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months ago, aid in the amount of $6,280,000,000 is now moving through the suc-
cessive stages of allocation, obligation, production, and delivery. Additional
funds are now needed in order that there be no interruption in the flow of aid to
those countries whose defense is vital to our own. I am, therefore, transmitting a
supplemental estimate of appropriation in the amount of $5,985,000,000, the details
of which are set forth in the accompanying letter from the Director of the Bureau
of the Budget. I recommend its speedy enactment.
Respectfully,

FRANKLIN D. ROOSEVELT.

EXECUTIVE OFFICE OF THE PRESIDENT,

BUREAU OF THE BUDGET,

Washington, D. C., September 13, 1941. The PRESIDENT,

The White House. SIR: I have the honor to submit for your consideration a supplemental estimate of appropriation to carry out the provisions of the act entitled An act to promote the defense of the United States,” approved March 11, 1941, in the amount of $5,985,000,000, as follows:

"DEFENSE AID "To enable the President, through such departments or agencies of the Government, as he may designate, further to carry out the provisions of an act to promote the defense of the United States, approved March 11, 1941, and for each and every purpose incident to or necessary therefor, there are hereby appropriated, out of any money in the Treasury not otherwise appropriated, in addition to the sums appropriated by the Defense Aid Supplemental Appropriation Act, 1941, the following sums for the following respective purposes, namely:

“(a) For the procurement, by manufacture or otherwise, of defense articles, information and services, for the government of any country whose defense the President deems vital to the defense of the United States, and the disposition thereof, including all necessary expenses in connection therewith, as follows:

“(1) Ordnance and ordnance stores, supplies, spare parts, and materials, including armor and ammunition and components thereof, $1,190,000,000.

*(2) Aircraft and aeronautical material, including engines, spare parts, and accessories, $685,000,000.

“(3) Tanks, armored cars, automobiles, trucks, and other automotive vehicles, spare parts, and accessories, $385,000,000.

(4) Vessels, ships, boats, and other watercraft, including the hire or other temporary use thereof, and equipage, supplies, materials, spare parts, and accessories, $850,000,000.

“(5) Miscellaneous military and naval equipment, supplies, and materials, $155,000,000.

“(6) Facilities and equipment for the manufacture, production, or operation of defense articles and for otherwise carrying out the purposes of the act of March 11, 1941, including the acquisition of land, and the maintenance and operation of such facilities and equipment, $375,000,000.

(7) Agricultural, industrial, and other commodities and articles, $1,875,000,000.

“(b) For testing, inspecting, proving, repairing, outfitting, reconditioning, or otherwise placing in good working order any defense articles for the government of any country whose defense the President deems vital to the defense of the United States, including services and expenses in connection therewith, $175,000,000.

"(c) For necessary services and expenses for carrying out the purposes of the
act of March 11, 1941, not specified or included in the foregoing, $285,000,000.

“(d) For adm inistrative expenses, $10,000,000.
'(e) In all, $5,985,000,000, to remain available until June 30, 1943.

"(f) Each of the foregoing appropriations shall be additional to, and consolidated with, the appropriation for the same purpose contained in sections 1 (a), 1 (b), 1 (d), and 1 (e), respectively, of the Defense Aid Supplemental Appropriation Act, 1941: Provided, That, with the exception of the appropriation for administrative expenses, not to exceed 20 per centum of any such consolidated appropriations may be transferred by the President to any other of such consolidated appropriations, but no such consolidated appropriation shall be increased more than 30 per centum thereby.

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“SEC. 2. The President may, from time to time, when he deems it in the interest of national defense, authorize the head of any department or agency of the Government, to enter into contracts for the procurement of defense articles, information, or services for the government of any country whose defense the President deems vital to the defense of the United States, to the extent that such government agrees to pay the United States for such defense articles, information, or services prior to the receipt thereof and to make such payments from time to time as the President may require to protect the interests of the United States; and, upon payment of the full cost, the President may dispose of such articles, information, or services to such government.

