Australia USA Lend Lease

[Mike Cecil]

Lang,

For the period Sept to Nov 1939, there was no purchases whatsoever of warlike stores from the USA. From Nov 1939 to March 1941, it was the 'Cash and Carry' period where a country had to pay for all purchases in cash, and from March 1941 it was mostly Lend Lease, with the Australian policy being to obtain as much as possible under Lend Lease and only small cash purchases were allowed.

According to the Ministry of Munitions, the balance of LL to RLL at war's end was that the RLL side of the ledger was about 75% of the LL side.

Mike

[Lang]

Mike

That was my point.

There was LL and Reverse LL. If as you say the balance was 75/25 how did Australia finish up so close the square? Certainly more at play with this treaty then raw LL/RLL figures.

Lang

[Mike Cecil]

$27M difference in 1946 $ hardly seems like 'close to square' to me, Lang. The only cash purchases I have found record of after March 1941 were small amounts in the hundreds of $$ per transaction, which fits with the government policy ceiling of $1,000 USD. Even then, the purchase had to be approved by the US LL authorities as being in the mutual interest and best use of the resource.

Given the wide variety of items and quantities supplied to US Forces under RLL, it seems quite reasonable to me that Australia reached around 75% of the LL total supplied to Australia by war's end.

Mike

[Lang]

Mike

All converted to dollars. Reserve Bank of Australia historic charts.

In government terms at the end of a 6 year war $US27m or 9m Australian pounds is pretty much SFA. This was around 3 weeks pay bill for the Australian Army at average numbers during the war. This equates in buying power today to $683,361,000 Australian Dollars.

At that time it took 3 US dollars to buy an Australian Pound.

They announce that much every election on single squeaky wheel vote buying projects. The proposed Virginia Class submarines for the RAN will cost $171,000,000,000 at the end - without the doubling in price as the project turns into the usual shambles. That is about $22,000,000,000 per boat each which is 32 times the value of Australia's WW2 LL debt - both in today's buying terms.

It certainly was not in the ball-park of the billions equivalent British debt.

Regardless of the amount, how many years, or decades, would it take the bureaucracies of both countries to create a similar result 3,000 page treaty today?

Lang

[Mike Cecil]

Lang,

Nice figures.

However, your initial statement was " One of the things not quite clear in the USA/Australia relationship is the fact Australia actually paid cash for a huge amount of equipment in normal commercial sales outside Lend Lease." (my underline)

I've not seen any evidence of large cash purchases by Australia after March 1941. Perhaps you could direct me to your source for the evidence of this, as it would certainly mean a re-think for me about the LL -RLL relationship and process.

Mike

[Lang]

Mike

Just getting some figures together.

The indicators I am getting have more to do with commercial transactions from Australian companies involved in the war effort not official government treasury direct payments.

The thing I am trying to simplify is blurred because a great many of the Australian giants, particularly car and engineering companies, were either totally or largely US or British owned. Huge credits and debits were absorbed between subsidiaries. For example GM would send GMH a gearbox valued at X. GMH would sell the gearbox, in a vehicle, to the Australian Government at X + 20%. GM as the owner of GMH would receive the profit dividend (didn't stop just because there was a war on). The X would go to the capital investment they had in GMH which could be returned to them any time the company decided to declare an extraordinary dividend which happens often. All this outside LL and direct government treasury purchases.

Australian wool, previously banned in USA, was released for shipment and millions of pounds worth was shipped during WW2. The Liberty ships did not go back empty.

I still believe Australia got out of jail helped significantly by these commercial operations. Bear with me for some figures.

Lang

[Lang]

Mike

An interesting one from DFAT.

Australia actually had a trade surplus during WW2 (all those Liberty ships full of wool and wheat). Of course the vast majority was with USA which was the only game in town at the time.

Unemployment was at record lows (due to war production and military service), people had more money than ever and the Reserve Bank was terrified of a post war inflation run-away like after WW1.

I venture to suggest that the stuff westbound across the Pacific was war material actually purchased with Eastbound trade profits - a great proportion commercial transactions by Australian war contractors not government.

Still collecting data.

[michaelkoudstaal]

Originally Posted by Lang

... Australia was $20 million behind but laid off debts by giving USA title to land ie the American Embassy in Canberra and promising to run education programs - I don't know if they ever did such a thing.

Originally Posted by Lang

At that time it took 3 US dollars to buy an Australian Pound.

I think the premise of that line of thinking might be wrong. If it is not a strictly financial arrangement, then that shifts it over to something like a value exchange and that's going to get very subjective as to what is fair or balanced or equal.

[Lang]

The main point of my posting the treaty was to demonstrate the goodwill and determination to come to an agreement acceptable to both parties in a miraculously short time.

You might go so far as to equate the US/Australian total Pacific War relationship to some family business. Everybody in the family contributed to their best endeavours. Obviously some were stronger and there were inequities but as Paragraph 7c says, in the interest of a fast conclusion and the opening paragraph talking about defeating the common enemy they shook hands.

There are several paragraphs about each side being able to get their stuff back if they wanted but I am sure this was to appease the naysayers to keep a foot in the door of any bad deals. Of course neither side ever acted on any sort of recovery action.

Lang

[Mike K]

https://recordsearch.naa.gov.au/Sear...spx?B=31426018

More reading