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to Mr. Young. With your permission to call upon these gentlemen, I think there is information they may have as to background on which you may wish to quiz them when you have finished with me.

NO CHANGES REQUESTED IN TITLE I OF BILL

Senator MCKELLAR. To start with, before you begin your statement, I would like to ask the general question I asked off the record a minute ago. Are you satisfied with the bill as passed by the House, or have you any changes you wish to make?

Mr. STETTINIUS. We are satisfied with the bill, Senator McKellar, as it passed the House.

FUNCTIONS OF LEASE-LEND ADMINISTRATION AND LEASE-LEND

PROCEDURE

Our organization, Mr. Chairman, is a coordinating, record-keeping, and policy-making agency. All actual procurement, after clearance of requisitions submitted by foreign governments, is conducted by the War Department, the Navy Department, the Maritime Commission, the Treasury Department, and the Department of Agriculture. They are the five agencies of the Government who actually do the procuring. Each of the procuring agencies carries on negotiations with representatives of the various governments and with the members of our organization, and we participate in this with them only up to the point of clearance.

ALLOCATIONS AND EXPENDITURES UNDER $7,000,000,000 LEASE-LEND

APPROPRIATION

Of the original $7,000,000,000, when I left the office this morningand this is the result of a quick tabulation-$6,635,000,000 had been allocated out of the first appropriation, with only some 5 percent of the funds then appropriated now left unallocated; these are reserved for current requirements of an urgent, emergency nature.

Expenditures to September 30 were approximately $590,000,000. The relatively small size of this amount is due to the fact that goods, as you all recognize, cannot be produced as fast as the contracts are let. Expenditures in September were approximately $201,000,000 as compared with about $389,000,000 during the previous 51⁄2 monthsthat is, $201,000,000 for the month of September and a total of $389,000,000 for the preceding 51⁄2 months.

Senator ADAMS. Those amounts making up the total expenditure of $590,000,000 up to this month?

Mr. STETTINIUS. That is right, sir, and I will submit a chart giving this in a little more detail. We feel these expenditures will increase at an accelerated rate now that we have gotten out of the engineering and into the actual production stage. Many facilities have had to be created to produce these armaments.

AMOUNT OF LEND-LEASE AID TO GREAT BRITAIN AND OTHER COUNTRIES AND EXTENT OF BRITISH PURCHASES FROM BRITISH FUNDS I fear there is a bit of misunderstanding as to the amount of aid being currently rendered Great Britain and the other democracies under lend-lease at the present time. I think sometimes we lose

sight of the fact that since the war began and up to this time approximately $5,000,000,000 of goods or armaments have gone from this side of the ocean under contracts of the British placed with their own money. With your permission, Mr. Chairman, I have a chart I would like to pass around to the members of the committee.

Senator ADAMS. Yes, sir.

Mr. STETTINIUS. I would like to call your attention particularly at this point to the bottom chart. You will note in the shaded area the direct-purchase exports and, in the black area, the lend-lease exports. Gradually the lend-lease exports and that black area is just up to September 1-gradually that black area will grow, and their own exports under their own contracts will diminish, probably.

Senator ADAMS. Mr. Stettinius, in this shaded part-not the black part-it shows the line running up to $350,000,000. That represents their purchases per month?

Mr. STETTINIUS. Per month.

Senator ADAMs. Will that line probably continue to rise for a time? Mr. STETTINIUS. They will both rise for a time, sir.

Senator ADAMS. How far would you estimate-and of course you can't know-but how far do you estimate that line of British purchases will reach?

Mr. Cox. The $350,000,000 is an all-time high; but it is almost impossible to predict what it might be in the future.

Senator ADAMS. I just asked you to guess.

Mr. STETTINIUS. We will try to get an estimate. I am sure it will climb. How many months before it drops down, Senator, I wouldn't venture a guess.

EXTENT OF BRITISH PURCHASES UNDER THEIR OWN CONTRACTS

Senator NYE. Are we to understand that by the time shown as the peak of that line, by August 1941, there had been expenditures and exports of approximately $5,000,000,000?

