Master Lend-Lease Agreement Summary

  • Last updated on November 10, 2022

The Master Lend-Lease Agreement, also referred to as the Mutual Aid Agreement, was the result of nearly a year of negotiation between the British and United States governments. Though the primary purpose of the agreement was to determine how military resources would be allocated between the two nations, it also contained controversial language about free trade and planning for the economic future of the world. President Franklin D. Roosevelt had signed the Lend-Lease bill in March 1941, which allowed resources to be transferred with extremely lenient terms from the nominally neutral United States to Great Britain. While aid to Britain began flowing immediately, Roosevelt did not intend the agreement to be one-sided, and through Treasury Secretary Henry Morgenthau and Secretary of State Cordell Hull, the United States began pressing for an overarching agreement that would detail how the two nations would provide for their mutual defense and aid. Many in England argued that the free-trade language in the agreement would cripple them after the war and destroy the special relationship that existed with the nations of the former British Empire. The United States wanted to ensure, however, that Britain could not undercut free trade and become a significant economic rival following the war. After Roosevelt reassured British prime minister Winston Churchill that the United States would not interfere in its relationship with the nations of its former empire, the agreement was signed on February 23, 1942.

Summary Overview

The Master Lend-Lease Agreement, also referred to as the Mutual Aid Agreement, was the result of nearly a year of negotiation between the British and United States governments. Though the primary purpose of the agreement was to determine how military resources would be allocated between the two nations, it also contained controversial language about free trade and planning for the economic future of the world. President Franklin D. Roosevelt had signed the Lend-Lease bill in March 1941, which allowed resources to be transferred with extremely lenient terms from the nominally neutral United States to Great Britain. While aid to Britain began flowing immediately, Roosevelt did not intend the agreement to be one-sided, and through Treasury Secretary Henry Morgenthau and Secretary of State Cordell Hull, the United States began pressing for an overarching agreement that would detail how the two nations would provide for their mutual defense and aid. Many in England argued that the free-trade language in the agreement would cripple them after the war and destroy the special relationship that existed with the nations of the former British Empire. The United States wanted to ensure, however, that Britain could not undercut free trade and become a significant economic rival following the war. After Roosevelt reassured British prime minister Winston Churchill that the United States would not interfere in its relationship with the nations of its former empire, the agreement was signed on February 23, 1942.

Defining Moment

In March 1941, President Roosevelt signed the Lend-Lease bill into law. It was a program of military aid that provided Britain and her allies with desperately needed supplies that they could no longer afford. This followed the cash-and-carry system, whereby military supplies could only be sold if paid for immediately. The American public was reluctant to allow other nations to accrue war debt, as the United States had never been repaid the bulk of the debt it was owed from World War I. The economic uncertainty of the Great Depression and very strong isolationist and antiwar sentiment in the United States led to legislation prohibiting wartime loans. Roosevelt, who believed that support of Britain was crucial to defeating Germany, argued that lending military supplies and materials was more like lending a neighbor a garden hose if his house was on fire. After the fire is out, he argued, wouldn't you just ask for the hose back? In this way, Roosevelt managed to remove direct payments from the agreement. The bill passed easily through Congress, though stipulations were added that Lend-Lease would be funded annually, and Congress would receive regular reports.

Though Lend-Lease was a fairly straightforward bill to provide emergency assistance to Britain, it quickly took on a political life as diplomats from the United States and Great Britain hammered out the terms of a long-term agreement specifically between the two nations. (The Lend-Lease Act was open to all of the Allies.) One particular section of this agreement was at issue: Article 7 laid out the long-term economic goals of the agreement. Neither country should be unduly burdened by the aid provided, a statement that released Britain from the specter of looming postwar debts to the United States. At the same time, Britain's highly regulated prewar trade system would be radically altered to eliminate “all forms of discriminatory treatment in international commerce.” The word “discriminatory” was so inflammatory that Roosevelt called Churchill directly to assure him that the purpose of the article was not to abolish so-called “imperial preference,” where the nations of the former British Empire enjoyed a special economic relationship with Britain. Churchill assured his cabinet that through tariffs, Britain could still have individual agreements with these nations. The agreement was signed on February 23, 1942.

Author Biography

The Lend-Lease Agreement was drafted by the governments of the United States and the United Kingdom and signed by acting US secretary of state Sumner Welles and British ambassador to the United States Lord Halifax.

