The Lend-Lease program was the largest wartime foreign aid program ever implemented or conceived. There is little question that the material that the United States provided to its allies through Lead-Lease contributed substantially to the defeat of the Axis powers in World War II. The Commerce Department estimated that the United States transferred approximately $48.4 billion in goods and services during the war period.1 Today, after more than fifty years of inflation, it is difficult to gauge the enormity, of this expenditure. Considering that the average total expenditure of the federal government during this period was $63.3 billion per year helps put the scale of the Lend-Lease program into perspective. The material wealth and the industrial might of the United States gave the allies an enormous advantage over the Axis. By 1944 the United States was producing about 60 percent of all munitions of the Allies. From the time the United States declared war until the surrender of the Japanese, it produced more than twice as many munitions as Germany and Japan combined.2
Lend-Lease: An Assessment of a Government Bureaucracy
Marcus R. Erlandson
A large body of literature documents the history of Lend-Lease. Aside from the official histories that the various government agencies involved with Lend-Lease produced shortly after the war, however, virtually all of the scholarly treatments of the program have focused on the issue of America's intentions in devising and directing the Lend-Lease. As with much of the historical interpretation of U.S. foreign policy published since the early 1960s, scholars have concentrated their analyses of Lend-Lease on attempting to determine to what extent the United States used the program to ensure its dominance of the postwar world. The critics of American foreign policy most often cite this alleged quest for dominance as the cause of the superpower confrontation between the United States and the Soviet Union that characterized the Cold War period. In essence they assert that the primary objectives of the United States government in directing Lend-Lease were to cripple the British economy by insisting on exhaustive reciprocal payments and to develop a Soviet dependence on American aid. The accomplishment of these two goals would effectively neutralize the only two nations who could challenge U.S. postwar global dominance. Several scholars have challenged this so-called "New Left" thesis and have suggested that U.S. intentions were more complex and less self-serving. These authors contend that Lend-Lease was an innovative program that was at once strategically astute and politically realistic. In their view the onset of the Cold War was the result of sharp disagreements between the United States and the Soviet Union over postwar objectives and domestic political pressures against supporting a communist state once the Axis surrendered.3 This study will not extend this overly wrought debate. There
is little more that can be added to either side of the argument, and, in light of the fact that the Cold War has ended, the issue is no longer as relevant as it once seemed.
Another aspect of Lend-Lease has received far less scrutiny and deserves closer examination. This study will focus primarily on the Lend-Lease bureaucracy in an attempt to determine how effectively the program utilized its allocated resources. There is little question that the program fulfilled its intended purpose of expediting the Axis defeat; but, for those seeking to benefit from the experience of the designing and running of history's most massive wartime foreign aid program, a thorough, critical analysis of the Lend-Lease bureaucracy would be useful. Given the enormous scope of this issue and the brevity of this study, it will only be possible to form a preliminary assessment of the effectiveness of Lend-Lease. This study will provide, however, ample evidence to support the assertion that Lend-Lease is an example of minimalist bureaucracy at its finest. Although at its peak Lend-Lease was a mammoth operation, the bureaucracy that ran it was highly flexible and decentralized. Characteristically, it conveyed only the minimum necessary guidance to those charged with directly executing the government's foreign aid plan. It was never an all-encompassing bureaucracy or a model of efficiency, but those were not its designers' intentions. They were far more interested in effectiveness than efficiency.
Recognizing the distinction between effectiveness and efficiency is critical to evaluating the merits of the Lend-Lease bureaucracy. An organization that stresses effectiveness over efficiency places more emphasis on mission accomplishment than on the conservation of resources. The United States entered World War II with an enormous wealth and industrial potential, but only limited time to bolster the logistical support of its allies before the Axis powers overwhelmed them. The designers and operators of the Lend-Lease program could tolerate some inefficiency in the expenditure of resources, but they could not afford the time that it would take to design and staff a bureaucracy large enough to maximize the efficiency of an undertaking on the scale of Lend-Lease. The modest bureaucracy they built attempted to maximize the quantity and speed of delivery of the goods it provided to America's World War II allies, while minimizing
the disruption to the country's efforts to mobilize its own forces. Lend-Lease largely fulfilled its designers' expectations and in the process demonstrated the advantages of minimalist bureaucracy in those instances where effectiveness rather than efficiency is the primary consideration.
As World War II approached there was little indication that the United States would become the source of massive military aid. Although American sympathies were clearly with the nations who allied themselves against Germany, prior to late 1939 the government maintained a policy of strict neutrality and made virtually no effort to mobilize the economy for war. Fearing the consequences of once again becoming involved in a costly European war, Congress passed the Neutrality Act of 1935 and subsequent amendments in 1936 and 1937, which made it unlawful to grant loans or export implements of war to any belligerent country. Furthermore, the Johnson Act of 1934 prohibited any nation in default of payments to the United States to buy goods on credit. Great Britain and France placed large orders for munitions, but had to pay for them on a strict "cash and carry" basis. The situation in Europe became much worse on September 1, 1939 when Germany invaded Poland. Two days later both the French and British declared war on Germany, and the Neutrality Act forced the federal government to freeze their orders. Sensing that the American public wanted to help the opponents of Nazi aggression and how desperately Great Britain and France needed American arms, President Franklin Roosevelt called a special session of Congress in order to obtain legislative relief. On November 4, 1939 Congress passed the Pittman Act lifting the embargo. Filling French and British orders enabled American industry to gradually convert from commercial to military production. To facilitate the conversion it was essential to distribute the orders in a judicious manner. Rather than create a special new bureaucracy, the government utilized the existing Clearance Committee of the Army and Navy Munitions Board for this purpose. Another barrier to America's effort to arm foreign belligerents was that it was still illegal to purchase directly government-owned munitions. To circumvent this problem the War Department sold guns and ammunition to the United States Steel Export Company, which served as an intermediary.4
Thus, from the very beginning of America's efforts to arm its allies, a pattern of using ad hoc arrangements and minimum bureaucracy emerged.
