cause in the bureaucratic infighting of wartime Washington, but by 1944, OLLA had been absorbed into the Foreign Economic Administration, a vast, inchoate organization with little sense of purpose or esprit de corps. Moreover, both the state and treasury departments reasserted their power as the time came for post-war planning. Coincidentally, Congressional support for huge Lend-Lease appropriations began to slip as Americans thought more and more about conversion to peacetime pursuits.

Whatever the programme's problems, Lend-Lease was a rousing success. A precise dollar figure cannot be determined since the value of the dollar changed during the war, and the worth of services and technological transfers can only be estimated. But between $42 and $50 billion of aid-food, military goods, oil, industrial production, and services-went to America's wartime allies (see Tables 1 and 2). The UK, the original beneficiary, and its empire received about half that total, the USSR, about $10 billion, France (mostly de Gaulle's Free French movement) some $3.5 billion, and China over $2 billion—the latter a relatively small amount because of a combination of hazardous supply routes (in particular the Hump air route), a weak Chinese military performance, and shifting US military priorities in the Pacific. Irrespective of sheer quantity, much of the aid was crucial to the war effort. Lend-Lease trucks helped put the Red Army on wheels as it rolled across eastern Europe; Lend-Lease munitions armed soldiers from North Africa to New Guinea; Lend-Lease food helped maintain the Home Front from London to New Delhi. In addition, some $8 billion of ‘reverse’ Lend-Lease—mainly technology transfers, and raw materials from the British and French empires—went to the USA.

Even while Lend-Lease functioned as an aid and exchange programme, it took on its second life—as a political programme. Almost as soon as the bill became law, state department officials began to use it as a lever to force broad changes in the world's political economy. Repayment was to be in concessions, not kind. The American position surfaced during the Placentia Bay conference, but the 1941–2 negotiations for a Master Lend-Lease Agreement with the UK set the tone. The state department insisted that their ally open its markets, at home and in the empire, to unrestricted American trade and commerce. With the UK so dependent on the USA for both wartime and post-war economic help, the British negotiator, John Maynard Keynes, had to acquiesce. The Imperial Preference System (special trade and tariff privileges among members of the British Empire) was the initial target, but the concept was pursued in conferences on the international wheat market, post-war civil aviation, and the monetary agreements made at Bretton Woods.

Lend-Lease to the USSR posed special problems from the outset. Roosevelt, wary of domestic criticism and aware that no significant aid could arrive before the 1941 battle for Moscow was decided, waited over four months after the German invasion in June 1941 (see BARBAROSSA) to declare the USSR eligible for Lend-Lease, although he provided symbolic aid before that (see also Three-Power conference). American strategists knew that only the Red Army could defeat Hitler on the ground, and Lend-Lease helped do just that. It constituted only about 7% of what the USSR itself produced during the war, but did allow the Soviets to concentrate their production where they were most efficient.

Lend-Lease, Table 1: Lend-Lease aid in millions of dollars

	Monthly	Cumulative from 11 March 1941
	Goods	Services	Total	Goods	Services	Total
a Negative figure results from adjustment to reflect downward revision in ship charter rates.
Source: ‘Twentieth Report to Congress on Lend-Lease Operations (on the period ending 30 June 1945)’ (US Government Printing Office, 1945).
1943
January	627	55	682	7,175	1,760	8,935
February	656	41	697	7,831	1,801	9,632
March	663	24	687	8,494	1,825	10,319
April	720	63	783	9,214	1,888	11,102
May	716	74	790	9,930	1,962	11,892
June	954	77	1,031	10,884	2,039	12,923
July	1,018	32	1,050	11,902	2,071	13,973
August	1,114	147	1,261	13,016	2,219	15,235
September	1,121	76	1,197	14,137	2,294	16,431
October	1,028	73	1,101	15,165	2,368	17,533
November	971	105	1,076	16,136	2,473	18,609
December	1,300	77	1,377	17,436	2,550	19,986
1944
January	1,214	45	1,259	18,650	2,595	21,245
February	1,124	226	1,350	19,774	2,821	22,595
March	1,406	224	1,630	21,180	3,045	24,225
April	1,266	18	1,284	22,446	3,063	25,509
May	1,160	239	1,399	23,607	3,301	26,908
June	1,212	150	1,362	24,819	3,451	28,270
July	1,308	82	1,390	26,127	3,533	29,660
August	1,009	156	1,165	27,136	3,689	30,825
September	1,116	82	1,198	28,252	3,771	32,023
October	1,048	97	1,145	29,300	3,868	33,168
November	856	39	895	30,156	3,907	34,063
December	1,254	65	1,319	31,410	3,972	35,382
1945
January	997	179	1,176	32,407	4,151	36,558
February	1,407	55	1,462	33,814	4,206	38,020
March	993	ç41a	952	34,807	4,165	38,972
April	902	68	970	35,709	4,233	39,942
May	846	33	879	36,555	4,266	40,821
June	886	314	1,200	37,441	4,580	42,021

