ABOVE the roar and clash of arms there now loomed upon us a world-fateful event of a different order. The Presidential Election took place on November 5. In spite of the tenacity and vigour with which these four-yearly contests are conducted, and the bitter differences on domestic issues which at this time divided the two main parties, the Supreme Cause was respected by the responsible leaders, Republicans and Democrats alike. At Cleveland on November 2 Mr. Roosevelt said: “Our policy is to give all possible material aid to the nations which still resist aggression across the Atlantic and Pacific Oceans.” His opponent, Mr. Wendell Willkie, declared the same day at Madison Square Garden: “All of us—Republicans, Democrats, and Independents—believe in giving aid to the heroic British people. We must make available to them the products of our industry.”
This larger patriotism guarded both the safety of the American Union and our life. Still, it was with profound anxiety that I awaited the result. No new-comer into power could possess or soon acquire the knowledge and experience of Franklin Roosevelt. None could equal his commanding gifts. My own relations with him had been most carefully fostered by me, and seemed already to have reached a degree of confidence and friendship which was a vital factor in all my thought. To close the slowly-built-up comradeship, to break the continuity of all our discussions, to begin again with a new mind and personality, seemed to me a repellent prospect. Since Dunkirk I had not been conscious of the same sense of strain. It was with indescribable relief that I received the news that President Roosevelt had been re-elected.
Up till this time we had placed our orders for munitions in the United States separately from, though in consultation with, the American Army, Navy, and Air Services. The ever-increasing volume of our several needs had led to overlapping at numerous points, with possibilities of friction arising at lower levels in spite of general goodwill. “Only a single, unified Government procurement policy for all defence purposes”, writes Mr. Stettinius,* “could do the tremendous job that was now ahead.” This meant that the United States Government should place all the orders for weapons in America. Three days after his re-election the President publicly announced a “rule of thumb” for the division of American arms output. As weapons came off the production line they were to be divided roughly fifty-fifty between the United States forces and the British and Canadian forces. That same day the Priorities Board approved a British request to order twelve thousand more aeroplanes in the United States in addition to the eleven thousand we had already booked. But how was all this to be paid for?
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In mid-November Lord Lothian, who had recently flown home from Washington, spent two days with me at Ditchley. I had been advised not to make a habit of staying at Chequers every week-end, especially when the moon was full, in case the enemy should pay me special attention. Mr. Ronald Tree and his wife made me and my staff very welcome many times at their large and charming house near Oxford. Ditchley is only four or five miles away from Blenheim. In these agreeable surroundings I received the Ambassador. He was primed with every aspect and detail of the American attitude. He had won nothing but goodwill and confidence in Washington. He was fresh from intimate contact with the President, with whom he had established a warm personal friendship. His mind was now set upon the Dollar Problem; this was grim indeed.
Britain entered the war with about 4,500 millions in dollars, or in gold and in United States investments that could be turned into dollars. The only way in which these resources could be increased was by new gold-production in the British Empire, mainly of course in South Africa, and by vigorous efforts to export goods, principally luxury goods, such as whisky, fine woollens, and pottery, to the United States. By these means an additional 2,000 million dollars were procured during the first sixteen months of the war. During the period of the “Twilight War” we were torn between a vehement desire to order munitions in America and gnawing fear as our dollar resources dwindled. Always in Mr. Chamberlain’s day the Chancellor of the Exchequer, Sir John Simon, would tell us of the lamentable state of our dollar resources and emphasise the need for conserving them. It was more or less accepted that we should have to reckon with a rigorous limitation of purchases from the United States. We acted, as Mr. Purvis, the head of our Purchasing Commission and a man of outstanding ability, once said to Stettinius, “as if we were on a desert island on short rations which we must stretch as far as we could”.*
This had meant elaborate arrangements for eking out our money. In peace we imported freely and made payments as we liked. When war came we had to create a machine which mobilised gold and dollars and other private assets, which stopped the ill-disposed from remitting their funds to countries where they felt things were safer, and which cut out wasteful imports and other expenditures. On top of making sure that we did not waste our money, we had to see that others went on taking it. The countries of the sterling area were with us: they adopted the same kind of exchange control policy as we did and were willing takers and holders of sterling. With others we made special arrangements by which we paid them in sterling, which could be used anywhere in the sterling area, and they undertook to hold any sterling for which they had no immediate use and to keep dealings at the official rates of exchange. Such arrangements were originally made with the Argentine and Sweden, but were extended to a number of other countries on the Continent and in South America. These arrangements were completed after the spring of 1940, and it was a matter of satisfaction—and a tribute to sterling—that we were able to achieve and maintain them in circumstances of such difficulty. In this way we were able to go on dealing with most parts of the world in sterling, and to conserve most of our precious gold and dollars for our vital purchases in the United States.