It was not long before the United States chose to deepen its involvement in the war. The French and British forces proved to be no match for the German war machine and Blitzkrieg warfare. On June 10, 1940, a month after launching a surprise attack through the neutral low countries, Hitler's armies were nearly at the gates of Paris, and Italy declared war against Great Britain and France. That same day, in an address delivered at the University of Virginia, Roosevelt promised that the United States would provide the Allies with the material resources needed to halt German aggression.5
Hours before the French capitulated on June 17, 1940, they assigned all their contracts with American manufacturers to the British. The problem that now confronted Great Britain was finding the resources to pay for what it had on order. By the end of 1940 the British had placed orders with United States firms totalling approximately $4.5 billion and exceeding the amount that it could cover with its remaining dollar assets.6 It was clear to Winston Churchill that Britain would have to come to some sort of cooperative economic arrangement with the United States if it wanted to continue to fight the Germans. In May 1940, soon after he became prime minister, Churchill wrote Roosevelt to inform him that the British could not go on paying for what they needed much longer and that he would "like to feel reasonably sure that when we can pay no more you will give us the stuff all the same." He also asked for the loan of forty or fifty old destroyers.7 At first Roosevelt was skeptical, but, when he began to grasp the seriousness of Britain's financial problem,
he was at a loss in finding a method of dealing with it. Issuing loans would require repeal of the Neutrality Act, and making outright grants would be politically untenable before the 1940 elections.8
The solution for handling Churchill's request for destroyers and establishing a pattern for providing additional aid for the British came from outside the administration. The Century Group, which was a division within William Allen White's Committee to Defend America, suggested a simple formula of exchanging ships for bases. The United States would lend the destroyers to the British in exchange for leases to strategic bases in the Atlantic needed for the defense of shipping routes. The quid pro quo nature of the deal appealed to Roosevelt and made him confident that Congress would find it acceptable. Secretary of State Cordell Hull signed the agreement on September 2, 1940.9 This original "lend-lease" arrangement not only solved an immediate problem, it provided both the inspiration and the name for the massive foreign aid program that would follow.
On December 8, Roosevelt received a cable from Churchill that described in detail how desperate Britain's position had become.10 Roosevelt needed no further convincing. With the destroyer-for-bases deal clearly in mind, he began to frame a simple concept that would "eliminate the dollar sign" from any aid arrangements made with the British. He decided that he would propose an extension of the lend-lease arrangement, whereby the United States would supply Britain with whatever it needed while asking only that it return the goods or their equivalent at the end of the conflict. On December 16, Roosevelt held a press conference to announce his plan. He was deliberately vague on the details of how he expected the British to replace damaged or destroyed goods. Instead, he stressed how important British survival was to American security. He offered a
simple folksy analogy of a person loaning a garden hose to a neighbor so that he could put out a fire in his burning house that threatened to engulf both of their dwellings.11 Roosevelt wanted a simple plan that everyone could easily understand and that would be simple to execute.
Fearing that the public was still not solidly behind his aid concept, Roosevelt made a national radio broadcast on December 29 in which he declared that America would become "the arsenal of democracy." In his stirring address he pledged that the United States would supply all nations willing to resist aggression. The following day, when it was clear that a substantial majority of the American public supported aid for the British, Roosevelt told Secretary of Treasury Henry Morgenthau to draft the Lend-Lease bill. Roosevelt made it clear that he personally wanted to control all allocations and set the terms of repayment. In delegating the responsibility to two of his subordinates, Morgenthau directed them to keep the bill as simple and straight-forward as possible. He specifically told them, "no RFC, no monkey business . . . no corporations." By this he meant they were to direct neither the use of complicated loan arrangements that the Reconstruction Finance Corporation administered nor a specially designed corporation to act as an intermediary between the federal government and any nation receiving aid. Morgenthau also told them to leave the repayment issue "very much up in the air," in order to give Roosevelt maximum flexibility in arranging final settlements.12 The chief characteristics of the Lend-Lease program would be minimum bureaucracy, maximum flexibility, and absolute control in the hands of the President. These characteristics would largely prevail throughout the program's existence.
The administration did a masterful job of steering the Lend-Lease bill through Congress. There were still many in Congress who were strict isolationists and who saw Roosevelt's bill as thinly disguised scheme to get America involved in the war. A detailed revelation of the extent of British weakness and firm assurances that the
President would protect American interests were essential to the bill's passage. The bill that Roosevelt signed into law on March 8 had only two significant congressional amendments. One amendment set a limit of $1.3 billion on the value of already existing military equipment that the government could transfer. The other amendment prohibited the payment for future Lend-Lease goods from future military appropriations, which meant that the President would have to request all Lend-Lease funds from Congress.13 Roosevelt received all of the power and flexibility to administer the program that he could have reasonably expected, and he wasted no time putting that power to use.
There is little question that the passage of the Lend-Lease Bill was one of the major turning points of the war. Germany had not planned for the protracted war that the economic might of the United States would now enable. The positive psychological effect on the British was also considerable. Churchill described Lend-Lease to Parliament as "the most unsordid act in the history of any nation."14
Roosevelt never intended that Lend-Lease be a one-way arrangement. He fully expected that Britain would be able to provide some reciprocal aid to the United States during the war. He left the details of establishing this arrangement and getting the British to agree to some general terms on postwar reimbursement to Morgenthau and Secretary of State Cordell Hull, but warned them that he did not want anything to interfere with the operation of the program. Hull insisted on at least getting the British to agree to more liberal trading relations after the war as a note of gratitude to the United States for the aid they would receive. The British were reluctant to give up the restricted trading privileges they enjoyed with the Commonwealth and therefore dragged out negotiations for nearly a year. Finally, they agreed to at least cooperate in negotiations on the matter after the war and signed the Mutual Aid Agreement on February 23, 1942. Reverse Lend-Lease did indeed prove beneficial to the United States. From the Commonwealth alone it received more than $6.7 billion in goods and services over the course of the war.
