THE 1941 LEND-LEASE ACT (USA)

Britain had started the Second World War with US$4,500 million in gold or American dollar cash reserves, and by November 1940 had spent all of it buying weapons, munitions and other essentials from the United States (other countries were willing to accept payments in British pounds).  Although Britain had some income from selling luxuries to the US and from gold mines (mainly in South Africa), this had only provided US$2,000 million in the 12 months since the war began.  With the end of the 'phoney war' at the beginning of 1940 and the escalation of the U-boat campaign, Britain's orders for war supplies at the end of 1940 greatly outstripped her cash reserves.  Britain had bankrupted herself buying supplies in America, and faced total economic collapse within the first few months of 1941.

Churchill wrote to Roosevelt on 8th December 1940 setting out Britain's strategic and financial position and asking for help.  In response to this letter, Roosevelt gave a press conference on 16th December, where he said:

"Suppose my neighbour's house catches fire and I have a length of garden hose four or five hundred feet away.  If he can take my garden hose and connect it up with his hydrant, I may help him to put out the fire.  Now what do I do?  I don't say to him before that operation, 'Neighbour, my garden hose cost me fifteen dollars; you have to pay me fifteen dollars for it'.  No!  What is the transaction that goes on?  I don't want fifteen dollars, I want my garden hose back after the fire is over."

So was born the lend-lease act, keeping Britain in the war, although in the time between December 1940 and March 1941 (when the act came in to force) all Britain's gold in South Africa was requested by (and given to) the United States.  The act enabled Britain to survive, but left her penniless.

A BILL

Further to promote the defense of the United States, and for other purposes

Defines a 'defense article' as 'any ... commodity or article for defense'

As used in this Act -

(a) The term "defense article" means -

(1) Any weapon, munition. aircraft, vessel, or boat;

(2) Any machinery, facility, tool, material, or supply necessary for the manufacture, production, processing, repair, servicing, or operation of any article described in this subsection;

(3) Any component material or part of or equipment for any article described in this subsection;

(4) Any agricultural, industrial or other commodity or article for defense.

Such term "defense article" includes any article described in this subsection: Manufactured or procured pursuant to section 3, or to which the United States or any foreign government has or hereafter acquires title, possession, or control.

(b) The term "defense information" means any plan, specification, design, prototype, or information pertaining to any defense article.

President can order any 'defense article' manufactured and transferred to any other nation, or repair any 'defense article' owned by any other nation.

Payment can be any direct or indirect benefit the President deems satisfactory

The US Navy is specifically not allowed to escort convoys

Reconfirms that US forces or ships are not allowed to enter combat areas

(a) Notwithstanding the provisions of any other law, the President may, from time to time. when he deems it in the interest of national defense, authorize the Secretary Of War, the Secretary of the Navy, or the bead of any other department or agency of the Government -

(1) To manufacture in arsenals, factories, and shipyards under their jurisdiction, or otherwise procure, to the extent to which funds are made available therefor, or contracts are authorized from time to time by the Congress, or both, any defense article for the government of any country whose defense the President deems vital to the defense of the United States.

(2) To sell, transfer title to, exchange, lease, lend, or otherwise dispose of, to any such government any defense article, but no defense article not manufactured or procured under paragraph (1) shall in any way be disposed of under this paragraph, except after consultation with the Chief of Staff of the Army or the Chief of Naval Operations of the Navy, or both. The value of defense articles disposed of in any way under authority of this paragraph, and procured from funds heretofore appropriated, shall not exceed $1,300,000,000. The value of such defense articles shall be determined by the head of the department or agency concerned or such other department, agency or officer as shall be designated in the manner provided in the rules and regulations issued hereunder. Defense articles procured from funds hereafter appropriated to any department or agency of the Government, other than from funds authorized to he appropriated under this Act. shall not be disposed of in any way under authority of this paragraph except to the extent hereafter authorized by the Congress in the Acts appropriating such funds or otherwise.

(3) To test, inspect, prove, repair, outfit, recondition, or otherwise to place in good working order, to the extent to which funds are made available therefor, or contracts are authorized from time to time by the Congress, or both, any defense article for any such government, or to procure any or all such services by private contract.

