by Ian Kershaw
Not that this had been Roosevelt’s intention. What seems in retrospect to have been part of an inexorable process did not look like that at the time. That it had taken fully three and a half months since Churchill’s first overture to bring the deal to fruition was first and foremost a reflection of Roosevelt’s uncertainty in handling public opinion at home and his reluctance to commit himself too far. In an election year, he was cautious of offering any propaganda hostages to fortune to his opponent. And his fear of upsetting Congress made him all the more ready to hide behind legalism when decisive action was called for. In the event, the Germans did not invade, and the destroyers were not needed. But an invasion certainly seemed imminent in summer 1940, and still Roosevelt hesitated over the destroyers. In the end, he did take action in authorizing something which he had probably inwardly favoured all along. But by then he was taking no risk with public opinion. Sensitive as ever to anything that might affect his popularity, he had even suggested that the destroyer deal might lose him the forthcoming election.178 In fact, he had been pushed by public opinion, stirred by the agitation of the lobbies favouring the deal. ‘The destroyer deal’, it has been aptly noted, ‘was at least as much the achievement of private effort as of official action.’179 With the United States now effectively a non-neutral non-belligerent, it remained to be seen whether the President would take a more active role than he had done in the summer of 1940 in driving ahead the support for Great Britain.
V
The underlying issue remained. The United States was committed, and with a great deal of popular backing, to providing support for Britain short of war. The idea that this was crucial to hemispheric defence–in America’s own direct interest, that is–was widely accepted. But the practicalities of supplying aid to Britain raised contentious issues. The destroyer deal had been pushed through on the President’s executive authority on what many regarded as legal sleight of hand by the Attorney General that allowed the bypassing of congressional legislation. However, if aid on a major scale were to be provided for Britain, the imprimatur of Congress as the seal of the nation’s backing could not be indefinitely avoided.
There were at least two major obstacles to attaining congressional support for massively increased aid. One was the view, vociferously expressed by the isolationist lobby though not confined to them, that arms should not be shipped to Britain when they were directly and obviously needed to build up American military defences. A related concern was that increased arms would necessitate increased support for the ships carrying the mate
´riel–inexorably, therefore, drawing the United States closer to involvement in the war. The second obstacle, and certainly a daunting one, was legal and financial. Britain was fast reaching the point where she would be unable to pay for the arms she desperately needed. But under the Johnson Act of 1934, still valid, the United States could not give loans to nations in default on their debts from the First World War. And under the cash-and-carry provisions of the Neutrality Act, introduced in 1937 and renewed in 1939, goods could only be sold to belligerent countries if the money was provided upfront.180 On the other hand, a drop in British arms orders was out of the question, and not just for the pressing reason that, without the resources of the United States at her disposal, Britain’s war effort would before long be exhausted. For domestic reasons, too, the Roosevelt administration wanted to increase, not curtail, supplies to Britain. By the time of his re-election–with a comfortable, if reduced majority–on 5 November 1940, Roosevelt had seen unemployment fall by 3.5 million since the recession of 1937–8. At the end of the year, unemployment stood at its lowest level for a decade. And this was thanks, in the main, to British weapons purchases, worth some $5 billion in orders by the end of 1940.181
The matter of aid to Britain was coming to a head by the end of 1940. The presidential election was past, but it had not brought the discernible shift in American policy that the British government had been hoping for. Vague illusions in Whitehall that the United States might even enter the war once Roosevelt was re-elected were rapidly dashed. In fact, there was some sense of anti-climax also in Washington. For some weeks, policy seemed becalmed. The exertions of the election campaign had probably left more of a mark on the President than was immediately visible. At any rate, as has been pointed out, Roosevelt ‘again deemed it more advantageous to stay in step with public opinion’ than to risk ‘a gamble with his powers of leadership’.182
In London, Churchill said at the beginning of December that he had been ‘rather chilled’ by the American attitude since the election. But one keen observer of the Washington scene who was unsurprised at the lack of dynamic action of the Roosevelt administration was the British ambassador, Lord Lothian. On a brief return to England in November, Lothian pointed out to Churchill the belief, still widespread in the United States, that Britain was asking for more than she needed and was less hard-up than she claimed. He advised Churchill to lay out the case for the greatly increased aid, necessary if Britain were not to be forced into a compromise peace during 1941, in a personal letter to the President.183 On his return to the United States, landing at New York, Lothian had spoken in uncharacteristically blunt and non-diplomatic language to reporters at an impromptu press conference. ‘Well boys, Britain’s broke; it’s your money we want,’ the ambassador told the waiting reporters. He repeated the remark, showing it was no off-the-cuff slip of the tongue, for the newsreels shortly afterwards. It was quite unlike Lothian. He claimed to have spoken on his own authority. But the suspicion remains that Churchill himself had prompted a calculated indiscretion.184