Chart 2 provides a detailed breakdown of the sources of reverse Lend-Lease. For example, over 30 percent of the supplies that the American troops used for D-Day came from the British.15
Roosevelt did not wait for the British to sign the agreement to implement the provisions of Lend-Lease. On March 27, 1941, Congress granted his first appropriation request for $7 billion. Before any British requests for aid could be filled, the President had to decide how Lend-Lease would be administered, and, more importantly, how production would be divided between filling requests from the country's own armed forces and those of its new allies. Roosevelt received several suggestions, which ranged from developing an elaborate bureaucracy specifically designed to administer foreign supply to organizing a committee of the cabinet and other administration officials who had a vested interest in the program. The President rejected all of these suggestions, preferring instead to keep directive authority in his own hands. On the same day Congress granted the first appropriation, Roosevelt designated Harry Hopkins "to advise and assist" him in running Lend-Lease. As his closest confidant, Hopkins was counted on by Roosevelt to keep an eye on things and ensure that the program ran according to his wishes. Three weeks earlier, Roosevelt had dispatched another confidant to London to make sure things ran smoothly at the other end. W. Averell Harriman's official rank was Minister, but people referred to him as the "Expediter."60 Roosevelt knew that it was essential to get Lend-Lease running as quickly as possible. He was not about to allow either a cumbersome bureaucracy or an indecisive committee to slow things down.
Roosevelt believed that at this juncture in the war only he could decide on the types and quantities of supplies the allies should receive and the priority that Lend-Lease should have relative to the effort to equip America's own armed forces. This highly centralized approach displeased several key members of Roosevelt's cabinet. Secretary of State Hull disliked an arrangement that deprived his department
Statement XIV.--Reverse lend-lease aid received from foreign governments, by country and by appropriation category, cumulative to Sept. 2, 1945, as of June 30, 1947
Country Total Ordnance and
Belgium $191,215,983.35 $3,617,925.44 $10,359,801.55 $112,520.57 British Empire 6,752,073.165.40 117,913,403.18 450,479,590.59 97,774,454.48 219,453,451.26 China 3,672,000.00 3,672.000.00 France 867,781,244.70 Netherlands 2,367,699.64 193.12 1,134,587.73 U.S.S.R. 2,212,697.81 Grand total 7,819,322,790.90 121,531,328.62 454,151,590.59 108,134,449.15 220,700,559.56 Country Miscellaneous
etc., of defense
Belgium $19,538,701.97 $23,997,746.10 $18,253,987.96 $33,352.710.97 $81,982,533.79 British Empire 1,314,423,424.49 1,556.203,888.20 1,876,612,638.62 193,278,393.88 925,933,920.70 China France 72,132,115.38 201,674,487.02 136,959,069.04 4,988,920.92 452,026,652.34 Netherlands 35,461.11 203,281.67 92,101.22 59,636.11 842,438.68 U.S.S.R. 2,212,697.81 56,785.84 2,155,911.97 Grand total 1,406,129,702.95 1,782,136,188.83 2,031,917,796.84 233,835,573.85 1,460,785,600.51
of control of such an important instrument of foreign policy. Morgenthau had hoped that his Treasury' Department would continue to have the pivotal role it had occupied in arranging the purchases with the Allies prior to the passage of Lend-Lease.17 The War Department was particularly concerned that managing a military aid program outside of the control of the military establishment would stymie war planning and preparation.18 Although Roosevelt himself made all the major decisions concerning the distribution of resources, he freely delegated operating authority. He relied on the
departments and agencies that were responsible for the production of each commodity to procure and deliver items in accord with his guidance.19
It was not long before the administrative overhead associated with running such a massive program caused Roosevelt to grudgingly begin the building of a Lend-Lease bureaucracy. On May 6 he ordered the establishment of the Division of Defense Aid Reports in the Office of Emergency Management. He appointed Major General James H. Burns to head the organization, but granted him the modest title of executive officer rather than administrator. The job of the new division was to coordinate the processing ot requests for aid, maintain records and accounts, prepare progress reports, serve as a clearinghouse of information, and "perform such duties relating to defense aid activities as the President may from time to time direct." Over the next few months Roosevelt gradually expanded Burns's authority. In a July 26 letter, the President granted him the authority to transfer defense articles worth up to $15 million to those countries whose defense the President had declared were vital to the defense of the United States. On August 29 he gave Burns the authority to authorize transfer or revoke transfers of selected defense items within the overall allocation of funds. Furthermore, Burns could regulate the quantities of procurement agency purchases as he deemed appropriate.20 Roosevelt had moved a considerable distance toward sharing his responsibilities for the administration of Lend-Lease, but the arrangements he had through the end of August were remarkably modest given the task at hand. While there was some confusion about priorities among both producers and government agencies that had a stake in the foreign aid program, a substantial volume of aid was already flowing to Great Britain. By the end of 1941 the British had received over a billion dollars of Lend-Lease aid. At first only modest amounts of aircraft and other military equipment were available for shipment, since American industry was only beginning to convert to the production of war materials. Both the amount of aid and the percentage of it that was military hardware would increase dramatically over the next two years (see Chart 3, next page).
United States Lend-Lease Aid to the British Commonwealth ($ million) 1941 (Mar. to Dec.) 1942 1943 1944 1945 (Jan. to Aug.) Total Ship (sail away) 65 195 1,078 540 229 2,107 Munitions destined for: --United Kingdom 86 987 2,797 3,807 971 8,648 --Rest of Commonwealth and other war theatres 100 1,158 2,131 2,294 1,203 6,886 Other goods destined for --United Kingdom 576 1,404 1,782 2,405 1,275 7,442 --Rest of Commonwealth 10 227 436 583 390 1,646 Services 245 786 807 1,137 369 3,344 Total aid to British Commonwealth 1,082 4,757 9,376 10,766 4,437 30,073 Aid to Russia 20 1,376 4,074 2,764 10,670 Aid to other countries 2,872 Total lend-lease aid 43,615
Composition of United States Lend-Lease Aid to the British Commonwealth ($ million) 1941 (Mar to Dec) 1942 1943 1944 1945 (Jan to Aug) Total Total lend-lease aid 1082 4757 9031 10,766 4437 30,073 Less petroleum 83 232 372 799 656 2142 Total, excluding petroleum 999 4525 8659 9967 3781 27,931 Per cent: Aircraft and equipment 2.0 17.8 18.8 23.6 27.7 21.8 Ships, equipment and repairs 14.1 8.5 17.9 9.3 9.2 12.0 Ordnance and ammunition 7.8 15.4 12.1 9.0 7.8 10.8 Vehicles and equipment 6.7 9.5 17.0 14.6 9.4 13.5 Otder munitions 1.1 2.3 4.5 11.0 10.2 7.1 Foodstuffs 29.1 14.3 9.5 11.7 12.7 12.2 Other agricultural produce 8.0 3.2 2.4 2.4 3.7 2.9 Metals 9.3 6.4 4.9 3.5 5.4 4.8 Machinery 2.4 4.2 3.4 2.7 2.6 3.1 Other manufactures 1.5 2.7 1.1 1.8 2.4 1.8 Services, excluding repairs 17.9 15.5 8.4 10.6 9.0 10.8 Source: H. Duncan Hall, North American Supply (London: Her Majesty's Stationary Office, 1955), 430.
