Joseph C. Grew, Acting Secretary of State; Henry Morgenthau, Jr., Secretary of the Treasury, and Leo T. Crowley, Foreign Economic Administrator, acting for the Government of the United States on lend-lease and reverse lend-lease discussions with Jean Monnet, representative of the Provisional Government of the French Republic, made the following statement today.
Three agreements relating to lend-lease and reverse lend-lease aid have been concluded with the French: (1) A master agreement identical with those entered into with the United Kingdom, China, the Soviet Union and other countries; (2) a reciprocal aid agreement similar to those entered into with the United Kingdom, Australia, New Zealand and others; and (3) an agreement under section 3(C) of the Lend-Lease Act.
The first two agreements with the French are based on the same principles as the lend-lease and reverse lend-lease agreements made by the United States with our other Allies. The third agreement is the first to be concluded with any of the United Nations. A similar agreement is in negotiation with the Soviet Union.
The underlying fundamental principle of the lend-lease agreements is the one previously laid down by the President of the United States: "Until the unconditional surrender of both Japan and Germany, we should continue the lend-lease program on whatever scale is necessary to make the combined striking power of all the United Nations against our enemies as overwhelming and as effective as we can make it."
All of the supplies, services and information covered by the agreements with the French Provisional Government are directly connected with the prosecution of the war. The basic purpose of the whole program is to enable all French resources and the whole French nation-soldiers, producers and farmers-to be mobilized and used for the war against the common enemy.
Supplies, services and information solely for reconstruction or rehabilitation purposes are excluded from these agreements. Supplies required by the French solely for post-war purposes will have to be handled by other means since the Lend-Lease Act is, and is being administered as a war supply measure.
Economic and financial cooperation by all the United Nations in many different ways will doubtless be required to meet such post-war problems. Effective action in this field will require both international and national action by the respective Governments, including in many cases legislative action.
As in the case of other lend-lease countries, the amounts and types of materials, services, etc., which are to be supplied under these lend-lease agreements continue to be subject, as always, to adjustment from time to time in accordance with the changing conditions of the war.
When finished munitions are produced and available for delivery, they are assigned by the Munitions Assignments Board under the direction of the combined Chiefs of Staff in the light of the strategic considerations prevailing at the time of the assignment. Similar procedures are and will continue to be in effect for other war supplies that each country may make available to the other.
The United States has already furnished France, under lend-lease, with guns, ammunition, tanks and other finished munitions and supplies for eight French divisions, and 300 supporting units, aggregating in all zones 225,000 men, in addition to a French air force of about 15,000 men.
In the words of Secretary of War Stimson:
"During the past year of operations some of those French divisions fought superbly by the side of our American troops in the Fifth Army in the very difficult campaign up through the Italian peninsula. Thereafter, these French troops took an indispensable part in the landing in southern France in support of our invasion of Normandy, resulting in the capture of the ports of Marseilles and Toulon, the triumphant march up the Rhone Valley through Lyons, and the successful junction with General Eisenhower's forces on the German frontier.
"It is proper to say 'indispensable' because without those French divisions the American forces alone could not have carried through that campaign with any comparable saving of losses on our side. As it was, those losses were at a minimum. Subsequently, as members of the French First Army, these same French troops have helped effectuate the rescue of the Province of Alsace, including Strasbourg and the present holding of the upper Rhine boundary."
Supplies to equip additional French divisions and units will be furnished under lend-lease pursuant to the terms of these agreements.
War production materials and other vital supplies and services will be furnished by the United States to the French under these agreements on lend-lease until a determination by the President that they are no longer necessary for the prosecution of the war.
After this determination, the French may, under the 3(C) agreement, continue to receive the undelivered balances of certain supplies in the program and to pay for them on specified credit terms, with the reserved right to have the program or contracts canceled upon paying the United States its out-of-pocket costs. The United States agrees to deliver the programmed supplies to the French, after this determination by the President, unless the President determines that it is not in our national interest to do so.
The maximum aid to be furnished the French by the United States under the 3(C) agreement is specified in two schedules.