“Sec. 3. Any defense article procured pursuant to this Act shall be retained by or transferred to and for the use of such department or agency of the United States as the President may determine, in lieu of being disposed of to a foreign government, whenever in the judgment of the President the defense of the United States will be best served thereby.

“Sec. 4. No part of any appropriation contained in this Act shall be used to pay the salary or wages of any person who advocates, or who is a member of an organization that advocates, the overthrow of the Government of the United States by force or violence: Provided, That for the purposes hereof an affidavit shall be considered prima facie evidence that the person making the affidavit does not advocate, and is not a member of an organization that advocates, the overthrow of the Government of the United States by force or violence: Prvoided further, That any person who advocates, or who is a member of an organization that advocates, the overthrow of the Government of the United States by force or violence and accepts employment the salary or wages for which are paid from any appropriation in this Act shall be guilty of a felony and, upon conviction, shall be fined not more than $1,000 or imprisoned for not more than one year, or both: Provided. further, That the above penalty clause shall be in addition to, and not in substitution for, any other provisions of existing law.

"Sec. 5. This act may be cited as 'Title II of the Defense Aid Supplemental Appropriation Act, 1941.'" I recommend that the estimate be transmitted to Congress. Very respectfully,

HAROLD D. SMITH, Director of the Bureau of the Budget.

PREPARED STATEMENT OF MAJ. GEN. JAMES H. BURNS, EXEC

UTIVE OFFICER, DIVISION OF DEFENSE AID REPORTS The CHAIRMAN. We will include at this point a statement prepared by Maj. Gen. James H. Burns, executive officer of the Division of Defense Aid Reports. General Burns is not in the country at this time, but we have with us this morning a gentleman representing General Burns.

Mr. TABER. Mr. Chairman, I am not very keen about statements presented ex parte. I think the witnesses should present themselves for examination by members of the committee.

The CHAIRMAN. Each member of the committee has before him a copy of General Burns' statement, and without objection it will be included in the record.

Mr. TABER. I would also like to have the record show that I do not like the inclusion of ex parte statements without the witnesses being available for examination.

The CHAIRMAN. If the gentlemen objects, we will not include it in the record.

Mr. TABER. It is up to you. If you want to put it in the record, that is up to you. But I do not give any weight to statements presented in that way, myself, and I want the record to show that.

The CHAIRMAN. With the gentleman's objection noted, the statement will be included in the record at this point.

a

(The statement above referred to is as follows):

SEPTEMBER 12, 1941. Hon. CLIFTON A. WOODRUM, Acting Chairman, Deficiency Subcommittee,

Committee on Appropriations, House of Representatives. DEAR MR. WOODRUM: In response to your request, and view the fact that I am leaving in the immediate future as a member of the President's War Supplies Mission to Russia, I am submitting the following statement with reference to lend-lease.

In asking Congress for additional funds and authority under lend-lease, it is realized your committee is entitled to a full accounting, subject to obvious restrictions as to secrecy, of our stewardship in the utilization of the funds and authority already granted, and is similarly entitled to a full justification of the additional needs submitted. This statement is directed, in only a general way, to these two objectives.

In accordance with the Lend-Lease Act, a report on its operations must be submitted to Congress within every 90-day period. The second report, covering operations to September 1, 1941, has just been submitted. It covers these operations quite fully and I am sure the Division of Defense Aid Reports, which prepared it under the acting executive, Mr. Philip Young, will furnish you with such additional information as you request. I will not attempt to cover the whole field.

I have been associated with the lend-lease activities since the passage of the basic legislation on March 11, 1941, first, as a part of the War Department organization and, since May 6, 1941, the executive officer of the central lend-lease control organization known as the Division of Defense Aid Reports, in conformity with the Executive order of the President of May 2, 1941. In this position I have functioned under the President and his Lend-Lease Administrator who, until August 28, 1941, was Mr. Harry L. Hopkins and now is Mr. Edward R. Stettinius, Jr. Mr. Hopkins remains as special assistant to the President on lend-lease questions.