The question that now needed an answer was how much was enough. American industry was beginning to mobilize for war, but no one had a clear idea of what or how much it needed to produce to equip both U.S. military forces and those of the Allies. The military did not have a strategic plan for a global war.21 The President sent requests to the Secretaries of War and the Navy, asking them to jointly estimate the production requirements for both Lend-Lease and equipping United States forces in the event that the country should have to go to war.22 The military responded with what became known as the Victory Plan. The plan provided a comprehensive statement of the American strategy for war as well as estimates of overall production requirements. The services had a firm fix on their own needs but could only speculate as to the needs of the Allies. The task now fell to the civil authorities to attempt to get a firmer grasp of the requirements of the countries the United States intended to aid.23
Clearly, the best way to determine the long-term requirements of the Allies necessary to the establishment of production objectives was to ask them. Although Roosevelt had deemed several other nations eligible for Lend-Lease aid in early 1941, it was clear that the overwhelming focus of the program would be on Great Britain. As a major industrial nation that was already mobilized for war, Britain was capable of meeting many of its own needs. The best way for the Americans and British to maximize their collective war production was to share as much information as possible. Stacy May, an accountant in the Office of Production Management, developed a ledger that listed in detail American military requirements, current and potential production capabilities, and current and potential material stocks. Secretary of War Henry Stimson asked May to get a leave of absence from OPM and sent him to London with a request that the British fill in the blank columns with their equivalent estimates.
When the British complied, both countries had a clear blueprint for further mobilization and the foundation for the "pooling concept" for the distribution of wartime production. All of the major military and civilian procurement agencies shared the information in May's book.24 Once again a simple ad hoc contrivance rather than a complicated bureaucratic process quickly fulfilled a critical requirement of Lend-Lease.
On June 22, 1941, Germany attacked the Soviet Union. The challenges facing Lend-Lease now became far more complicated. A few days later Roosevelt publicly pledged that the United States would provide all of the aid that it could to Russia. Convincing Congress and the American people that they should support a communist state, however, was a considerable challenge for the President. Initially, Roosevelt was skeptical about Russia's ability to hold out against the Germans. After Harry Hopkins returned from a visit to the Soviet Union with encouraging news, Roosevelt announced on August 2 that the United States would give the Soviets "all the economic assistance practicable," but not under the provisions of the Lend-Lease Act. In September a joint British and American delegation traveled to Moscow to consult with Stalin and determine how the Soviets would utilize Allied aid. The conference produced a protocol listing the items that the British and Americans agreed to supply over the next twelve months. This protocol arrangement became the pattern for negotiating support for the Soviets throughout the remainder of the war.25
Even before Roosevelt formally declared, on November 7, 1941, that defense of the Soviet Union was vital to the defense of the United States and brought the Soviets under the provisions of the Lend-Lease Act, it was clear that the current aid administration would not be equal to the rapidly expanding task. Back in July 1941, Roosevelt had directed Major General Burns and his Division of Defense Aid
Reports to assume responsibility for coordinating the transfer of supplies and equipment to the Soviets. Only a small number of items were cleared for shipping during the first few months, but it was obvious there would soon be more. On October 28, 1941, Roosevelt abolished the Division of Defense Aid Reports and established the Office of Lend-Lease Administration (OLLA). The authority the President delegated to the OLLA had previously required his own signature. Roosevelt appointed Edward R. Stettinius, Jr., as administrator, and specified that, subject to such politics that the President might from time to time prescribe, Stettinius would exercise any authority that the Lend-Lease conferred upon the President.26 The bureaucracy of Lend-Lease was growing steadily, but only in accord with the growth of its task. As an independent agency reporting directly to the President and involved with policies that were of keen interest to him, OLLA was in little danger of becoming bogged down in its own bureaucracy or losing its sense of urgency.
The activity of the Office of Lend-Lease Administration picked up steadily from nearly the moment of its creation. Roosevelt convinced both Congress and the American people that it was reasonable to support communist Russia as long as it was fighting the Axis.27 On the day that the President declared that the Soviet Union was eligible for aid under the provisions of the Lend-Lease Act, Congress appropriated a billion dollars earmarked for its support. Ten days later Congress repealed the Neutrality Act of 1939, thus removing a serious barrier to the flow of Lend-Lease goods. A shortage of shipping would continue to inhibit the flow of aid, but at least now American vessels could arm themselves and carry cargoes to belligerent ports. The attack on Pearl Harbor caused a brief delay in the
flow of Lend-Lease supplies. For a few days the Navy and War Departments ordered the freezing of Lend-Lease shipments while they waited to see if the Japanese would continue their attacks on American territories. The services diverted a small quantity of airplanes and other supplies to equip some American units, but soon allowed the Lend-Lease shipments to resume.28
With the addition of the Soviet Union to the Lend-Lease program, the administrative burden on the OLLA increased significantly. The problem of supporting China also required a good deal of attention. China was in desperate need of all types of supplies and equipment in its unequal struggle against the invading Japanese. Because of the remote locations of China's fighting forces, the first priority for Lend-Lease aid was for rebuilding their life-line, the Burma Road, and providing fighter aircraft to protect it. During the first year after the passage of the Lend-Lease Act a total of 33 countries became eligible for Lend-Lease aid.29
The next major bureaucratic reorganization that would affect War Production Board (WPB) replace the Office of Production Management and the Supply Priorities Allocations Board. These two agencies had limited power and served largely as coordinating bodies. In establishing the WPB, the President consolidated functions and strengthened the authority of a single administrator. Roosevelt appointed Donald M. Nelson, Chairman of Sears Roebuck, as head of the board and granted him broad authority in setting priorities and controlling the economy. Nelson chose to exercise his authority with great discretion, and, as a consequence, other agencies and committees exercised substantial autonomy in allocating resources. Nelson's behavior had considerable justification. He feared that the establishment of a new super-bureaucracy would cause the nation's mobilization efforts to lose
momentum. In reflecting on his actions when he first assumed his new position, Nelson recalled, "it obviously would have been foolish for us to try to do anything that some existing agency was already doing satisfactorily."30 As a general rule he worked through existing organizations and their established leaders as much as possible. Since it could not rely on either the President or Donald Nelson to adjudicate all disputes over priorities, the Office of Lend-Lease Administration had to work cooperatively with several organizations in order to accomplish its mission.