At any rate, it had the effect desired: putting the matter of the parlous British dollar resources squarely in the public eye. But the immediate response in the Roosevelt administration was far from positive. Cordell Hull was sceptical about the claim that Britain could afford to buy no more. So was Morgenthau, in charge of the Treasury, who pointed out to Lothian that opponents of aid could make political capital out of allowing a bankrupt country to place more orders. Morgenthau was aware that Lothian’s remark was not quite what it seemed. Britain was not bankrupt. But dollar resources were running low, if not, Morgenthau surmised, as low as Lothian was claiming. Morgenthau, even so, was struck by Lothian’s pessimism about Britain’s future, unless large supplies of aid were forthcoming. In fact, the Secretary to the Treasury had been mulling over throughout November ways to meet British needs not just for armaments, but for merchant ships–victims already to U-boats at an alarming rate–to carry the food on which Britain depended.185 Roosevelt himself, at a Cabinet meeting on 8 November, had hinted at a possible solution. He thought the British still had enough in credit and property in the United States–about $2.5 billion–that they could liquidate to pay for war supplies. But he recognized that the money would run out. ‘The time would surely come’, the President remarked, ‘when Great Britain would need loans or credits.’ According to Ickes, ‘he suggested that one way to meet that situation would be for us to supply whatever we could under leasing arrangements with England. For instance, he thought that we could lease ships or any other property that was loanable, returnable, and insurable.’186 In fact, it was not the first time that something like it had occurred to the President. Two years earlier, in November 1938, following the disastrous Munich Agreement, Roosevelt had mused over the difference it might have made had he been able to sell or lend large numbers of warplanes to the embattled European democracies.187 Thus did the idea that blossomed into the lend-lease programme begin to germinate.
The idea gained its first airing in public by an indirect route on 26 November 1940, when William Allen White’s Committee to Defend America by Aiding the Allies issued a strong statement urging greater assistance to Britain. The statement called upon Congress to revise statutes hampering this assistance, and advocated the building with all speed of the maximum number of merchant ships for rent or lease to Britain. Behind the scenes, the press release had probably been initiated by the President
himself, as a trial balloon, a device sometimes used by the White House to test opinion. In this instance, the statement elicited neither an outburst of public support nor sizeable opposition. Opinion, as usual, generally favoured helping Britain short of war, but was still cautious about the risk of American involvement in hostilities. Whatever Roosevelt deduced from the trial balloon, if that is what it was, no action followed from the White House. All the public learned was that the President was about to take a holiday.188
The President was about to set sail on the USS Tuscaloosa for a ten-day cruise in the Caribbean. Officially, he was visiting the new base sites in the West Indies. He took plenty of state papers with him, and said he would work on a major speech to the nation about the international situation while he was away. But he took no experts on foreign affairs with him. Looking worn out, he needed the trip to recharge his batteries, and mainly spent the time fishing, playing poker, watching films and relaxing with Harry Hopkins, his sole guest, and his aides, his only other accompaniment.189
The day before he left Washington, Roosevelt had authorized a complex deal for orders from London worth $2 billion to equip ten British army divisions. The question was how the British were going to fund the deal. Though Roosevelt was still insisting that ‘they aren’t bust–there’s lots of money there’, he recognized that most of it was tied up in foreign assets in the Empire and not readily available in dollars. All the available resources in dollars, and more besides, would be used up in the munitions deal and over the coming months. The idea of loaning cargo ships to Britain recurred during the discussion, though there was no suggestion at the time of loaning or leasing aircraft or armaments. Pressed by Morgenthau, Roosevelt agreed that the orders should be placed and the capital investment to build new plants and extend existing ones should come from American funds, with the British paying on delivery for the material produced, adding a surcharge to contribute to the capital costs. But the President told Stimson, ‘we have just got to decide what we are going to do for England’, adding, ‘doing it this way is not doing anything’.190
Unless new ways could be found, the end of the road for the current ways of fulfilling the aim of maximum aid for Britain short of war was clearly approaching. That much was recognized by Roosevelt’s key advisers, meeting in the President’s absence just after he had left for his Caribbean cruise. Frank Knox came to the point and posed the key question, a rhetorical one. ‘We are going to pay for the war from now on, are we?’ When Morgenthau raised the issue of whether the United States should allow Britain to place the orders, Knox was adamant: ‘Got to. No question about it.’ But how was this to be done? Discussion still circled around the issue of whether Britain would have to pay cash for the goods produced. There was no resolution to this issue. Those present were agreed that the proposal for any kind of gift or loan, such as Britain would soon request, would have to go to Congress, and was likely to be rejected unless it was obvious that there was no other option. Until British assets were liquidated, this was unlikely.191 Loans were, given the bad feeling stirred up by Britain’s non-payment of her debts from the First World War, not seen as the solution. It was felt better for the United States to place the orders, then turn over the products to Britain, though not as an outright gift, since it was hoped that something might be had in return, or at least unused or undamaged material eventually returned.192 The idea of a loan in kind, first mooted by Roosevelt, was now tentatively being extended in his absence to cover not just freight ships, but potentially the whole gamut of British armaments demands.
