WHAT YOU NEVER KNEW ABOUT WWII's Lend-Lease Program
Baudelier, Alan, Sea Classics
Ever resourceful, President Roosevelt found an innovative way around America's neutrality laws to finance our Allies in WWII
It can be safely stated that few Americans alive today either recall or appreciate the genius of threeterm President Franklin Delano Roosevelt who led this country through two of worst periods in our history - the Great Depression of 1929 and the world's greatest conflict - World War II.
Though highly controversial at the time of its implementation, Roosevelt's ambitious "New Deal" of 1933 became the blueprint for America's recovery from its plight as a near bankrupt nation. Nowhere was Roosevelt's genius for finance and economics better demonstrated than in the many unique, far-sighted legislations he managed to successfully engineer and implement than in the Lend-Lease Act of 1940 which not only provided vitally needed war materials to our Allies, but set the stage for the multi-billion dollar financing of America's involvement and ultimate victory in WWII.
The best example of Roosevelt's genius was the adroit manner in which he almost single-handedly maneuvered an isolationist nation into becoming the standard bearer of America's quest for world-wide democracy. At the time of his election in 1933, most of the American public knew little and cared less about what was happening in Europe, Asia, and the Mid-East.
A daunting economic calamity staggered the planet's most productive society, creating a myopic mood that almost traumatized America's heart and soul. Everything philosophically held near and dear soured in the need to face the harsh realities of an often starving, largely unemployed populace.
By creating an unheard maze of bureaucratic agencies, Roosevelt's plethora of "New Deal" programs innovatively primed an economic pump that got our economy started again, an impetus that allowed the President to leverage virtually untapped industrial production potential into a high-stakes international crap shoot. As the world watched the rise of fascism in Germany, Italy, and Japan, Roosevelt professed that the United States could not only feed the world, but arm and finance it as well - and set out to prove this with the same innovative economic programs devised to shed America's harrowing domestic drought.
Formally entitled "An Act to Further Promote the Defense of the United States," Lend-Lease became the program under which the United States supplied the United Kingdom, Soviet Union, China, Free France, and other Allied nations the materials of war between 1941 and 1945. Signed into law on 11 March 1941, a year and a half after the outbreak of war in Europe (September 1939), but ninemonths before the US entered the war in December 1941, the Act effectively ended the pretense of neutrality.
Before it ended in September 1945 a total of $50.1 billion (equivalent to $647 billion today) worth of supplies had been 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 was the other side of the coin wherein the US paid for services such as rent on air bases and facilities for US use, 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 matériels were to be used until time for their return or destruction. Supplies after the teimination date were sold to Britain at a discount for £1.075 billion using long-term loans from the US. Canada operated a similar program that sent $4.7 billion in supplies to the United Kingdom and the Soviet Union. Taken as a whole, this program was a critically decisive step away from noniiiterventionist policy, which had dominated US foreign relations since theendofWorldWarl.
THE HOW & WHY OF LEND-LEASE
Following the fall of France in 1940, Great Britain became the only European nation actively engaged in war against Nazi Germany. Until then Britain had been paying for its war goods in gold under "cash and carry," as required by the Neutrality Acts of the 1930s, but by 1941 the UK had liquidated so many assets it was fast running short of cash. During this same period, the US government began to mobilize for a possible war, instituting the first-ever peacetime draft and a five-fold increase in the long dormant defense budget (from $2 billion to $10 billion).
In the meantime, as the British began nmning short of money, arms, and other supplies, Prime Minister Winston Churchill pressured 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 FDR biographer 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 ovenvhelming majority of Americans, led in the late election by their president, wished to help them." As Roosevelt himself put it, "There is no reasoning with incendiary bombs."
AN ARSENAL OF DEMOCRACY
In December 1940, President Roosevelt took it upon himself to proclaim that the US would be the "Arsenal of Democracy" by proposing to sell munitions to Britain and Canada. Isolationists grew furious and were strongly opposed, warning it would lead to American involvement in what was viewed by most Americans as an essentially European conflict. In time, however, opinion shifted as Americans began to adopt the philosophy that saw the advantage of funding the British, while staying out of the hostilities themselves.