Mr. STETTINIUS. Approaching 5 billion, under their own contracts, Senator Nye.

Senator NYE. I see.

Mr. STETTINIUS. Yes, sir-since the beginning of the war.

Senator MCKELLAR. These figures here apply only to war materials?

Mr. STETTINIUS. That is right, sir.

Senator MCKELLAR. And not to other exports to Great Britain? Mr. STETTINIUS. Oh, yes.

Senator MCKELLAR. So that the line-not the black part of it but the other-constitutes or represents all exports of every kind to Great Britain?

Mr. STETTINIUS. That is correct, sir.

Senator MCKELLAR. All right.

BRITISH CONTINUING TO MAKE CERTAIN PURCHASES UNDER THEIR

OWN CONTRACTS

Senator ADAMS. Following the passage of the lend-lease bill, have the British ceased to make contracts, and all contracts since that time have been made by the United States?

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Mr. Cox. Not completely.

Mr. STETTINIUS. Not completely, sir. There are a few contracts, for some items not lend-leasable.

Senator ADAMS. Is it true, then, that everything covered by the categories of the lend-lease bill, after its passage, was put under contract by the United States and no further such contracts by Great Britain? Mr. Cox. No.

Mr. STETTINIUS. No, sir.

Mr. Cox. There have been some cases where the articles were covered by the categories in the Lend-Lease Act as a legal matter, but as a matter of policy it was deemed wise not to extend the aid. I can give you one illustration. The British wanted equipment to expand their oil facilities in the British West Indies and other parts of the world. We felt-not as a legal matter-because the oil was going to be used for the operation of combat planes, and so forth, and was clearly a defense article, but as a matter of policy, that if these particular facilities were to be expanded, they ought to be expanded in this country, rather than in other parts of the world. The net result of it was that the British used their own dollars to buy equipment in this country to expand their own oil facilities. The expenditure within that category was all right as a legal proposition, but as a policy matter it was determined not to do it.

Senator ADAMS. What did that amount to, in money?

Mr. Cox. In one case, as I remember offhand, it ran into $36,000,000.

ALLOCATIONS, OBLIGATIONS, AND EXPENDITURES UNDER PRIOR LEASELEND APPROPRIATION

Senator THOMAS. Referring specifically to the top chart on exhibit A, that refers to the appropriation made in the first lend-lease bill, which was a little over $7,000,000,000.

Mr. STETTINIUS. Yes, sir.

Senator THOMAS. According to this chart, that money was practically all allocated?

Mr. STETTINIUS. Approximately 95 percent.

Senator THOMAS. And something over $4,000,000,000 has been contracted?

Mr. STETTINIUS. That is substantially correct. The exact figure on obligations as of September 30, 1941, was $4,343,591,569.28. Senator THOMAS. And that only about $500,000,000 has been actually expended?

Mr. STETTINIUS. The exact figure on expenditures as of September 30, 1941 was $589,811,239.17.

Senator THOMAS. So it is true at this time that only the funds necessary to meet the expenditures have been raised under the financing program of the Government?

Mr. STETTINIUS. That is right.

AS OBLIGATIONS BECOME DUE TREASURY FINANCES THE PAYMENTS

Senator THOMAS. We haven't raised the 7,000,000,000, but only the 500,000,000?

Mr. STETTINIUS. That is correct.

Senator THOMAS. And as the obligations accrue and become due, the Treasury will finance the payments?

Mr. STETTINIUS. That is right.

Senator THOMAS. Some people may think, when we appropriate 5 or 7 billion, that that money is raised immediately, and we begin paying interest on it immediately. But it may be some time before we begin to pay interest on all these funds which are appropriated. Mr. STETTINIUS. That is correct.

Senator THOMAS. I think the record ought to show that.

Mr. STETTINIUS. Mr. Chairman, I have distributed another table, exhibit B, at which I think probably you gentlemen would like to glance, which shows the period up to September 30, and which substantiates the figures shown on the chart that has been distributed earlier.

SENSE IN WHICH WORD "TRANSFERRED" IS USED

Senator ADAMS. When you use the term "transferred," that means "delivered"?