(4) To communicate to any such government any defense information pertaining to any defense article furnished to such government under paragraph (2) of this subsection.

(5) To release for export any defense article disposed of in any way under this subsection to any such government.

(b) The terms and conditions upon which any such foreign government receives any aid authorized under subsection (a) shall be those which the President deems satisfactory, and the benefit to the United States may he payment or repayment in kind or property, or any other direct or indirect benefit which the President deems satisfactory.

(c) After June 30, 1943, or after the passage of a concurrent resolution by the two Houses before June 30, 1943, which declares that the powers conferred by or pursuant to subsection (a) are no longer necessary to promote the defense of the United States, neither the President nor the head of any department or agency shall exercise any of the powers conferred by or pursuant to subsection (a) except that until July 1, 1946, any of such powers may be exercised to the extent necessary to carry out a contract or agreement with such a foreign government made before July 1,1943, or before the passage of such concurrent resolution, whichever is the earlier.

(d) Nothing in this Act shall be construed to authorize or to permit the authorization of convoying vessels by naval vessels of the United States.

(e) Nothing in this Act shall be construed to authorize or to permit the authorization of the entry of any American vessel into a combat area in violation of section 3 of the neutrality Act of 1939.

Recipients of the defense articles are not allowed to give or sell them on

All contracts or agreements made for the disposition of any defense article or defense information pursuant to section 3 shall contain a clause by which the foreign government undertakes that it will not, without the consent of the President, transfer title to or possession of such defense article or defense information by gift, sale, or otherwise, or permit its use by anyone not an officer, employee, or agent of such foreign government.

The President must report the articles transferred by this treaty

(a) The Secretary of War, the Secretary of the Navy, or the head of any other department or agency of the Government involved shall when any such defense article or defense information is exported, immediately inform the department or agency designated by the President to administer section 6 of the Act of July 2, 1940 (54 Stat. 714). of the quantities, character, value, terms of disposition and destination of the article and information so exported.

(b) The President from time to time, but not less frequently than once every ninety days, shall transmit to the Congress a report of operations under this Act except such information as he deems incompatible with the public interest to disclose. Reports provided for under this subsection shall be transmitted to the Secretary of the Senate or the Clerk of the House of representatives, as the case may be, if the Senate or the House of Representatives, as the case may be, is not in session.

The money required to accomplish this may be taken from the US treasury

(a) There is hereby authorized to be appropriated from time to time, out of any money in the Treasury not otherwise appropriated, such amounts as may be necessary to carry out the provisions and accomplish the purposes of this Act.

(b) All money and all property which is converted into money received under section 3 from any government shall, with the approval of the Director of the Budget, revert to the respective appropriation or appropriations out of which funds were expended with respect to the defense article or defense information for which such consideration is received, and shall be available for expenditure for the purpose for which such expended funds were appropriated by law, during the fiscal year in which such funds are received and the ensuing fiscal year; but in no event shall any funds so received be available for expenditure after June 30, 1946.

Patent rights of US citizens are to be protected

The Secretary of War, the Secretary of the Navy, and the head of the department or agency shall in all contracts or agreements for the disposition of any defense article or defense information fully protect the rights of all citizens of the United States who have patent rights in and to any such article or information which is hereby authorized to he disposed of and the payments collected for royalties on such patents shall be paid to the owners and holders of such patents.

The US may purchase arms from other countries

The Secretaries of War and of the Navy are hereby authorized to purchase or otherwise acquire arms, ammunition, and implements of war produced within the jurisdiction of any country to which section 3 is applicable, whenever the President deems such purchase or acquisition to be necessary in the interests of the defense of the United States.

The President may, from time to time, promulgate such rules and regulations as may be necessary and proper to carry out any of the provisions of this Act; and he may exercise any power or authority conferred on him by this Act through such department, agency, or officer as he shall direct.

This act relates only to noncombatant measures

Nothing in this Act shall be construed to change existing law relating to the use of the land and naval forces of the United States, except insofar as such use relates to the manufacture, procurement, and repair of defense articles, the communication of information and other noncombatant purposes enumerated in this Act.

If any provision of this Act or the application of such provision to any circumstance shall be held invalid, the validity of the remainder of the Act and the applicability of such provision to other circumstances shall not be affected thereby.

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