But Lend-Lease to the USSR was, for Roosevelt, much more than just a wartime aid programme. It was an integral part of his aspiration to make the Grand Alliance an educational experience for the suspicious, wary Bolsheviks who had remained outside the mainstream of international relations. Lend-Lease would demonstrate the benefits of the American system, help convince Soviet leaders that the liberal democracies could be trusted, and put Americans and the people of the USSR in close contact with each other—what a later president called a people-to-people programme. That put the USSR in a special category for Lend-Lease aid. Presidential policy called for promising to give the Soviets almost everything they requested, which caused misunderstandings and resentment when either US production, German submarines, insufficient shipping resources, or the requirements of other theatres made it impossible to deliver.

Despite public statements during the war by Stalin praising US aid, American diplomats in Moscow created a minor incident when they complained that the Soviets did not give the USA credit for its Lend-Lease aid. That episode foreshadowed the deterioration of the image of Lend-Lease in the USSR from a popular and successful aid programme into another Cold War argument. At the end of the war, the Truman administration required payment for non-military supplies to the USSR, especially a large number of ships. The initial estimate of the bill was $2.6 billion. The Soviets rejected the amount, and eventually agreed to negotiate. But the discussions came to nothing as one or another Cold War consideration prevented a settlement. Finally, in June 1990, in the glow of glasnost and with the USSR eager to qualify for US credits (still illegal under the Johnson Debt-Default Act until the USSR paid its Second World War ‘debts’), a repayment agreement was reached. At the same time, Soviet historians began to revise their earlier dismissal of the significance of Lend-Lease for the Soviet war effort.

Once the tide of war had changed and attention began to focus on the shape of the post-war world, some in the USA began to accuse the UK of using Lend-Lease to husband its own resources and thus gain a competitive edge. Such charges fell on receptive ears, for Americans retained their suspicions of British guile and belief in the UK's opulence. Even Roosevelt insisted that one had to drive a hard bargain with one's closest ally. White Papers outlining restrictions on the re-export of Lend-Lease goods were followed by arguments over Lend-Lease for post-war reconstruction (Stage II Lend-Lease). Whatever vague promises of post-war Lend-Lease Roosevelt made at the Quebec conference in September 1944 (see OCTAGON)—allegedly in return for Churchill's agreement to the Morgenthau Plan for Germany—Truman, fearful of Congressional opposition and ignorant of the ramifications of his action, abruptly halted Lend-Lease on the day the Japanese surrendered, 15 August 1945. It was a petty, sordid ending to what Churchill had called ‘the most unsordid act’.

Lend-Lease, Table 2: Lend-Lease aid—by category

	Cumulative to 1 July 1945	Percent of Total Aid
Source: as Table 1.
Goods Transferred
Munitions
Ordnance	$1,291,672,000	3.1
Ammunition	2,652,458,000	6.3
Aircraft	4,967,466,000	11.8
Aircraft engines, parts, etc.	2,543,882,000	6.1
Tanks and parts	3,542,997,000	8.4
Motor vehicles and parts	2,074,751,000	4.9
Watercraft	3,618,336,000	8.6
total	20,691,562,000	49.2
Petroleum products	2,184,730,000	5.2
Industrial materials and products
Machinery	2,180,020,000	5.2
Metals	2,069,780,000	4.9
Miscellaneous materials and manufactures	4,407,914,000	10.5
total	8,657,714,000	20.6
Agricultural products
Foods	5,094,724,000	12.1
Other agricultural products	811,742,000	2.0
total	5,906,466,000	14.1
total transfers	37,440,472,000	89.1
Services Rendered
Rental of ships, etc.	3,268,092,000	7.8
Servicing, repair of ships, etc.	570,433,000	1.4
Production facilities in USA	634,210,000	1.5
Miscellaneous expenses	107,572,000	.2
total services	4,580,307,000	10.9
total direct aid	42,020,779,000	100.0
Consignment to US commanding generals
for subsequent transfer under Lend-Lease	788,603,000

But that does not eclipse its significance as an immensely successful wartime aid programme, one that set the stage for the US foreign aid programmes that followed. Lend-Lease was designed to deliver America's economic strength to the war effort without leaving behind a residue of war debts and recriminations. Despite a bad after-taste in both the UK and the USSR, it worked. See also Canadian Mutual Aid and world trade and world economy.

Warren Kimball

Bibliography

Dobson, A. P. , US Wartime Aid to Britain, 1940–1946 (New York, 1986).
Herring, G. C. , Aid to Russia, 1941–1946: Strategy, Diplomacy, and the Origins of the Cold War (New York, 1973).
Kimball, W. F. , ‘The Most Unsordid Act’: Lend-Lease, 1939–1941 (Baltimore, Md., 1969).
Stettinius, E. R., Jr. , Lend-Lease: Weapon for Victory (New York, 1944).