As the United States forces became combatants in the war, America's priorities shifted and the Office of Lend-Lease Administration had to adjust accordingly. On April 9, 1942, in recognition of the need to give the services a greater say in the military procurement process, Congress adopted the policy of appropriating all funds for war materials directly to the service departments. This change greatly simplified both accounting and contracting for military equipment. Prior to the passage of this act, the OLLA received direct appropriations from Congress to purchase Lend-Lease goods. Under the old system OLLA used the services as procurement agents, but had to allot specific funds for specific products. The services' standard practice was to pool Lend-Lease funds with their own procurement funds prior to issuing contracts. Thus, manufacturers would make tanks without regard for whether they were producing Army tanks or Lend-Lease tanks. While this practice kept accounting simple for the producers, it made it complicated for both the services and the OLLA, especially when they attempted to juggle contracts in response to the President's directives to speed up aid to "allies. Under the new arrangement, Congress allotted funds to the services earmarked for Lend-Lease. OLLA and the services merely kept track of the gross quantities of Lend-Lease funds spent for each country and made allocation decisions for finished products based on immediate strategic needs. Although the Lend-Lease administration grew steadily to
meet expanding requirements, one of its most important procedures simultaneously became simpler and more flexible.31
Once United States forces became combatants, the munitions allocation procedure became the critical step in the military procurement process. The scale of production was becoming too massive for Roosevelt and his close personal advisors to handle alone. In early 1942 at the ARCADIA conference, Roosevelt read to his Army Chief of Staff, George Marshall, a proposal for a munitions allocation board that would be directly responsible to the President and the British Prime Minister. Marshall responded flatly that unless the board was subordinate to the Combined Chiefs of Staff (CCS) he would resign. The CCS was a newly created organization that combined the top ranking officers of the American and British military services into a single staff that met to plan and coordinate all strategic military operations. Harry Hopkins, who witnessed the incident, wholeheartedly concurred with Marshall's position. The allocation of munitions, he agreed, should never be considered outside of the military strategic planning process. Although the demand apparently caught Roosevelt off guard, he agreed to establish a munitions assignment board in Washington and another in London both responsible to the CCS in Washington, for which he obtained Churchill's approval. Roosevelt noted that this was merely a preliminary arrangement and that he and Churchill retained the authority to resolve any disagreements that might arise. The Munitions Assignment Boards (MAB) in fact remained in control of the assignment of all military hardware throughout the remainder of the war.32
Hopkins served as the chairman of the Washington MAB, but in practice the most important positions were those of the chairmen of the powerful ground, air, and naval subcommittees, who made allocation decisions in their respective areas. Through this system, General Brehon B. Somervell, chief of the Army Service Forces, as chairman of the MAB(Ground), controlled the allocation of nearly all military items manufactured in the United States. Somervell saw to it that many Lend-Lease requests were filled, but he exhibited a clear preference for equipping American forces first. Lend-Lease
support to the Allies increased steadily during the war mostly because the United States was able to produce much more than it needed for its own forces.33
Neither the Army nor the Office of Lend-Lease Administration had much to say about the allocation of resources to one recipient. The United States distributed aid to the Soviets strictly according to the annual negotiated protocols. Roosevelt personally saw to it that the protocol lists were filled to the maximum extent possible, even at the expense of supporting American troops. Initially, the United States fell well short of filling the commitments it made to the Soviets.34 There are a number of reasons that this occurred, but none of these appears to be directly related to either organizational or procedural failures on the part of the Lend-Lease administration.
Roosevelt made his first commitments of aid in the summer of 1941 when American industry was still in the early stage of conversion to military production. The entire American volume of tank armor plate for the next twenty-four months would not have covered the initial Russian request.35 The number of medium tanks the American negotiators agreed to in the first protocol was based on the faulty assumption that United States tank producers could double their output in a year.36
The most persistent problem that would challenge the Allies in their effort to supply the Soviets was the significant set of transportation obstacles. Unlike the British, the Soviets had negligible merchant shipping. The United States would eventually build a huge merchant fleet, but, again, neutrality had seriously delayed the mobilization of the shipbuilding industry. Naval access to Russia was limited in the best of times. The Soviet Union's few significant ports were frozen much of the year, and their port and internal transportation infrastructure had limited capacity. At first the British and Americans focused on using the Soviets' preferred northern route, but German submarines and ice made this route particularly difficult.37 In 1942
Chart 5: Shipments to U.S.S.R.