When the war exploded into hideous reality in May 1940, we were conscious that a new era had dawned in Anglo-American relations. From the time I formed the new Government, and Sir Kingsley Wood became Chancellor of the Exchequer, we followed a simpler plan, namely, to order everything we possibly could and leave future financial problems on the lap of the Eternal Gods. Fighting for life and presently alone, under ceaseless bombardment, with invasion glaring upon us, it would have been false economy and misdirected prudence to worry too much about what would happen when our dollars ran out. We were conscious of the tremendous changes taking place in American opinion, and of the growing belief, not only in Washington but throughout the Union, that their fate was bound up with ours. Moreover, at this time an intense wave of sympathy and admiration for Britain surged across the American nation. Very friendly signals were made to us from Washington direct, and also through Canada, encouraging our boldness and indicating that somehow or other a way would be found. In Mr. Morgenthau, Secretary of the Treasury, the cause of the Allies had a tireless champion. The taking over of the French contracts in June had almost doubled our rate of spending across the Exchange. Besides this, we placed new orders for aeroplanes, tanks, and merchant ships in every direction, and promoted the building of great new factories both in the United States and Canada.
Up till November we had paid for everything we had received. We had already sold 335 million dollars’ worth of American shares requisitioned for sterling from private owners in Britain. We had paid out over 4,500 million dollars in cash. We had only 2,000 millions left, the greater part in investments, many of which were not readily marketable. It was plain that we could not go on any longer in this way. Even if we divested ourselves of all our gold and foreign assets, we could not pay for half we had ordered, and the extension of the war made it necessary for us to have ten times as much. We must keep something in hand to carry on our daily affairs.
Lothian was confident that the President and his advisers were earnestly seeking the best way to help us. Now that the election was over the moment to act had come. Ceaseless discussions on behalf of the Treasury were proceeding in Washington between their representative, Sir Frederick Phillips, and Mr. Morgenthau. The Ambassador urged me to write a full statement of our position to the President. Accordingly that Sunday at Ditchley I drew up, in consultation with him, a personal letter. As the document had to be checked and re-checked by the Chiefs of Staff and the Treasury, and approved by the War Cabinet, it was not completed before Lothian’s return to Washington. In its final form it was dated December 8, and was immediately sent to Mr. Roosevelt. The letter, which was one of the most important I ever wrote, reached our great friend when he was cruising, on board an American warship, the Tuscaloosa, in the sunlight of the Caribbean Sea. He had only his own intimates around him. Harry Hopkins, then unknown to me, told me later that Mr. Roosevelt read and re-read this letter as he sat alone in his deck-chair, and that for two days he did not seem to have reached any clear conclusion. He was plunged in intense thought, and brooded silently.
From all this there sprang a wonderful decision. It was never a question of the President not knowing what he wanted to do. His problem was how to carry his country with him and to persuade Congress to follow his guidance. According to Stettinius, the President, as early as the late summer, had suggested at a meeting of the Defence Advisory Commission on Shipping Resources that “It should not be necessary for the British to take their own funds and have ships built in the United States, or for us to loan them money for this purpose. There is no reason why we should not take a finished vessel and lease it to them for the duration of the emergency”. It appeared that by a Statute of 1892 the Secretary for War, “when in his discretion it will be for the public good”, could lease Army property if not required for public use for a period of not longer than five years. Precedents for the use of this Statute, by the lease of various Army items, from time to time were on record.
Thus the word “lease” and the idea of applying the lease principle to meeting British needs had been in President Roosevelt’s mind for some time as an alternative to a policy of indefinite loans which would soon far outstrip all possibilities of repayment. Now suddenly all this sprang into decisive action, and the glorious conception of Lend-Lease was proclaimed.
The President returned from the Caribbean on December 16, and broached his plan at his Press Conference next day. He used a simple illustration. “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.” And again: “There is absolutely no doubt in the mind of a very overwhelming number of Americans that the best immediate defence of the United States is the success of Great Britain defending itself; and that therefore, quite aside from our historic and current interest in the survival of Democracy in the world as a whole, it is equally important from a selfish point of view and of American defence that we should do everything possible to help the British Empire to defend itself.” Finally:
“I am trying to eliminate the dollar mark.”