Prior to formalizing of the organization the central office was manned by Mr. Philip Young, Mr. Oscar Cox, Mr. James Buckley, Mr. Paul Banning, and a number of others who had been engaged on somewhat similar work in the Treasury Department. This group, under the general guidance of Mr. Hopkins and with the assistance of the Bureau of the Budget and other departments, laid the foundations of the procedure and policies which are now following. Fortunately nearly all of the original group still remain with the organization. Mr. Young is the deputy executive, Mr. Cox is the head of the legal staff, Mr. Buckley is Budget officer and special assistant. Mr. Banning, after establishing our accounting system on a very satisfactory basis, returned to the Treasury Department.

SCOPE OF LEND-LEASE ACTIVITIES

With the passage of the basic act of March 11, 1941, including its authority to transfer munitions to a value of $1,300,000,000, and the appropriation act of March 27, 1941, authorizing the expenditure of $7,000,000,000 for lend-lease purposes, a movement was started which is growing in importance and scope as time goes on. It is becoming worldwide in its effect and in its execution and ramifications. It is believed to be of importance to outline briefly the field covered.

Lend-lease programs of aid include not only all types of munitions used by the fighting front-such as ships, planes, tanks, guns, ammunition, trucks, food, clothing, shelter, fuel, etc.—but also all types of materials and services needed by the home front to assure production, delivery, supply, and effective utilization of these munitions, such as raw and intermediate materials, manufacturing and maintenance equipment and facilities, food, fertilizers, oil, office supplies, cargo vessels, tankers, railroad facilities, and equipment. In short, they include either directly or indirectly nearly everything produced on the farms, in the mines, and in the factories and shipyards just as does our own national-defense effort.

Lend-lease now involves 12 foreign countries.

Lend-lease activities include the coordination of production, the storage and the delivery of goods and services to the various main theaters of action, including the British Isles, the Middle East and China, as well as to potential theaters, such as Iceland, the American republics, the Far East, etc.

Lend-lease is involved in the complications and ramifications of foreign trade and foreign exchange.

The Lend-Lease Act requires international agreements with the countries to be aided.

Inasmuch as the war supplies available now and in the near future are quite inadequate to meet the needs of the United States and the various countries to be aided, difficult questions are raised as to the proper distribution of stocks and production among the various countries involved.

Lend-lease activities must not only be organized in the United States but to a reasonable extent they must be organized in the countries to be aided in order to assure proper and effective use of aid rendered.

ORGANIZATION

In order to meet the above requirements, the following organizational concept has been followed which is believed to be in accord with the understandings reached with your committee at the hearings on the basic act.

The central organization records, supervises, and coordinates lend-lease activities and makes over-all policies. We are trying to keep the organization small and manned with workers. We are proud of our personnel. Many of them are career men with the broad Government experience and discipline so necessary to this complicated task.

Other functions are decentralized to the maximum extent possible.

The establishment of the aid programs, within certain limitations, and their execution is assigned to the following five United States agencies in accordance with their normal governmental functions: The War Department, the Navy Department, the Treasury Department, the Agriculture Department, the Maritime Commission.

It is to be noted that the United States procuring agencies are all old and seasoned Government organizations with the many protections and advantages that flow from their long established procedure and their experienced personnel.

Questions of foreign trade and foreign exchange are coordinated with the assistance of the State and Treasury Departments.

Lend-lease agreements are being negotiated by the State Department.

Recommendations as to distribution of inadequate war supplies as between the United States and various countries to be aided are submitted to the President by the Army and the Navy.

Cognizant United States agencies and also the central lend-lease organization are establishing representation in the theaters of use.

PROCEDURE

The most important points in procedure are that official requisitions for aid must be submitted by the various countries involved. These requisitions must give such information as is deemed essential for records and action. They are forwarded to the interested United States Government agency for detailed recommendations. Based upon such recommendations, decision is made as to whether or not a requisition will be honored. If it is approved, after review by the Division of Defense Aid Reports and the Bureau of the Budget, funds are allotted to the proper agency for procurement. It is to be emphasized that funds are not turned over to foreign governments. At the appropriate time written authority is given to transfer the aid to the country involved. This system produces a simple but sufficient record and control. With the improvements that come with experience it should be quite satisfactory.