Source: Department of State, Report on War Aid Furnished by the United States to the U.S.S.R. (November 28, 1945), 26.
the United States lost 12 percent of its vessels that attempted to use that route.38 Eventually, the United States developed safer and more reliable alternative routes, Lend-Lease funds helped to expand greatly the Pacific port of Vladivostok and construct a transportation network through Iran. Beginning in 1941, the Army established a major command in Iran to supervise the building and operation of ports, final assembly factories, and rail lines that by 1943 had become one of the most heavily used supply routes.39
Transportation problems and manufacturing shortages, however, do not entirely explain the Americans' early shortfalls in supplying the Soviet Union. Most of the materials the Soviets wanted were
those that the War Department was responsible for supplying. There is little question that the War Department was guilty of some foot dragging. Marshall and Stimson were both reluctant to supply the Soviets when it appeared in 1941 that they might not be able to withstand the German onslaught. Also the requests in late 1941 and early 1942 came precisely when the Army was most desperate to begin its own mobilization in the wake of Pearl Harbor. At this same time the Lend-Lease requests of Great Britain and China were placing their most severe strains on the War Department procurement system.40
Roosevelt personally blasted the War Department for delays and used the OLLA to verify compliance with his wishes. Stettinius, General Burns, and Hopkins were all in agreement with the President's desire to place the highest priority on supplying the Russians.41 The OLLA established a field office in Moscow, which greatly facilitated arrangements with the Soviets. Colonel Phillip Faymonville, the head of that office, was so insistent that nothing interfere with supplying the Russians, and so unyielding in his refusal to allow Lend-Lease aid to be used as a tool for extracting information from the secretive Russians, that some questioned his loyalty. But Admiral William H. Standley, the ambassador to Moscow, conceded that Faymonville was simply executing the President's policy.42
For a time the Soviets where able to use the American quota shortfalls as a means of pressuring the United States into redoubling its efforts. By the end of 1943, however, the United States was fulfilling virtually all of the Soviet Union's seemingly insatiable needs. Chart 6 (next page) depicts the enormous increases in the deliveries of the most critical war materials. By the end of the war the Soviets had received from the Americans 11,450 planes, 7,172 tanks, and 433,000 trucks. 43
LEND-LEASE EXPORTS OF MILITARY ITEMS TO U.S.S.R.
Source: Fourteenth Report to Congress on Lend-Lease Operations (March 11, 1944), 32.
1941 1942 1943 Total Planes 150 2,500 5,150 7,800 Tanks 180 3,000 920 4,100 Motor Vehicles 8,300 79,000 144,400 231,700
Throughout 1942 and 1943, the volume of Lend-Lease continued to expand, reaching its peak in 1944. Despite the enormity of its task, the Lend-Lease administration remained surprisingly small. In testimony before the House Foreign Relations Committee on January 29, 1943, Edward Stettinius remarked that his organization had fewer than 600 people, and they were scattered all over the world. To reinforce his point, he added: "If we had gone out to do this job ourselves we would have had to have many, many thousands of people duplicating the facilities and organization of already existing efficient agencies in Washington."44
Before the end of the war, the Lend-Lease Administration would undergo one more major adjustment. During the war the United States government had established a number of agencies to handle various aspects of its foreign economic policy. As American forces began to occupy more formerly enemy-controlled territory, several of these agencies came into conflict with each other over policy and jurisdictional matters. The State Department established a new organization called the Office of Foreign Economic Coordination to resolve the problems, but it soon proved unequal to the task.
The President turned to the reliable, flexible Office of Lend-Lease Administration to form the foundation of a new organization outside the Department of State to collectively manage all of the nation's foreign economic programs. On September 25, 1943, the President issued an order establishing the Foreign Economic Administration and consolidating more than a dozen agencies and offices. While this act created a new, fairly large bureaucracy, it consolidated a number of functions, and eliminated a whole host of smaller bureaucracies.45
In little more than a year, the Foreign Economic Administration (FEA) would itself disband. With the enormous task of fighting the war complete, the organization had outlived its purpose. Rather than attempting to adjust the FEA to an entirely new mission, the government disbanded it and released its members, who were mostly private citizens who had offered their services in support of the war effort. The organization that coordinated and sometimes directed history's largest wartime foreign aid program had evolved from a single advisor into a large multifunctional agency. Along the way it grew just quickly enough to enable it to continue to accomplish its mission. Throughout its brief history the characteristics of America's Lend-Lease administration had remained minimal bureaucracy and maximum flexibility.
Another indication of the Lend-Lease program's minimal bureaucracy is the modest amount of funds it expended on administrative expenses. Over the life of the program, less than one-tenth of one percent of the funds Congress allocated for Lend-Lease were charged to administrative expenses (see Chart 7, next page). While efficiency may not have been the primary concern of the Lend-Lease administrators, it appears that they wasted little of the government's resources on expenditures not directly related to supporting the country's allies.
An assessment of the merits of America's Lend-Lease program and its bureaucratic approach must ultimately rest on an assessment of its effectiveness in accomplishing its assigned task. Minimal bureaucracy and flexibility are better only if they produce better results. If America's ultimate aim in World War II was to defeat the Axis as
Statement I.--Statement of operations under the Lend-Lease Act,
cumulative through June 30, 1947
Type of Defense Aid Charged to foreign governments Not distributed by foreign governments Total Transfers to foreign governments $44,228,324,404.90 $44,228,324,404.90 Services and other expenses 3,534,903,377.68 3,354,903,377.68 Consignments to commanding generals 632,007,595.95 632,007,595.95 Transfers to Federal agencies 725,589,141.95 725,589,141.95 Losses on inventories and facilities 31,072,272.57 31,072,272.57 Production facilities 720,641,686.66 720,641,686.66 Miscellaneous charges 332,200,098.31 332,200,098.31 Administrative expenses 39,257,580.77 39,257,580.77 Total defense aid provided 48,395,235,378.53 1,848,760,780.26 50,243,996,158.79 Source of Funds From funds appropriated to-- --Lend-Lease Administration $25,231,776,585.66 --War Department 19,488,377,685.32 --Navy Department 4,745,554,742.96 --Maritime (War Shipping Administration) 620,647,410.38 --Coast Guard (Treasury) 12,965,897.56 From foreign government funds1 143,631,442.20 From reissues of returned lend-lease articles 1,042,394.71 Total $50,243,996,158.79 1. In addition, the foreign governments have paid approximately $900,000,000 to the United States for lend-lease items purchased out of U.S. Government funds. This money has or will be reappropriated or deposited to the general fund of the Treasury.
