306 Lord Cranborne, U.K. Secretary of State for Dominion Affairs, to Commonwealth Government

Cablegram 101 LONDON, 17 February 1941, 11.05 p.m.

IMMEDIATE SECRET

In connection with United States lease or loan bill, we have been asked by the United States Administration to submit as a matter of the utmost urgency estimates of our requirements not only of warlike stores, but also of other commodities such as raw materials, food, etc. to which the bill may apply.

There is no certainty yet as to what commodities other than armaments may be held to be covered by the bill but we are urgently preparing estimates of our requirements so far as the United Kingdom is concerned.

2. Inasmuch that all Dominion orders for warlike stores and aircraft and components have by arrangements previously made been placed through, or in conjunction with, the British Purchasing Commission, and Air Commission we are in a position to include in our estimates for the Dominion requirements under these heads and we assume that it will be in accordance with your wishes that we should do so.

3. As regards estimates of other commodities required by the Dominions from the United States, we should be glad to know whether the Commonwealth Government would agree that we should submit their estimates with ours. The figures are required within the next few days and for the immediate purpose of ensuring that the Commonwealth requirements will not be omitted, we have notified the British Supply Council in North America for their guidance a provisional figure of 15 million pounds sterling as representing the estimate of the annual rate of expenditure by the Commonwealth Government on such other commodities on the understanding that we should immediately consult the Commonwealth Government with a view of ascertaining whether they agree to our including their estimates with ours and if so to obtain details in support of the figure provisionally submitted. We should accordingly be grateful for the earliest possible expression of views of the Commonwealth Government.

4. If it is agreed that the Commonwealth figure should be submitted with our own, we should be glad to have the considered estimate of commitments to be incurred in respect of such orders in the United States- (a) from now until June 30th, 1941;

(b) for the period July 1st, 1941, to June 30th, 1942 under the following heads:-

(1) Metals (including steel).

(2) Oil.

(3) Other raw materials.

(4) Food (including tobacco).

(5) Machinery.

(6) General manufactures.

(7) Motor vehicles.

5. It appears to us that in the present uncertainties surrounding the application and working of the bill which are not likely to be resolved for some time and in view of the present insistence of the United States Administration that orders be placed through one channel for other commodities as well as for warlike stores, there is no satisfactory alternative [to] co-ordinating estimates of requirements for sterling Dominions through the British Supply Council in North America in the manner proposed.

6. If the Commonwealth Government agree to action on this basis, the United Kingdom Government would proceed on the understanding that whatever liability is assumed by the United Kingdom Government in respect of the Commonwealth requirements, or [sic] corresponding liability would be accepted by the Commonwealth Government. In the case of any commodities not covered by lease- loan bill we should, as at present, have to find dollars or gold.

For commodities covered by the bill, such conditions regarding the future repayment or replacement as may in due course be imposed by the United States Government would fall to be met by the Dominion concerned. This aspect of the matter will need further consideration as the situation develops and need not be finally settled at present.

7. We trust in considering the estimate of requirements in accordance with paragraph 4 above, the Commonwealth Government will bear always in mind that the financial strain of our joint war effort requires concentration on the acquisition of essentials only and that the extremely difficult shipping situation will also impose severe limitations on scale on which requirements can usefully be estimated. Canada's position as being a member of Commonwealth and an active participant in our war effort requires special consideration to ensure that her economic staying power shall not be damaged by the diversion to the United States of orders which Canada is in a position to fulfil, and for our part we do not contemplate that our programme of purchases in Canada should be appreciably modified.

8. We should be grateful for the earliest possible reply to this telegram in view of the urgent need of meeting the request of the United States administration. We hope that the figures asked for in paragraph 4 may reach us not later than Saturday 22nd February.

[AA:A3195, 1941, 1.2424]