On this foundation the ever-famous Lend-Lease Bill was at once prepared for submission to Congress. I described this to Parliament later as “the most unsordid act in the history of any nation”. Once it was accepted by Congress it transformed immediately the whole position. It made us free to shape by agreement long-term plans of vast extent for all our needs. There was no provision for repayment. There was not even to be a formal account kept in dollars or sterling. What we had was lent or leased to us because our continued resistance to the Hitler tyranny was deemed to be of vital interest to the great Republic. According to President Roosevelt, the defence of the United States and not dollars was henceforth to determine where American weapons were to go.
It was at this moment, the most important in his public career, that Philip Lothian was taken from us. Shortly after his return to Washington he fell suddenly and gravely ill. He worked unremittingly to the end. On December 12, in the full tide of success, he died. This was a loss to the nation and to the Cause. He was mourned by wide circles of friends on both sides of the ocean. To me, who had been in such intimate contact with him a fortnight before, it was a personal shock. I paid my tribute to him in a House of Commons united in deep respect for his work and memory.
I had to turn immediately to the choice of his successor. It seemed that our relations with the United States at this time required as Ambassador an outstanding national figure and a statesman versed in every aspect of world politics. Having ascertained from the President that my suggestion would be acceptable, I invited Mr. Lloyd George to take the post. He had not felt able to join the War Cabinet in July, and was not happily circumstanced in British politics. His outlook on the war and the events leading up to it was from a different angle from mine. There could be no doubt however that he was our foremost citizen, and that his incomparable gifts and experience would be devoted to the success of his mission. I had a long talk with him in the Cabinet Room, and also at luncheon on a second day. He showed genuine pleasure at having been invited. “I tell my friends,” he said, “I have had honourable offers made to me by the Prime Minister.” He was sure that at the age of seventy-seven he ought not to undertake so exacting a task. As a result of my long conversations with him I was conscious that he had aged even in the months which had passed since I had asked him to join the War Cabinet, and with regret but also with conviction I abandoned my plan.
I next turned to Lord Halifax, whose prestige in the Conservative Party stood high, and was enhanced by his being at the Foreign Office. For a Foreign Secretary to become an Ambassador marks in a unique manner the importance of the mission. His high character was everywhere respected, yet at the same time his record in the years before the war and the way in which events had moved left him exposed to much disapprobation and even hostility from the Labour side of our National Coalition. I knew that he was conscious of this himself.
When I made him this proposal, which was certainly not a personal advancement, he contented himself with saying in a simple and dignified manner that he would serve wherever he was thought to be most useful. In order to emphasise still further the importance of his duties, I arranged that he should resume his function as a member of the War Cabinet whenever he came home on leave. This arrangement worked without the slightest inconvenience, owing to the qualities and experience of the personalities involved, and for six years thereafter, both under the National Coalition and the Labour-Socialist Government, Halifax discharged the work of Ambassador to the United States with conspicuous and ever-growing influence and success.
President Roosevelt, Mr. Hull, and other high personalities in Washington were extremely pleased with the selection of Lord Halifax. Indeed it was at once apparent to me that the President greatly preferred it to my first proposal. The appointment of the new Ambassador was received with marked approval both in America and at home, and was judged in every way adequate and appropriate to the scale of events.
I had no doubt who should fill the vacancy at the Foreign Office. On all the great issues of the past four years I had, as these pages have shown, dwelt in close agreement with Anthony Eden. I have described my anxieties and emotions when he parted company with Mr. Chamberlain in the spring of 1938. Together we had abstained from the vote on Munich. Together we had resisted the party pressures brought to bear upon us in our constituencies during the winter of that melancholy year. We had been united in thought and sentiment at the outbreak of the war and as colleagues during its progress. The greater part of Eden’s public life had been devoted to the study of foreign affairs. He had held the splendid office of Foreign Secretary with distinction, and had resigned it when only forty-two years of age for reasons which are in retrospect, and at this time, viewed with the approval of all parties in the State. He had played a fine part as Secretary of State for War during this terrific year, and his conduct of Army affairs had brought us very close together. We thought alike, even without consultation, on a very great number of practical issues as they arose from day to day. I looked forward to an agreeable and harmonious comradeship between the Prime Minister and the Foreign Secretary, and this hope was certainly fulfilled during the four and a half years of war and policy which lay before us. Eden was sorry to leave the War Office, in all the stresses and excitements of which he was absorbed; but he returned to the Foreign Office like a man going home.