What Principles Should Govern the Final Settlement?

When the smoke of the last battle has cleared away and the United Nations sit down to discuss the settlements of the war, what shall be done with the lend-lease accounts? What kind of bill should we draw up and present to our allies? Or should we just forget about a bill?

The Lend-Lease Act, as amended in 1944, says this about settling up:

“The terms and conditions upon which any ... foreign government receives any aid ... shall be those which the President deems satisfactory, and the benefit to the United States may be payment or repayment in kind or property, or any other direct or indirect benefit which the President deems satisfactory: Provided, however, that nothing in this paragraph shall be construed to authorize the President to assume or incur any obligations on the part of the United States with respect to post-war economic policy, post-war military policy, or any post-war policy involving international relations except in accordance with established constitutional procedure.”

This provision was made purposely broad. When the act was passed we were not in the war. It could not be foreseen how the lend-lease program would shape up, what it would ultimately cost the American people, to, whom the aid would largely go, and in what position the beneficiaries might be, at the end of the war, to make repayment.

Nevertheless, as the war has progressed, the matter of “payment” or return benefits has been increasingly discussed by the American people. What should we expect? What forms of payment are possible? What principles shall guide the settlements? Officials in the State Department and the foreign offices of our allies are giving a lot of attention to these matters, for the prosperity of many nations may largely depend on how lend-lease accounts are ultimately settled.

What do the people think?

The President’s quarterly reports to Congress on lend-lease operations have stressed that “Lend-lease and reverse lend-lease are not a system of debits and credits. They involve neither gifts, nor loans nor transfers of money. They are, instead, a system of mutual war supply that has been evolved by the United Nations to make possible the effective combined operations by which we are fighting and winning the war.”

Despite such assertions a large portion of the American people seem to regard lend-lease as a form of aid that should be repaid by our allies—somehow and sometime.

The Office of War Information in the summer of 1943 asked people the following question: “If England (Russia) continues to do all it can to help us defeat the Axis, do you think this is enough repayment for the lend-lease supplies we sent?” The replies were tabulated as follows:

                                                            England           Russia

                                            Percent       Percent

Enough                                                 42                     51

Not enough                                         51                     42

No opinion                                            7                      7

Clearly, about half the people polled believed that we should get some tangible returns for lend-lease. Furthermore, the O.W.I. noted that “the better educated and those who have accurate knowledge of reverse lend-lease are the very ones who make the highest demand for repayment.”

Of the persons questioned in a Gallup Poll, published on November 12, 1943, 57 percent thought England is supposed to pay us back in some way for lend-lease aid; 13 percent thought we should present no bill; and 30 percent had no opinion.

The persons queried by the O.W.I., when asked how re-payment should be made, voted for goods, military bases, and gold, in the order listed.

Can the books be balanced?

Regardless of what individuals or groups may think, the clearing of lend-lease accounts will present staggering difficulties. Disregarding for the moment the basic issues of principle involved, any attempt at an exact settlement will run into questions of method.

For instance, there will be the problem of reconciling the accounts. To a large extent, this is being done currently, as reports by our government and foreign governments indicate. But these reports are incomplete even for the periods they cover. There are inevitable delays. It may be weeks or months between the time an article is transferred and the time the receipt gets to the Treasury in London or the War Navy, or Treasury Departments in Washington to be recorded. In some cases transfers are made on or near the battle zone, and receipts may be subsequently lost or destroyed during combat operations.

Even for the transfers that are recorded, there may be questions of the value to be assigned. Thus, the cost of producing some war supplies, including certain types of guns or planes, may be less in England than in the United States, owing to lower labor costs and longer experience in production. For instance, the Army pays $6.10 apiece for field jackets bought in the United States. But the same article made in England and supplied to our troops there wider reverse lend-lease costs the British government the equivalent of $5.60. Similarly, a 65-inch aircraft tire bought in the United States sets Uncle Sam back $350. But if it starts out as a “tyre” made in Britain it can be purchased by the British government for the equivalent of $160—and that’s the figure entered in the books if it is transferred to us under reverse lend-lease.

For such articles the monetary values set down in lend-lease account books may thus be said to underestimate the British contribution in terms of materials, labor, and so forth. On the other hand, there are many articles that can be made more cheaply in the United States. The value placed on these articles by our government in lend-lease accounts may then be said to underestimate our contribution.

This matter of evaluation of goods has received a lot of attention in both London and Washington, and though it has not been a source of friction, it has created plenty of problems.

Certainly, in the final clearing of accounts, the reconciling job will be tremendous. Yet, despite this and other difficulties, it is possible to see, even now, that certain principles will presumably guide the final settlements. Much discussion of these principles has already taken place—among government officials, in Congress and Parliament, in British and American newspapers, and so on.

What is equality of sacrifice?

The idea that each member of an alliance should contribute an equal share to the common cause does not mean, for instance, that Norway and the Soviet Union should provide the same number of fighting men. Nor does it mean that the United States and New Zealand should supply the same amount of war materials.