The formal American position was a political tight rope; to help the British but not enter the war. A Gallup poll taken early February 1941 revealed that 54% of Americans were unqualifiedly in favor of Lend-Lease. A further 15% were in favor with qualifications such as: "If we can steer clear of the war," or "If the British provide us some security for what we give them." Twenty-three percent were unqualifiedly against the President's proposal. When poll participants were asked their party affiliation, the poll revealed a sharp political divide: 69% of Democrats were unqualifiedly in favor of Lend-Lease, whereas only 38% of Republicans favored the bill without qualification.
Opposition to the Lend-Lease bill was strongest among isolationist Republicans in Congress, who feared that 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 9 February 1941, the 260 to 165 vote fell largely along party lines. Democrats carried the day with 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 divide - 49 Democrats (79%) voted "aye" with only 13 Democrats (22%) voting "nay." In contrast, 17 Republicans (63%) voted "nay" while ten Senate Republicans (37%) sided with the Democrats to pass the bill.
DESTROYERS FOR BASES
President Roosevelt signed the Lend-Lease bill into law on 11 March 1941 and by the end of October he had approved US $1 billion in Lend-Lease aid just to Britain. The new law permitted him to "sell, transfer title to, exchange, lease, lend, or otherwise dispose of, to any such government whose defense the President deemed vital to the defense of the United States." In April, this policy was extended to China, and in October to the Soviet Union.
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.
Roosevelt set up the Office of LendLease Administration in 1941, appointing steel executive Edward R. Stettinius as head. In September 1943, he was promoted to Undersecretary of State and Federal Deposit Insurance Corporation (FDIC) director 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, dominated by Harry Hopkins and Gen. John York, both of whom were totally sympathetic to the provision of "unconditional aid." Very soon it was demonstrated that Lend-Lease was a major consideration in the eventual success of the Allies in World War ?. In 1943-1944 alone, about a quarter of all British munitions arrived through Lend-Lease. Aircraft, especially C-47 transport aircraft, comprised about a quarter of the shipments to Britain, followed by food, land vehicles and ships.
The Royal Navy soon fielded a veritable armada of American-built warships, merchantmen, and amphibious craft ranging from escort carriers to LSTs to sub-hunting destroyer-escorts. By war's end, Royal Navy fleet carriers would also proliferate with an abundance of American-supplied Naval aircraft like the F4F Wildcat, F6F Hellcat, F4U Corsair and TBM Avenger. England's wartime army, which abandoned most of its heavy equipment on the beaches of Dunkirk in the 1940 evacuation from France also re-equipped with a variety of American-made trucks and armor including the widely used M-3 Grant and M-4 Sherman tanks.
Even after the United States forces in Europe and the Pacific began to reach full-strength in 1943-1944, Lend-Lease continued. Most remaining Allies were largely selfsufficient in front line equipment (such as tanks and fighter aircraft) by this stage, but Lend-Lease provided a useful supplement of Lend-Lease logistical supplies (including motor vehicles and railroad rolling stock, all of enormous assistance.
Much of the aid can be better appreciated when considering the war's many economic distortions. Most belligerent powers cut back severely on production of nonessentials, concentrating on producing weapons. This inevitably produced shortages of related products needed by the military. For example, the USSR was highly dependent on rail transportation, but the war virtually eliminated production of rail equipment. Only 92 locomotives were produced in the USSR, yet under Lend-Lease 2000 locomotives and 11,000 railcars were supplied.
Likewise, the Soviet air force received 18,700 American-built aircraft, which amounted to about 14% of Soviet aircraft production. Although most Red Army tank units were equipped with Soviet-built tanks, their basic logistical support was provided by hundreds of thousands of US-made trucks, jeeps, and weapons carriers. Amazingly, by 1945 two-thirds of the truck strength of the Red Army was US-built. Trucks such as the Dodge 3/4-ton and Studebaker 2-ton, were easily the best trucks available in their class on either side on the Eastern Front.
Likewise, Russia's Navy manned American-loaned icebreakers, patrol frigates, and support vessels. American shipments of food stuffs, medicines, canned rations, clothing, and aluminum were critically required supplies that arrived in American-flagged merchantman crewed by American merchant seamen.
