BRITISH EMBA33Y,
WASHINGTON. B.C.
October 14th, 1940.
Dear Colonel Knox,
You spoke to rae last week of the
importance which the United states Governraont attached
to work being started on the bases recently transferred
to the United states as soon as possible.    I have now
consulted toy Government and I m authorised to state
that subject to the consent of the local Governors
they are agreeable to the United States starting work
at any base as soon as the site has been agreed upon
between the United Jtates Government. , the British
Government and tixe local authorities.     It is clear
that in a number of places a good deal more discussion
will be necessary before the precise location can be
defined and agreed to.     Indeed it is certain that the
final completion of the leases cannot be effected for
several months at the earliest, if only because, as I
told Mr. Hull and Admiral Greenslade, the completion
of the leases must be effected in London where both the
detailed information and the ultimate authority in regard
to the Colonies are alone concentrated.     But already
it would appear to be clear that there is general agree-
ment in Newfoundland that the iaain naval base and naval
air station should be at Argentia near Placencia; that
there should be a small naval base and army barracks at
St. John's and a supply and training base at Argentia.
The Honourable
subject/
The secretary of The iiavy,
Washington, D.0«
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subject, therefore, to final confirmation that there
is agreement on these areas and to the United states
agreeing, as far aa possible, to use local labour,
work there can be begun at any time.
In the case of Bermuda it is clear tliat
no work can be undertaken until after Admiral Oreenslade*a
further visit to the Colony, for reasons set forth in
my letter of to-day's date.      In thin case also, the
Bermuda Government attaches the greatest importance
to the employment as far as possible of local labour.
*. In the case of the Caribbean Islands, tfee
preliminary survey seems to show that no insuperable
difficulties in the way of agreement on the sites
proposed is likely to arise though there are a Good
many matters of detail to be adjusted.     There also,
subject to final agreement, it would appear to be
possible for the United states to begin construction
work in the fairly near future, also on the understand-
ing that as far as possible it will employ local labour.
There is also the question of the f011.1 of lease* I
think I ought to say that I am pretty certain that the
draft form which you showed me the other day will not
be acceptable.     It goes well beyond what was provided
in the exchange of letters between Mr. Hull and myself*
It is quite one-sided and would allow the United states
Government to exercise any kind of right in any part of
Bermuda provided it could be brought under the heading
of military control or operations, and this at the sole
discretion of the United states Government.     In my
personal/
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personal opinion at any rate this would give rise
to an Infinite number of legalistic disputes if not
to litigation between our two countries.     I am sure
the shorter and simpler the lease can be made the more
likely are things to go harmoniously, leaving the many
minor detailed issues which are bound to arise between
two countries engaging to live side by aide in the same
island to bo loft to common sense adjustment between
the respective authorities on the spot, with provision
for settlement by our two respective Secretaries of
State where difficulties arise.
I hope therefore it will be satisfactory
to you that wherever agreement is reached as to the
BiteB, your Government should be free to begin work
without waiting for the final leases to be completed.
The only reservation I should have to make is that
where it should become necessary to displace private
interests these should be compensated within reasonable
time and if necessary without waiting for the completion
of the leases.        I am further instructed by my Govern-
ment to say that they hope it will bo possible for the
United states Government to allow British or Dominion
firms of repute to tender for some of the work concerned.
There are many firms of international repute, such as
John Jackson, Paulirigs and others, who would be prepared
to cooperate for building and whose prices and workman-
ship would probably compare well with the best firms in
the United states of America.