Equality of sacrifice among allies means that each should contribute the same relative proportion of its war-making resources whether of manpower or wealth. A nation of 10 million people that puts an army of 1 million in the field makes a sacrifice equal to that of a nation of 100 million that fields an army of 10 million men. And two governments, each of which puts half its national income into war expenditures, make equal sacrifices on that score—though the sum spent by one may be twenty times what the other spends.

As we have already seen, it is not possible to measure one kind of sacrifice in terms of the other for the reason that no dollar-and-cents price can be set on lives and limbs. Many people think that it is only fair, however, to recognize that the two kinds of sacrifice go for a single purpose. Some say that trying to balance the accounts, therefore, is not only useless but wrongful since the benefits of victory are the only payments that really count in the end.

How do we stand in lives lost?

Millions of Russian soldiers have been killed or wounded and millions of Soviet citizens have been tortured and assassinated by the Nazis or shipped to Germany as slave laborers. Russian homes, farms, and factories have been demolished and great quantities of property stolen by the Nazi invaders.

Great Britain has lost over a million soldiers, sailors, airmen, and civilians. Bombardment has done enormous damage to the homes and factories of Britain.

In more than seven years of warfare China has suffered untold property damage and the loss of uncounted millions of lives.

We Americans have also suffered. Our men in uniform—though in lesser numbers—have also been killed, drowned, maimed, and imprisoned. But our civilians have not been bombed; our homes and factories have not been destroyed; and our soil has not been devastated by enemy invasion.

In settling lend-lease accounts should we give some attention to the much greater sacrifices in life and property of our allies? The United States government in numerous statements by the President and other responsible officials has in fact recognized this principle.

Shall we count only the dollars?

But suppose we look only at the contributions that can be measured in monetary terms. The United States is spending more money for war than any of its allies. The question is not whether our financial contribution to victory will outweigh the similar contributions of our allies. Without doubt it will in dollars-and-cents value.

The question is whether it will be excessive in terms of ability to pay. Here we come up against the fact that our principal allies have been at war longer than the United States, for longer times have been putting larger proportions of their national wealth into the war effort than we, and are more in need of material aid while we are better able to give it.

Granted that the United States is pouring out more wealth in lend-lease than we will ever get back in reverse lend-lease, should this country adopt as its sole measure for settlement the final balance of dollar values? Or should we measure equality of sacrifice in material contributions in terms of relative wealth and ability-to pay?

Is lend-lease a path to peace?

The principle of equality of sacrifice relates to the past. Another principle, equally important, relates to the future. This is the principle that the settlement of lend-lease accounts, whatever it is, should be such as to help toward lasting peace and prosperity for the world.

Of course the kind of settlement that seems desirable when the time comes will depend in some measure on the kind of peace that seems to lie ahead. That is to say, if certain prospective or agreed conditions of the peace do not appear to be workable, the United States will presumably be more interested than otherwise in getting lend-leased planes and tanks back again.

The settlement, it perhaps needs to be emphasized, is no more a one-way matter than is lend-lease a one-way traffic. Lend-lease is a method of reciprocal and mutual aid, and it is designed to be settled by mutual agreement. While the United States will naturally have the foremost voice in the settlement, the decision cannot be ours alone.

Master Lend-Lease Agreements have been signed with Great Britain, the Soviet Union, and China. The seventh article in each of these agreements sets down in identical language the guiding principle. When the time comes to determine the benefits to be provided the United States by the other governments in return for lend-lease aid, the article states that “the terms and conditions thereof shall not be such as to burden commerce between the two countries, but to promote mutually advantageous economic relations between there and the betterment, of world-wide economic relations.

Is it a portal to prosperity?

Leaving out some of the diplomatic language, this means that the settlement agreement in each case shall stimulate rather than discourage “production, employment, and the exchange and consumption of goods, which are the material foundations of the liberty and welfare of all peoples.” This is in accord with the opinion of most students of international problems that freeing international trade from artificial restrictions works to the benefit of nations.

After World War I the bulk of the debts owed to the United States was not collected for three main reasons:

  1. We would not take goods in payment since we felt that such goods, if put on the market in the United States, would throw our people out of work.
  2. For reasons which need not concern us here, the debtor countries could not pay in gold.
  3. Britain, Prance, and Italy, our former Allies, said it was not fair for us to insist on payment when Germany, the real offender, would not pay the reparations owed them.

Nations such as Great Britain, Prance, and the Soviet Union that are receiving major lend-lease aid today normally buy large amounts of goods in this country. If we insist on a settlement that requires them to send us tangible wealth, either of two things must happen: We must be willing to accept their goods in competition with our own, or we must resign ourselves to the fact that if they transfer gold or credit to our accounts they won’t have what it takes to buy our goods.

The kind of settlement envisaged in the Master Lend-Lease Agreements is clearly intended to avoid the situation that grew out of World War I—a burden of permanently unpaid debts, a cloud of resulting ill will between former friends, and in the end world-wide collapse and depression growing at least in part out of shackled world trade. Do you think that it serves the principle involved? And do you think that the principle is sound?