Benjamin Sumner Welles was born in 1892 in New York City. He was related by marriage and friendship to both branches of the Roosevelt family. Welles's cousin was married to Franklin Roosevelt's half brother, and at Groton School in Massachusetts, Welles was roommates with Eleanor Roosevelt's brother. After graduating from Harvard in 1914, Welles entered the Foreign Service and became a specialist in Latin American diplomacy. He briefly retired from public service when his professional prospects stalled and in 1928 wrote a history of the Dominican Republic, Naboth's Vineyard: The Dominican Republic, 1822–1924. In 1933, President Roosevelt appointed Welles first as ambassador to Cuba and then as assistant secretary of state. In 1937, Welles became undersecretary of state. Though the powerful and politically connected Cordell Hull was Roosevelt's secretary of state, Welles was a powerful Roosevelt confidante. Because Hull suffered from serious health issues and was absent for extended periods, Welles often assumed the secretary's duties. Resentment grew between the two men, and Hull pushed for Welles's removal in 1943 following a scandal involving Welles soliciting sex from Pullman car porters. Welles resigned in September 1943. After the war, he was a noted author and commentator. He died in 1961 in New Jersey.

Edward Frederick Lindley Wood, 1st Earl of Halifax, was born in Yorkshire, England, in 1881 to an aristocratic family. He attended Oxford University and served as a member of Parliament and also as a major in World War I. After the war, Halifax served in several ministerial positions before he was made Viceroy of India in 1926. He returned to England and served as secretary of foreign affairs and secretary of war. In 1934 he became the Viscount Halifax, a title he inherited from his father. From 1940–46, he was the British ambassador to the United States, a role that was somewhat diminished by the close personal relationship between Roosevelt and British prime minister Winston Churchill. In 1944, he was made the Earl of Halifax. After the war, he held several positions, including the chairmanship of the British Broadcasting Company (BBC). He died in Yorkshire in 1959.

Historical Document

Preliminary Agreement Between the United States and the United Kingdom, February 23, 1942

Whereas the Governments of the United States of America and the United Kingdom of Great Britain and Northern Ireland declare that they are engaged in a cooperative undertaking, together with every other nation or people of like mind, to the end of laying the bases of a just and enduring world peace securing order under law to themselves and all nations;

And whereas the President of the United States of America has determined, pursuant to the Act of Congress of March 11, 1941, that the defense of the United Kingdom against aggression is vital to the defense of the United States of America;

And whereas the United States of America has extended and is continuing to extend to the United Kingdom aid in resisting aggression;

And whereas it is expedient that the final determination of the terms and conditions upon which the Government of the United Kingdom receives such aid and of the benefits to be received by the United States of America in return therefor should be deferred until the extent of the defense aid is known and until the progress of events makes clearer the final terms and conditions and benefits which will be in the mutual interests of the United States of America and the United Kingdom and will promote the establishment and maintenance of world peace;

And whereas the Governments of the United States of America and the United Kingdom are mutually desirous of concluding now a preliminary agreement in regard to the provision of defense aid and m regard to certain considerations which shall be taken into account in determining such terms and conditions and the making of such an agreement has been in all respects duly authorized, and all acts, conditions and formalities which it may have been necessary to perform, fulfil or execute prior to the making of such an agreement in conformity with the laws either of the United States of America or of the United Kingdom have been performed, fulfilled or executed as required;

The undersigned, being duly authorized by their respective Governments for that purpose, have agreed as follows:

ARTICLE I

The Government of the United States of America will continue to supply the Government of the United Kingdom with such defense articles, defense services, and defense information as the President shall authorize to be transferred or provided.

ARTICLE II

The Government of the United Kingdom will continue to contribute to the defense of the United States of America and the strengthening thereof and will provide such articles, services, facilities or information as it may be in a position to supply.

ARTICLE III

The Government of the United Kingdom will not without the consent of the President of the United States of America transfer title to, or possession of, any defense article or defense information transferred to it under the Act or permit the use thereof by anyone not an officer, employee, or agent of the Government of the United Kingdom.

ARTICLE IV

If, as a result of the transfer to the Government of the United Kingdom of any defense article or defense information, it becomes necessary for that Government to take any action or make any payment in order fully to protect any of the rights of a citizen of the United States of America who has patent rights in and to any such defense article or information, the Government of the United Kingdom will take such action or make such payment when requested to do so by the President of the United States of America.

ARTICLE V

The Government of the United Kingdom will return to the United States of America at the end of the present emergency, as determined by the President, such defense articles transferred under this Agreement as shall not have been destroyed, lost or consumed and as shall be determined by the President to be useful in the defense of the United States of America or of the Western Hemisphere or to be otherwise of use to the United States of America.

ARTICLE VI

In the final determination of the benefits to be provided to the United States of America by the Government of the United Kingdom full cognizance shall be taken of all property, services, information, facilities, or other benefits or considerations provided by the Government of the United Kingdom subsequent to March 11, 1941, and accepted or acknowledged by the President on behalf of the United States of America.