ACCOMPLISHMENTS

The second report of the Division of Defense Aid Reports gives a detailed statement of results achieved. The more important points are as follows:

(a) The over-all needs of organization and procedure are now quite well known and are in large part met not only by this government in its various echelons but also by the countries to be aided.

(6) General and specific programs of aid are being evolved for the various countries and they are being integrated into the strategic requirements and production expectations of this country.

(c) The act of March 11, 1941, authorizes transfers to a limit of $1,300,000,000 in value from stocks obtained or to be obtained from appropriations made prior to that date. Of this authorization it has only been possible to utilize to date some $100,000,000. This is due to the fact that stocks either do not exist or the

needs of America are so urgent that they cannot be spared. It is expected that large additional transfers will soon be justified.

(d) Of the $7,000,000,000 appropriation, some 90 percent has been definitely allocated to the various United States agencies and to specific projects of aid. The balance is quite fully programmed.

(e) Approximately 50 percent of the appropriation has been committed by the various United States agencies concerned and the rate of contracting is increasing.

(f) Actual transfers of aid in the form of goods and services have been made to the extent of approximately 5 percent of the total appropriation.

(g) British records show that of the total dry cargo shipped to the United Kingdom and the Middle East from the United States, the following percentages were lend-lease: Percent

Percent May 1941. 8 July 1941.

36 June 1941 17 August 1941.

65 The oil cargoes are substantial also and now comprise practically all oil shipped from the United States to England and some 40 percent of all oil shipped from the Western Hemisphere to England.

(h) In those cases where there is a ready supply of American goods, such as food, oil, gasoline, and some raw materials, a very substantial amount of help is being given.

(2) In the case of long-term munitions items which are so vitally necessary, substantial backlogs of orders are already placed and these are rapildy growing, but deliveries are not large. Shipments will depend upon the over-all ability of America to produce. It should be remembered that these orders are necessarily placed with American industry after very large-scale similar orders of the United States and Great Britain for their own account and these are not yet in full quantity production.

(j) Important contributions are being made in the field of ocean transport. Large numbers of cargo ships and tankers have been chartered under lendlease. Many merchant ships have been and are being repaired and outfitted in our harbors. Construction has started under lend-lease on 227 ships, including 87 tankers. This program is separate from the Maritime Commission's other emergency program under which there are to be constructed 1,090 cargo vessels and tankers.

CRITICISMS

Some of the more important criticisms received with reference to the execution of the work are as follows:

Lack of speed. We know, and we know that the country knows, the importance of speedy action in time of war. We appreciate the necessity of creating as rapidly as possible large reservoirs of needed supplies that can be distributed quickly to the theaters of use throughout the world. That is our goal, but we do not contend that we are yet moving toward it at full speed. We are not satisfied with the relatively small trickle of aid in the form of fighting materials which is flowing to the countries at war. We are trying to streamline our central procedure to the maximum and to assist in similar action in other United States agencies and in foreign organizations. We are trying to stimulate quick action. In the case of doubt as between speed and perfection, we try to err on the side of speed. Progress is being achieved, but in spite of every effort our lend-lease speed will obviously be less than that of the speed of the various United States agencies, for they are the operating agents and their efforts must be coordinated with those of the central agency and the various countries to be aided. This latter task is in many instances quite difficult, as full information must be obtained from the home governments. The country knows quite well the time factors required by the War, Navy, and other departments to convert their own appropriations into contracts, contracts into production, and production into delivered articles at point of use.

Permitting Great Britain to use lend-lease as a means of maintaining or expanding her foreign trade to the detriment of the United States.—This question has been the subject of friendly negotiations with Great Britain and an agreement has been reached which is satisfactory to both Governments. This contains two assurances as follows:

Lend-lease materials which might be available for reexport have been and will be used within the Empire and only for needs essential to the war effort.

The British will not permit exports of materials similar to those lend-leased to them in any manner which will enable their exporters to enter new markets or extend their trade at the expense of United States exporters.

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