Mr. STETTINIUS. That means the item is delivered to a ship, at Halifax or New York Harbor.

Senator ADAMS. Yes.

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USE OF WORDS "ALLOCATION" AND OBLIGATION"

Mr. STETTINIUS. When we use the word "allocation," that is an item allocated to the War Department in favor of the British, for example, for the War Department to buy something. An" obligation" is when the War Department contracts for that item.

Senator ADAMS. Of course, the allocations are subject to your control always?

Mr. STETTINIUS. That is correct; yes, sir.

Senator ADAMS. That is, it is a sort of a budgeting of prospective expenditures?

Mr. STETTINIUS. Yes, sir; and we can always change our minds, up to the very last moment.

Senator ADAMS. Up until it is obligated?

Mr. STETTINIUS. Oh, no—until the ship leaves.

Senator ADAMS. I was thinking of the term "obligated" in this sense, that if you make a contract with a manufacturer for so many tanks, that money has been obligated.

Mr. STETTINIUS. Yes, sir.

Senator ADAMS. Even though you might change your mind as to whether you will give those tanks to Britain.

Mr. STETTINIUS. Or keep them ourselves; yes, sir.

Senator ADAMS. You have allocated on your books your plan that you are going to use so much for airplanes and so much for tanks; but until it is actually obligated, it is subject to your control? Mr. STETTINIUS. That is correct, sir.

AMOUNT OF $7,000,000,000 LEASE-LEND APPROPRIATION UNOBLIGATED

Senator ADAMS. How much is unobligated at this time, of the $7,000,000,000?

Mr. STETTINIUS. Four billion three was obligated, sir; as of October 1.

Senator ADAMS. Then that would leave two billion seven unobligated?

Mr. STETTINIUS. That is right.

MORE FOOD HAS BEEN DELIVERED THAN ANY OTHER COMMODITY OR

ARTICLE

Senator MCKELLAR. Mr. Stettinius, in reference to the expenditures already made, where you have delivered the goods, what article leads in those deliveries? Is it oil? I am just wondering how they are divided. Have you shipped them more oil than any other one article, or more guns?

Mr. STETTINIUS. In the shipments up to the present time, more food has gone than any other one item.

Senator MCKELLAR. Have you a statement, or is there one in the House hearings-and if there is, I don't recall it as to such articles? Mr. STETTINIUS. The total transfers up to October 1, that is, deliveries and these are confidential figures

(Discussion off record.)

Mr. STETTINIUS. Mr. Chairman, the additional appropriation as now requested we feel is quite important, as the procurement agencies and the manufacturers cannot start and maintain the production necessary for the swift flow of production until the funds are in hand.

PREVIOUS LEASE-LEND APPROPRIATION PRACTICALLY ALL ALLOCATED

Senator THOMAS. If I may interrupt, there is one other question I think should be made a little plainer. Chart No. 1 shows you have obligated the first $7,000,000,000 appropriation to the extent of over $4,000,000,000, and then there is the allocation of it. But the testimony shows only a little over $4,000,000,000 have been obligated and, as it stands now, there is a little doubt as to how it is tied up, if at all. I would like for you to show what that means, for the record.

Mr. STETTINIUS. "Allocation" means we allocate, say, $10,000,000 to the Army to buy a thousand implements of war. The "obligation" is a contract the Army signs with the manufacturer to have those items manufactured.

Senator THOMAS. Then as far as you are concerned, the whole fund has been handled and prorated and is where you can't very well change it?

Mr. STETTINIUS. Unless the scene changes and we take it away from England to give it to China.

Senator THOMAS. While not obligated or contracted for, the money is there available.

Mr. STETTINIUS. Yes, sir.

Senator THOMAS. So the whole fund is committed or used?

Mr. STETTINIUS. Committed; yes, sir.

Senator THOMAS. So that the money is all gone, in a sense. All of it may not be contracted for, but it is all prorated, and the word "obligated" means exactly what it is presumed to mean.

Mr. STETTINIUS. And, of course, you understand that allocations for the balance are well along in every case.

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