ARTICLE VII

In the final determination of the benefits to be provided to the United States of America by the Government of the United Kingdom in return for aid furnished under the Act of Congress of March 11, 1941, the terms and conditions thereof shall be such as not to burden commerce between the two countries, but to promote mutually advantageous economic relations between them and the betterment of world-wide economic relations. To that end, they shall include provision for agreed action by the United States of America and the United Kingdom, open to participation by all other countries of like mind, directed to the expansion, by appropriate international and domestic measures, of production, employment, and the exchange and consumption of goods, which are the material foundations of the liberty and welfare of all peoples; to the elimination of all forms of discriminatory treatment in international commerce, and to the reduction of tariffs and other trade barriers; and, in general, to the attainment of all the economic objectives set forth in the Joint Declaration made on August 14, 1941, by the President of the United States of America and the Prime Minister of the United Kingdom.

At an early convenient date, conversations shall be begun between the two Governments with a view to determining, in the light of governing economic conditions, the best means of attaining the above stated objectives by their own agreed action and of seeking the agreed action of other like-minded Governments.

ARTICLE VIII

This Agreement shall take effect as from this day's date. It shall continue in force until a date to be agreed upon by the two Governments.

Signed and sealed at Washington in duplicate this twenty-third day of February 1942.

For the Government of the United States of America:

[SEAL] SUMNER WELLES

Acting Secretary of State of the United States of America.

For the Government of the United Kingdom of Great Britain and Northern Ireland:

[SEAL] HALIFAX

His Majesty's Ambassador Extraordinary and Plenipotentiary at Washington.

Glossary

cognizance: awareness, realization, or knowledge

pursuant: proceeding after; following

thereof: of that or it; from or out of that origin of cause

title: an established or recognized right to something; a ground of basis for a claim

Document Analysis

The Master Lend-Lease Agreement opens by establishing the special relationship that already exists between the United Kingdom and the United States. The scope of this agreement goes well beyond deciding how and when military aid will be rendered. From its opening paragraph, the agreement looks to set goals for the postwar world in which nations will “[engage] in a cooperative undertaking, together with every other nation or people of like mind, to the end of laying the bases of a just and enduring world peace securing order under law to themselves and all nations.” This agreement also states that the United States has a particular interest in the defense of Great Britain, as laid out in the original Lend-Lease Act of 1941. “The defense of the United Kingdom against aggression is vital to the defense of the United States of America.” The specific terms of the military aid that is being provided is hard to measure as the war is ongoing, so this will be decided later, but any aid must meet the goal of being able to “promote the establishment and maintenance of world peace.” Though the terms must be broad, the governments in question “are mutually desirous of concluding now a preliminary agreement in regard to the provision of defense aid.”

The provisions of this agreement are fairly straightforward: The United States will provide military aid to Great Britain, which will reciprocate as it is able. No war matériel will be given away by Great Britain without the consent of the US president. American patent rights will be respected, and anything not destroyed at the end of the war will be returned. Great Britain's contributions to the United States during the war will be taken into consideration when the return of war matériel is discussed. It is not until Article VII of the agreement that the broader question of economic reform is raised. Once the final amount of aid is tallied, it should not burden either country but should instead “promote mutually advantageous economic relations between them and the betterment of world-wide economic relations.” In other words, Great Britain should not use the end of the war as an opportunity to reinstate trade barriers at any cost to the United States. It was the word “discriminatory” toward the end of Article VII that caused many of the diplomatic issues with this agreement, however. A goal of the agreement was to be “the elimination of all forms of discriminatory treatment in international commerce” along with the “reduction of tariffs and other trade barriers.” This was seen by the British government as calling for the elimination of the special trade relationships enjoyed by former members of the British Empire, which would effectively cut all ties with these nations. The language of the agreement was softened before it was signed (an earlier draft had called for the elimination of tariffs and trade barriers), and Roosevelt called Churchill to reassure him that the article was necessary for the agreement to satisfy American interests, but it was flexible enough to allow Britain to maintain some level of special economic relationship with its former colonies.

Essential Themes

This agreement went well beyond the goals of the earlier Lend-Lease Act in establishing goals for a new economic world order after the war was over. Its primary theme, the mutual benefit to both the United States and Great Britain of winning the war, is stated in the context of the goal of international economic cooperation in the postwar world.

Bibliography and Additional Reading:
  • Beevor, Antony. The Second World War. London: Phoenix, 2012. Print.
  • Dobson, Alan P. US Wartime Aid to Britain, 1940–1946. New York: St. Martin's, 1986. Print.
  • Woods, Randall Bennett. A Changing of the Guard: Anglo-American Relations, 1941–1946. Chapel Hill: U of North Carolina P, 2008. Print.
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