June 4, 1945

New York Times.

I have the honor to transmit for the consideration of the Congress an estimate of appropriation for defense aid for the fiscal year 1946, exclusive of aid authorized to be transferred by the War and Navy Departments and the Maritime Commission, as follows:

 
Defense aid ............................................ $1,975,000,000 

This recommended appropriation, together with unobligated balances of about $2,400,000,000 from the current year, will provide a total program of $4,375,000,000. Since Germany has been defeated, the proposed new program of defense aid and the appropriation required are less than for the current year. This program, however, reflects our resolution to give fully effective aid in order to shorten the war and thereby reduce the cost in Allied lives and materials.

The war against Japan, like the war against Germany, is a cooperative Allied effort. Through lend-lease and reverse lend-lease we shall continue to pool our resources with those of our Allies so that the crushing weight of our combined might may be thrown against our remaining enemy.

Where lend-lease funds will make the efforts of our Allies more effective we shall use them. Where the redeployment of our troops from Europe or our control over enemy areas require aid from other nations, lend-lease will be available to enable their maximum participation. Similarly, through reverse lend-lease we can expect our Allies to give us all the assistance possible.

In the light of changed war conditions, a preliminary review of lend-lease assistance to individual nations has been made. Further review will be necessary from time to time in the coming year as the war progresses and the needs and the wartime roles of our Allies vary. For this reason any programs proposed must be considered as most tentative.

Our recent lend-lease agreements with France, Belgium and the Netherlands will be carried out by lend-lease funds to the fullest extent consistent with changed war conditions and the basic wartime purposes of lend-lease aid. Beyond this I propose that these Allies be assisted in financing necessary equipment and supplies by the Export-Import Bank.

Such assistance is consistent with the enlarged role which the bank should be given in providing certain types of industrial equipment and supplies which other nations may wish to obtain from us for reconstruction. Some aspects of reconstruction are of particular interest to this nation and can most appropriately be financed by our own instrumentality.

Accordingly, there will be transmitted to the Congress at an early date a proposal providing for adequate legal authorization and expanded lending capacity for the bank.

The lend-lease and Export-Import Bank programs represent unilateral efforts of this country. They are not intended to duplicate the work of international agencies.

The United Nations Relief and Rehabilitation Administration, for example, has been created to meet the more immediate needs of relief and rehabilitation where nations are unable to meet their needs from their own resources. Legislation is now before the Congress to allow participation by the United States in the International Bank for Reconstruction and Development and the International Monetary Fund. This legislation merits early consideration and approval.

In contrast to these devices, however, lend-lease is a positive weapon of waging war. The appropriation estimate herein submitted provides for its full use to bring the conflict with Japan to a quick and decisive end.

The details of the defense-aid estimate are set forth in the letter of the director of the Bureau of the Budget, transmitted herewith, in whose observations and recommendations I concur.

The text of the letter to the President from the Director of the Bureau of the Budget follows:

I have the honor to submit for your consideration an estimate of appropriation for the fiscal year 1946 for defense aid, exclusive of aid authorized to be transferred by the War and Navy Departments and the Maritime Commission, in order further to carry out the provisions of the act entitled, "An act to promote the defense of the United States," approved March 11, 1941, as amended, as follows:

 
Defense aid ............................................ $1,975,000,000 

The requested appropriation is $1,563,869,000 less than that for the current year. The total new program anticipated for the fiscal year 1946 is $4,375,000,000 as compared to estimated obligations of $5,128,000,000 in the current year. It has been possible to reduce the requested appropriation by $2,400,000,000 by the inclusion of a provision authorizing the use in fiscal year 1946 of unobligated balances as of the end of the current fiscal year.

The proposed defense-aid budget for the fiscal year 1946 reflects the following recommendations:

1. Lend-lease should continue to be an indispensable weapon for waging fully effective war against Japan in close collaboration with our Allies. In furtherance of this objective such funds should be of limited but valuable assistance in expediting the maximum redeployment of our armed forces for full use against Japan.

2. Lend-lease funds should be limited to purposes of the war and national defense, and should be reduced as fast as possible consistent with those objectives.

3. Raw materials should be provided under lend-lease arrangements only where they are needed to increase or maintain the industrial contribution of the lend-lease country to the war effort.

4. Petroleum products for United States military use should henceforth be financed from war and navy appropriations.

The appropriation recommended also assumes that Congress will expand the lending authority of the Export-Import Bank and remove the prohibition of lending to Governments which have been in default in the past. Such action will make possible the financing of portions of the lend-lease 3 (c) agreements with the French, Belgian and Netherlands Governments for the delivery of industrial equipment and supplies, provision for which has not been made in the program recommended above because of changed war conditions.

The requirements for the supplies to be furnished under the defense aid program for the fiscal year 1946 were prepared by the Foreign Economic Administration after consultation with representatives of the Governments of the countries eligible for such aid. They were discussed as to feasibility by the FEA with the War Production Board, the Department of Agriculture, the War Shipping Administration, the Treasury Department, the Petroleum Administration for War and other interested departments and agencies.

There are attached the details of the estimate of appropriation with supporting schedules and summary tables showing the defense aid requirements for the fiscal year ending June 30, 1946.

I recommend approval of the above estimate of appropriation.