Eager to ensure public consent for this controversial plan, Roosevelt explained to the press and public that his plan was similar to one neighbor lending another a garden hose to put out a fire in his home. 'What do I do in such a crisis?" the president postulated at a press conference. "I don't say. . . *Neighbor, my garden hose cost me $15; you may use it you pay me $15 for it'. . . but, I don't want $15 - I just want you to return my garden hose after the fire is extinguished." In this fashion, often delivered via deeply personal "fireside chats," the President was often able to cleverly mold public opinion to suit his political needs. Bolstering this friendly "big uncle" approach was deft manipulation by Washington bureaucrats of every form of communication ranging from newspapers to magazines, motion picture studios, book publishers, to all strata of the academic community.
FEEDING THE RED BEAR
By way of a rare display of appreciation, during the Tehran Conference in 1943, Soviet Premier Joseph Stalin, publicly acknowledged the importance of America's efforts: "Without American production the United Nations could never have won the war." The first shipment to Russia was paid for in gold (Pre-Lend-Lease Act) on 22 June 1941 with a second following in October 1941, and continued uninterrupted until formally ended 20 September 1945. Deliveries also 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.
Delivery was via 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. Almost 4,000,000-tons of goods were shipped by the Arctic route; 7% was lost, while 93% arrived safely, constituting 24% 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, 180,000-tons of goods, 27% of the total.
The Pacific Route opened in August 1941, but its operation was affected by the start of hostilities between Japan and the US. After December 1941, only Soviet ships could be used since 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.
LEND-LEASE IN REVERSE
Often called Reciprocal Aid, Reverse Lend-Lease was the supply of equipment and services to the United States, as exemplified by de Havilland Mosquito photo-reconnaissance aircraft and hundreds of Spitfire Mk.V and Mk. VIII fighters loaned to the USAAF, Canadian Fairmile launches and corvettes for anti-submarine use, and supplied food to US forces in the South Pacific by New Zealand. In 1945-1946, the value of Reciprocal Aid from New Zealand actually exceeded that of Lend-Lease.
The UK also supplied extensive material assistance to US forces stationed in Europe. The total of defense materials and services to Canada received through lend-lease channels amounted to approximately $419.5 million. Some idea of the scope of economic collaboration can be realized from the fact that from the beginning of 1942 through 1945 Canada, furnished the US with $1 billion to $1.25 billion 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 US. The agreement was that all temporary construction for the use of American forces and all permanent construction required by the US forces beyond Canadian requirements would be paid for by the US; 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 national sovereignty and a desire to be a good neighbor led the Canadian Government to suggest a new financial agreement. In the end the total amount that Canada agreed to pay under the new arrangement came to $76,800,000, which was some $13,870,000 less than the US had spent on the facilities.
CANADIAN AID TO GREAT BRITAIN
Britain's Lend-Lease arrangements with its dominions and colonies is one of the lesser known aspects of WWII history. While Canada did not use a term like "Lend Lease" it did give Britain gifts totaling $3.5 billion during the war; 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, and these loans were fully repaid in late 2006. Most American Lend-Lease aid comprised supplies purchased in the US, but Roosevelt allowed Lend-Lease to purchase supplies from Canada, for shipment to Britain, China and Russia.
PAY BACK DELAYED
There was no charge for the LendLease aid delivered during the war, but the US did expect the return of some durable goods such as ships. Congress had not authorized the gift of supplies after the war, so the administration charged for them, usually at a 90% discount. Large quantities of undelivered goods were in Britain or in transit when LendLease tenninated 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 US Lend-Lease items retained were sold to Britain at 10% of nominal value, giving an initial loan value of £1.075 billion for the LendLease 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 modest interest. Final payment of $83.3 million (£42.5 million), was due on 31 December 2006 (repayment having been deferred in the allowed five-years), and was paid on 29 December 2006 (the last working day of the year). Once this final payment was made, Britain's Economic Secretary to the Treasury, Ed Balls, formally thanked the US for its wartime support. So ended a very creative and generous program that was crucial to obtaining the overall Allied victory in WWII. Thanks to Roosevelt's flair for finance and economics as well as politics, a war that might have bankrupted the world in fact helped create a thriving international economy which, in large measure, we still enjoy today.…
Questia, a part of Gale, Cengage Learning. www.questia.com
Publication information: Article title: WHAT YOU NEVER KNEW ABOUT WWII's Lend-Lease Program. Contributors: Baudelier, Alan - Author. Magazine title: Sea Classics. Volume: 45. Issue: 8 Publication date: August 2012. Page number: 50+. © Challenge Publications Inc. Mar 2009. Provided by ProQuest LLC. All Rights Reserved.
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