Source: Twenty-fifth Report to Congress on Lend-Lease Operations. March 15. 1948. 2.
expeditiously as possible while minimizing losses, it is difficult to imagine how Lend-Lease could have contributed more to that aim.
From the perspective of America's major allies, the administration of Lend-Lease was highly effective. The British were in dire straights in 1941 when the United States started funneling resources to them through Lend-Lease. America's ad hoc approach got supplies moving quickly while the threat to Great Britain was most severe, and the British all along received the overwhelming preponderance of the aid. A more deliberate approach may have delivered the goods more efficiently, but, for the British, timing rather than larger quantifies of goods was key.
It is more difficult to gauge the relative effectiveness of Lend-Lease to the Soviets. During the Cold War the USSR clearly downplayed the importance of American aid to its achievement of victory. In a recent study, a Russian scholar asserted that Lend-Lease aid may
not have made a decisive contribution to the defeat of the Germans on the Eastern Front, but the small quantities that arrived early came when the Russian situation was most grave. The contribution of Lend-Lease may have been more psychological than material.46 The Russians wanted an assurance that they were not fighting alone. Again, timing rather than efficiency, was key. By 1943 the Lend-Lease administration was delivering an enormous amount of supplies and equipment under the most difficult of circumstances. While much of this aid arrived too late to physically help the Soviets stop the German advance, it certainly proved useful in their subsequent counter-offensive.47
From the perspective of America's own forces, the administration of Lend-Lease was also effective. It is possible the Lend-Lease program delayed the entry of American forces into combat in Europe in World War II and it is certain that Lend-Lease caused them to be less well-equipped.48 There is no evidence, however, that this was the result of bureaucratic inefficiency. Policy decisions that prescribed sharing resources with allies and in some cases granted higher priority in filling requirements for allies are sufficient explanations for the effects the program had on United States forces. American fighting men and women nevertheless benefitted from the effective administration of Lend-Lease. For every Allied unit that was able to stay in the fight because of supplies and equipment from Lend-Lease, American units were spared assuming a greater share in combat.
Lend-Lease was not exceptional for the fact that Roosevelt and his subordinates chose the minimal bureaucratic approach in its administration. The United States government used a similar approach in the design and administration of most of its World War II agencies. Indeed, this preference for flexible, ad hoc arrangements over precisely constructed bureaucracies may be part of a cultural phenomenon noted by scholars in the development of American
government agencies through the middle of the twentieth century.49 Few of America's World War II ad hoc agencies, however, worked as well as the Lend-Lease administration. While the federal government had to disband many of its agencies as they failed to accomplish their intended purposes, it merely expanded the Lend-Lease administration as its tasks grew. This may have been because of the unique nature of the program or because it enjoyed the close personal attention of President Roosevelt. In either case, Lend-Lease is certainly a worthy subject for those who are interested in studying an example of a successful minimalist bureaucracy.
Table of Contents ** Previous Chapter (4) * Next Chapter (6)
1. U.S. President, Twenty-seventh Report to Congress on Lend-Lease Operations, (Washington, D.C.: Government Printing Office, 1949) 3; and Department of Commerce, Foreign Aid by the United States Government, 1940-1951 (Washington, D.C.: Government Printing Office, 1952), 2.
2. Historical Statistics of the United States: Colonial Times to 1970 (Washington, D.C.: Government Printing Office, 1975), series Y339-42; Alan S. Mihvard, War, Economy and Society, 1939-1945 (Berkeley: University of California Press, 1977), 70; and Bureau of the Budget, The United States at War (Washington, D.C.: Government Printing Office, 1946), 507.
3. For examples of the New Left interpretations of Lend-Lease see William Appleman Williams, The Tragedy of American Diplomacy, second revised and enlarged edition (New York: Dell Publishing, 1972); Lloyd C. Gardner, Economic Aspects of New Deal Diplomacy (Madison: University of Wisconsin Press, 1964); and Gabriel Kolko, The Politics of War: The World and the United States Foreign Policy, 1943-1945 (New York: Random House, 1968). For examples of the critics of the New Left interpretation of Lend-Lease see George C. Herring, Aid to Russians, 1941-1946: Strategy, Diplomacy, the Origins of the Cold War (New York: Columbia University Press, 1973); John Lewis Gaddis, The United States and the Origins of the Cold War, 1941-1947 (New York: Columbia University Press, 1972); and John C. Brewer, "Lend-Lease: Foreign Policy Weapon in Politics and Diplomacy, 1941-1945" (Ph.D. diss., University of Texas at Austin, 1974).
4. War Department, International Division, U.S. Army Service Forces, A Guide to International Supply, 31 December 1945, General Collection, National Defense University Library, Washington, D.C., 3-4. See also Milward, 48-49.
5. State Department, Foreign Relations of the United States, 1940, vol. 3, (Washington, D.C.: Government Printing Office, 1942), 12.
6. Richard J. Overy, "Co-operation: Trade, Aid, and Technology," in Allies at War: The Soviet, American, and British Experience, 1939-1945, ed. David Reynolds, Warren Kimball, A. O. Chubarian (New York: St. Martin's Press, 1994), 204.
7. Winston S. Churchill, Their Finest Hour (Boston: Houghton Mifflin, 1949), 24-25.
8. Warren F. Kimball, The Most Unsordid Act: Lend-Lease, 1939-1941 (Baltimore: Johns Hopkins Press, 1969), 55-65, 123-124.
9. Kimball, 68-69; Brewer, 5-6. For a detailed study of the destroyers for bases deal, see Philip Goodard, Fifty Ships that Saved the World: The Foundations of the Anglo-American Alliance (Garden City, N.Y.: Doubleday, 1965).
10. Churchill, 558-567.
11. Robert E. Sherwood, Roosevelt and Hopkins, an Intimate History (New York: Harper & Brothers, 1948), 225; and Kimball, 122.
12. John M. Blum. ed., From the Morgenthau Diaries, 3 vols. (Boston: Houghton Mifflin, 1959-1967), II, 210-213: Kimball, 128-132; and Brewer, 12-13.
