232 Keane to Curtin

Letter CANBERRA, 30 June 1943

A number of reports which have appeared in the press recently have suggested that the reciprocal aid being granted by Australia to the United States Forces is now outstripping the Lend-Lease aid granted to Australia by the United States Government. The first suggestions of this kind were contained in press messages cabled from Washington. While, as far as I am aware, these suggestions have never received any support or encouragement in Ministerial or informed official circles in Australia, there is no doubt that they have led to widespread misconception (even among some officials) of the relative magnitude of Lend-Lease and reciprocal Lend-Lease transactions.

The press reports have caused some concern to the U.S. Army representatives here and the matter was raised by Colonel Kramer at the 15th Meeting of the Allied Supply Council [1], held on June 1st, 1943.

U.S. Army officers constantly come up against the statement that Australian aid to the United States is greatly in excess of the aid we are receiving from the United States, and, while they do not wish to stress the aspect of money values, they are forced into the invidious position of having themselves to attempt to correct such misconceptions.

While deprecating any comparison of Lend-Lease and reciprocal Lend-Lease from the basis of money values, the Council agreed that the Director of the Division of Import Procurement, Mr. A. C.

Moore, should confer with Colonel Kramer with a view to assembling the best information available.

The fundamental conception behind the Lend-Lease Act was, of course, to take the dollar sign out of the aid given by the United States to foreign Governments prosecuting the war against the Axis powers, and the whole basis of the mutual aid arrangements now operating between the United States and Australia is that each country should provide the other with such goods and services as it may be in a position to supply without reference to money values. Money values do not enter into these transactions except to the extent that each Government maintains records for its own purposes of the value of the aid which it renders to the other country.

There is, however, no measuring stick other than money values which could be used to estimate the relative contribution made by each country. Any such comparison would have to be based on the United States official records of the value of Lend-Lease aid granted to Australia and the Australian official records of the value of reciprocal aid granted to the United States Forces.

Colonel Kramer and Mr. Moore, who have conferred on this matter, agree that this is the only basis on which any comparison could be made.

The Australian records of reciprocal aid granted to the United States Forces are maintained by the Director of Reciprocal Lend- Lease Finance in the Department of the Treasury, Mr. W. E. Dunk, and the latest available figures were presented to War Cabinet by the Treasurer early this month (Agendum No. 94/43 [2]). This report covered the period up to April 30th, 1943, and gave the total recorded reciprocal Lend-Lease expenditure to that date as A48,200,000. However, as the report points out, there is substantial unrecorded expenditure resulting from:-

(a) services not apportioned as between Departmental and reciprocal Lend-Lease expenditure;

(b) the time lag in transferring expenditure which is apportioned.

This is offset, however, by the inclusion in the reciprocal Lend- Lease figure of expenditure on joint works, a proportion of which will be transferred to Australian Departmental votes at a later stage.

So far as the value of Lend-Lease aid granted to Australia is concerned, the United States Government has kept the dollar sign in the background and has not communicated any money values to us.

The only figure we have is one which was included in the 8th Quarterly Report to Congress on Lend-Lease Operations. This report covered the period from March 11th, 1941 (the date of the passage of the Lend-Lease Act) to March 1st, 1943, and gave the total figure for Lend-Lease aid granted to Australia at $452,000,000 (A141,000,000). No breakdown of this figure was given but, as it was embodied in a formal report to Congress, it must be taken as representing the value which the United States Government places on the aid in the form of goods and services which it has made available to the Australian Government.

Colonel Kramer has been asked by Mr. Moore whether he desires to submit any other or more detailed figures for the information of the Australian Government.

As matters stand the latest available records show the value of Lend-Lease aid to Australia at A141,000,000 up to March 1st, 1943, and the value of reciprocal aid by Australia at A48,200,000 up to April 30th 1943.

This cannot, of course, be regarded in any sense as a true comparison of the amount of aid given by each country to the other. Many forms of assistance do not lend themselves to expression in money values and I feel it is against the whole spirit of Lend-Lease that money value comparisons should be made.

I am confident that this viewpoint would be shared by the U.S.

Government.

It is, however, most desirable that the existing misconception should be corrected and I think the most effective way of achieving this would be for you to issue a public statement on the matter. It would not be necessary to quote any actual money values.

I have had a suitable statement drafted and am enclosing it herewith for your consideration. [3]

R. V. KEANE

1 For the Allied Supply Council see Documents on Australian Foreign Policy 1937-49, vol. V, Document 303.

2 AA:A2671, 94/1943.

3 On file AA:A1608, A59/2/1, vi. The statement was issued by Curtin on 2 July (Commonwealth Govt, Digest of Decisions and Announcements, 61, pp. 6-7). It emphasised that money value comparisons were contrary to the whole spirit of Lend-Lease, since each country was contributing all it could to the United Nations cause, but pointed out that available figures suggested that the United States was giving between two and three times as much to Australia as she received in return.

Keane also wrote a personal letter to Curtin on 30 June (on the file cited above in this note) urging 'that we should not allow our own estimates of the value of Lend-Lease aid to appear on the official records so far as the United States Government is concerned. Equally, we should not encourage the United States Army authorities here to attempt to compile any records of their own of the value of reciprocal aid we grant to them; nor should they be permitted to assert any right to check or audit the figures we compile.'

[AA:A1608, A59/2/1, vi]