Within days, Churchill’s long letter, which Lothian had suggested he write, was on its way to Roosevelt and eventually reached the President in the middle of the Caribbean on 9 December, sent on by the State Department and delivered by a naval seaplane. It had been difficult to compose and went through numerous drafts over a period of longer than a fortnight before it was ready. Churchill later commented, with justification, that it was one of the most important he ever wrote.193
Most of the letter presented a tour d’horizon of the state of the war, from a British perspective. Churchill stressed the losses of merchant shipping in the Atlantic, the urgent need for ships, planes and munitions, and the tough struggle looming in 1941. He laid strong emphasis on Britain’s dependency on help from the United States. The prime need to reduce the loss of tonnage in the Atlantic could be achieved, he tactfully suggested, if the United States were to provide warship escorts to the merchant convoys, a move, he said, which ‘would constitute a decisive act of constructive non-belligerency’. Churchill was aware of the magnitude of what he was asking. It would be months before the American public would be ready for such a move. He expressed another hope: ‘the gift, loan, or supply of a large number of American vessels of war’ to maintain the Atlantic route, and the extension of control by American forces in the western part of the ocean.
Only at the end of his lengthy missive did he reach the crucial issue of finance. He pointed out the drain on dollar credits. ‘The moment approaches’, he wrote, ‘when we shall no longer be able to pay cash for shipping and other supplies.’ He combined moral pressure with economic logic: ‘I believe you will agree that it would be wrong in principle and mutually disadvantageous in effect if at the height of this struggle Britain were to be divested of all saleable assets, so that after the victory was won with our blood, civilisation saved, and the time gained for the United States to be fully armed against all eventualities, we should stand stripped to the bone.’
He went on to outline the postwar economic problems this would cause for the United States. American exports to Britain would slump. Widespread unemployment would result. He offered no solution, but he ended by placing Britain’s future in America’s hands. ‘Moreover,’ he concluded,
I do not believe that the Government and people of the United States would find it in accordance with the principles which guide them to confine the help which they have so generously promised only to such munitions of war and commodities as could be immediately paid for. You may be certain that we shall prove ourselves ready to suffer and sacrifice to the utmost for the Cause, and that we glory in being its champions. The rest we leave with confidence to you and to your people, being sure that ways and means will be found which future generations on both sides of the Atlantic will approve and admire.194
Indirectly, with these closing remarks, Churchill was underlining the shift in power-relations between Great Britain and the United States which the first year of the war had laid bare. Morgenthau put it succinctly: ‘It gets down to a question of Mr. Churchill putting himself in Mr. Roosevelt’s hands with complete confidence. Then it is up to Mr. Roosevelt to say what he will do.’195 It sounded like the obsequies for the British Empire.
While Morgenthau and other administration leaders continued in Washington to wrestle with the problem of Britain’s payments for the material she needed,196 Roosevelt was sitting in his deckchair on board the Tuscaloosa in the balmy sunshine of the Caribbean, pondering Churchill’s letter. He read it time and again and for two days seemed deep in thought, profoundly affected by its contents. Hopkins, the President’s only confidant on board, left Roosevelt to his ruminations. ‘Then one evening,’ Hopkins later recounted, ‘he suddenly came out with it–the whole programme. He didn’t seem to have any clear idea how it could be done legally. But there wasn’t a doubt in his mind that he’d find a way to do it.’197 Perhaps Hopkins was being modest about his own role; perhaps he and Roosevelt had, in fact, examined the possibilities before the President resolved the matter in his own mind; perhaps the decision was less a bolt out of the blue than it was made to seem. However, this is of minor significance. For there is no question that the way round Britain’s dollar crisis, the momentous decision that would open up unlimited resources for the British war effort, was found by Roosevelt himself.198
Characteristically, Roosevelt was in no hurry to tell the members of his Cabinet about his decision. He told them to avoid action
until he returned and could discuss the matter in detail.199 Before then, the key figures in the administration responsible for foreign and defence policy had met in Hull’s office in the State Department to review the situation in the light of Churchill’s letter, and notably his call for ‘a decisive act of constructive non-belligerency’, to have a position worked out for the President on his return. Alongside the Secretary of State himself were Stimson, Knox, General Marshall, Admiral Stark, Sumner Welles and a number of other leading officials. Stark was adamant that at the current rate of shipping losses Britain could not survive longer than six months. Stimson, to the point as ever, drew the conclusion that American defence production could not be raised to the levels necessary for the security of the United States and to prevent Britain’s defeat ‘until we got into war ourselves’. When he asked Stark what measures were necessary to relieve Britain’s plight in the Atlantic, the Admiral replied that the Neutrality Act would have to be repealed to allow US merchant ships to carry supplies to British ports, and that such a move would undoubtedly lead to naval escorts of convoys and, ultimately, in all probability, to American entry into the war. It was a daunting prospect. Unsurprisingly, no clear path forward emerged from the meeting.200