13. Kimball, 133-220; and Brewer, 13-28.
14. Overy, 205; Milward, 23-30; and Churchill, 569.
15. Blum, Morgenthau Diaries II, 243; Brewer, 37-50, 53-66; and Overy, 205.
16. Bureau of the Budget, The United States at War: Development and Administration the War Program of the Federal Government, (Washington, D.C.: Government Printing Office, 1946), 48-49; and Sherwood, 267-269.
17. Sherwood, 278.
18. Richard M. Leighton and Robert W. Coakley, Global Logistics and Strategy, 1940-1943, U.S. Army in World War II, The War Department series (Washington, D.C.: Government Printing Office, 1955), 78; and General Albert C. Wedemeyer, Wedemeyer Reports!, (New York: Henry Holt and Company, 1958), 69.
19. The United States at War; 47-48.
20. Ibid., 49-50.
21. Charles E. Kirkpatrick, An Unknown Future and a Doubtful Present: Writing the Victory Plan of 1941 (Washington, D.C.: United States Army Center of Military History, 1992), 48-50.
22. Letter, President to the Secretary of War, 9 July 1941. Entry 234, Box 498, Director of SS & P, G-4. NARA RG 165, Numerical File 1921 -- March 1942, Document #33473.
23. Kirkpatrick, 101-102, 122.
24. Donald M. Nelson, Arsenal of Democracy: The Story of American War Production (New York: Harcourt, Brace and Company, 1946), 129-135; and Overy, 215.
25. Overy, 206-208; Sherwood, 343-348; and Robert H.Jones, The Road to Russia: United States Lend-Lease to the Soviet Union (Norman: University of Oklahoma Press, 1969), 35-64. For a complete listing of all of the protocols see Department of State, Soviet Supply Protocols (Washington, D.C.: Government Printing Office, n.d).
26. The United States at War, 87; and "Lend-Lease Liaison with Foreign Nations -- Russia." Entry 18. Box 230, Lend-Lease History Files. NARA RG 169, Soviet Russia File.
27. The building of popular support for including the Russians under the Lead-Lease Act was yet another testimony to Roosevelt's political skills. The President went so far as to secure the endorsement ot Pope Pius XII, who declared that there was a distinction between aiding the Soviet Union and aiding communism. For detailed analyses of Roosevelt's actions see Raymond H. Dawson, The Decision to Aid Russia, 1941: Foreign Policy and Domestic Politics (Chapel Hill: University of North Carolina Press, 1959), 67-109; and Herring, 7-9, 18-21.
28. A Guide to International Supply, 10-12; and Leighton and Coakley, 247, 270.
29. Wesley M. Bagly, The Eagle-Dragon Alliance: America's Relations with China in World War II (Newark: University of Delaware Press), 24-25, 62-67; Leighton and Coakley, 85-87, 525-530; Second Report to Congress on Lend-Lease Operations (September 11, 1941), 23-24; and Fourth Report to Congress on Lend-Lease Operations (March 11. 1942), 7.
30. Nelson, 202. See also The United States at War, 109-111; and Theodore A. Wilson, "The United States: Leviathan," in Allies at War: The Soviet, American, and British Experience, 1939-1945, ed. David Reynolds, Warren Kimball, A. O. Chubarian (New York: St. Martin's Press, 1994), 177.
31. Leighton and Coakley, 90, 259; and A Guide to International Supply, 16.
32. Sherwood, 470-473; and Leighton and Coakley, 251-254.
33. A Guide to International Supply, 15-19; and Wilson, 177.
34. Jones, 85-86; and Leighton and Coakley, 115, 552-553.
35. Wayne Coy of the Office Of Emergency Management made this assessment, quoted in Herring, 14.
36. Leighton and Coakley, 100.
37. Ibid., 102, 112-114.
38. Fourteenth Report to Congress on Lend-Lease Operations. (March 11, 1944), 33.
39. Hubert P. van Tuyll, Feeding the Bear: American Aid to the Soviet Union, 1941-1945 (New York: Greenwood Press, 1989), 26-27; and Overry, 206-208. For a detailed account of the Army's efforts to supply the Russians through Persia see T.H. Vail Motter, The Persian Corridor and Aid to Russia, United States Army in World War II (Washington, D.C.: Government Printing Office, 1952).
40. Leighton and Coakley, 97-99.
41. Herring, 13-14; Blum. Morgenthau Diaries, II, 264; Sherwood, 544, 551-552; Stettinius, 211; and "Lend-Lease Liaison with Foreign Nations--Russia." Entry 18, Box 230, Lend-Lease History Files. NARA RG 169, Soviet Russia File.
42. van Tuyll, 9-10; and Herring, 103. Vice President Henry Wallace interviewed Faymonville when he returned to Washington after being relieved in late 1943; see John M. Blum, The Price Of Vision: The Diary of Henry A. Wallace, 1942-1946 (Boston: Houghton Mifflin, 1973), 274-275.
43. Jones, 118-119. Detailed figures on final counts of equipment the Soviet's received are in "The United States Army in World War II: Statistics, Lend-Lease," Lend Lease File 400.336, United State Army, Center of Military History, Washington, D.C.
44. Congress, House, Committee on Foreign Relations, Extension of Lend-Lease Act: Hearing before the Committee on Foreign Relations, 78th Cong., 1st Sess., 29 January 1943, 18.
45. The United States at War, 403-428.
46. Lydia V. Pozdeeva, "The Soviet Union: Phoenix," in Allies at War: The Soviet, American, and British Experience, 1939-1945, ed. David Reynolds, Warren Kimball, A. O. Chubarian (New York: St. Martin's Press, 1994), 160-165.
47. van Tuyll, 84-85; and Jones 269.
48. Kirkpatrick, 107-109.
49. For studies that examine America's preference for minimal beauracracy see Barry D. Karl, The Uneasy State: The United States from 1915 to 1945 (Chicago: University of Chicago Press, 1983); and Theda Skocpol, Protecting Soldiers and Mothers: The Political Origins of Social Policy in the United States (Cambridge, Mass.: Belknap Press, 1992).