The articles and services in Schedule 1 and their estimated maximum cost are as follows:
Raw materials for war use and essential civilian supply (cotton, metals, steel, chemicals, synthetic rubber, drugs, medical supplies, etc.) .................. $840,000,000 Food (milk, pulses, edible oils, oil seed, seeds) ....... 185,000,000 Petroleum supplies ...................................... 132,000,000 French prisoner-of-war supplies ......................... 48,000,000 Short-life manufacturing equipment for war production ... 250,000,000 Freight charges (rental and charter of vessels) ......... 220,000,000 $1,675,000,000
The supplies and services to be furnished under Schedule 1 include such items as cotton for the production of cotton duck for tents and other textiles for the armed forces, rubber for the production of tires for military vehicles, and similar war production materials. They also include other vital supplies such as petroleum, hand tools and trucks for war production and other essential operations, and food and medical supplies for war workers and others of the French people so that they can fight, produce and work most effectively in the winning of the war.
Supplies and services under Schedule 1 do not include finished armament, etc., for the use of French military forces. Up to the extent that they are not found to be necessary in the joint war effort by the President, any undelivered balances of Schedule 1 items may, subject to the reservation of the President to withhold in the national interest, be acquired by the French. Such items are to be paid for by the French in thirty annual installments, beginning July 1, 1946, or on the first day of July following delivery with interest at 2 3/8 per cent per annum.
In addition to these supplies and materials provided under Schedule 1, certain categories of long-life capital goods will be provided under Schedule 2 to enable France to produce and transport military equipment and other war goods for our combined forces. This will reduce the burden on our own output of such goods and will save vital shipping.
These long-life capital goods which have a war-connected use are to be supplied to the French who agree to pay for them in full against 20 per cent down payment on delivery and the balance in equal annual installments within not to exceed thirty years, with interest at 2 3/8 per cent per annum.
The articles and services in Schedule 2 and their estimated maximum cost are as follows:
Locomotives ............................................. $200,000,000 Railroad cars ........................................... 120,000,000 Merchant marines ........................................ 140,000,000 Harbor watercraft ....................................... 32,000,000 Fishing fleet ........................................... 8,000,000 Inland watercraft (barges) .............................. 50,000,000 Metal-working machinery ................................. 100,000,000 Industrial equipment .................................... 150,000,000 Machinery for mines, arsenals, etc. ..................... 100,000,000 $900,000,000
These long-term articles are being furnished under Section 3(C) of the Lend-Lease Act and are put on these terms because, while they have an important and useful part to play in the war, a large part of their usefulness may also serve post-war purposes.
Under the agreement, production and delivery will not have to stop on these goods even though the war should end before they were finished. The French agree to take and pay for such goods and the United States Government can proceed with an orderly liquidation of the lend-lease contracts in the manner provided for under Section 3(C) of the Lend-Lease Act. The program for long-life equipment of this character is subject to substantially the same limitations as apply to Schedule 1.
Both of these programs are subject to periodic review in the light of the war conditions and particularly after the end of the European war.
Such reviews will have as their central objective the carrying out of the intent of the Lend-Lease Act. From the beginning of the program in March of 1941, lend-lease aid has been extended for one purpose-and for one purpose only-the defense of the United States and to enable our Allies to bring the full weight of their men and resources to bear against our common enemies.
Accordingly, it is understood between the two Governments that the United States has a broad power to cancel or revoke procurement programs or contracts if the President determines that it is in our national interest to do so. Actual delivery will always be subject to the development of the military situation, and the changing demands of strategy, as well as to economic and financial factors which affect our national interest.
The reciprocal aid agreement the second of the agreements noted above has been made retroactive to D-day in order to cover supplies and services provided to the armed forces of the United States by the French since that time and without payment by us.
The supplies and services being furnished to us by the French under reverse lend-lease include textiles, military vehicle tires, batteries, telephone wire, chemicals and other vital war materials, railroad and port facilities and services, hotels, warehouses and other facilities and services. The French have placed their industrial production, in so far as it can be brought into operation, at the service of the common war effort.
The reciprocal aid agreement reaffirms the central principle that the French are to render us benefits on reverse lend-lease, thus putting into effect the kind of combined war supply operations which have previously been so effective in aiding the United Nations to progress to victory over the common enemies.