MINUTE DESCRIBING DEVELOPMENTS WHICH RENDERED
INAPPLICABLE INSTRUCTIONS CONTAINED IN FOREIGN
OFFICE TELEGRAM TO WASHINGTON 1828 OF THE
8th AUGUST.
1.     The concluding paragraph of Lord Lothian's note
^9^1) £» l<r°       to the State Department No. 459 of the 26th September read
as follows:
"Further I am to invite attention to the last
paragraph of my letter to Mr. Sumner Welles, dated
<?4</67       8th August, 1940, in which I felt obliged to stipulate
in connexion with the air facilities which they were
offering, that any British air transport undertaking
designated by His Majesty's Government engaged in the
operation of air transport services between the West
Indies and North and South America will have the
unconditional use of these facilities - i.e. aerodromes,
wireless installations, etc. - established by American
interests on British soil and that these facilities
will be made available to such British undertakings
at reasonable commercial charges.     This is no doubt
also a matter which will have to be considered when
the details of the leases are under discussion."
, 2.     The note in which this passage occurred was
S^ltfir/^o       prompted by Foreign Office telegram 2268 of the 15th
September, which instructed the Ambassador formally to
reserve the position tf H.M. Government as set forth in
^9V////</©      his tele6ram 1956, making it plain that we would expect
' the U.S. Government to grant to us in the areas we had
leasee! to them the equivalent of any facilities and
privileges which they may accord to South American Republics.
Washington telegram 1956 informed us that f!r. Cordell Hull
had announced to Lord Lothian that, owing to alarm on the
part of the South American States lest our bases-destroyer
agreement implied the first step towards Anglo-American
hegemony, he had decided to declare that the bases had
been given and acquired in the interests of hemispheric
defence and that any privileges the U.S. Government might
accord to South American Republics in their own harbours
would also be accorded to them in the leased bases. By
stipulating in the note which he addressed to the State
Department with reference to this declaration that any
British air transport undertakings would have the
unconditional use of facilities established in the leased
areas, the Ambassador has given the impression to the U.S.
Government that we would be willing to make these leased
areas available for Pan-American Airways, which is contrary
to our present attitude.     This attitude is set forth in
a note by Sir Francis Shelmerdinu, Director-General of
Civil Aviation, of the 4th October.      In paragraph 4 of
this note it is pointed out that the interests of British
civil aviation require that the hands of American air
transport operators shall not be further strengthened as
the result of the present negotiations.      In particular,
on the North Atlantic route it is important that the bargaining
value of our existing civil aviation bases shall not be lost by
the creation of new ones out of our control;    and in the West
/Indies
r
Indies that the. position of Pan American Airways shall
Bot..be further consolidated.     It is al3o important
that the U.S.A. should,"be precluded from making air
facilities   .ava£&a*ble ..for;   she   commercial air operations
of nationals of third Powers..    In the light of this
consideration the note recommends (see paragraph 5, sub-
heading (2)) that the use of the bases to be leased to the
United States should be limited to defence purposes.
3,     Lord Lothian was unaware of the attitude of the
Air Ministry as thus defined when he drafted his note under
reference, and the fact that he included the passage in
question was the natural result of earlier instructions
sent to him at a time when the bases agreement had not yet
been concluded*     'The history of these instructions is as
follows.     On the 4th August Sir Arthur Street of the Air
Ministry wrote a semi-official letter to the Foreign Office
requesting, with reference to the .-,'ar Cabinet decision of
the 29th July,  that it should be suggested to Lord Lothian
as quickly as possible that provision should be made for
the "unconditional use by any British transport undertakings
of the facilities which H.M. Government had offered to the
United States Government.      These proposed facilities, it
will be recollected, included a lease to Pan American Airways
of a small area near Trinidad aerodrome, a lease of
approximately a square mile for an aerodrome at British
Guiana, and permission for Pan American Airways to construct
an aerodrome near Kingston, Jamaica.      On receipt of this
letter it was pointed out to the Air Ministry that Sir
Arthur Street had made his suggestion without knowledge of
the fact that, as a result of Lord Lothian's telegram 1579
of the 1st August, the question of facilities in British
possessions had become merged in the problem of acquiring
destroyers (N.B. In the last-named telegram Lord Lothian
had reported that the U.S. Government would probably be
willing to transfer destroyers to us in exchange for the
sale to the United States of definite air and sea bases in
Newfoundland, Bermuda, Trinidad, and possibly one or two
minor islands).     After further consultation between the
Air Ministry and the Colonial Office, the following paragraph
was inserted in our telegram to Lord Lothian 1828 of the
8th August:    "We understand that the United States Government
propose to work through Pan-American Airways who already
enjoy many facilities in British territory in Caribbean
area.     These facilities ore all in connexion with operation
of marine aircraft.     Effect of present proposals would be
to give Pan-American Airways chain of land aerodromes in
same area and so enormously strengthen their position. We
want to ensure that British undertakings will be able to use
the same facilities, in particular for operating British air
services between the West Indies and North and South America
and we want to safeguard ourselves against Pan-American
Airways raising heavy charges for user.     You should
therefore make it clear at once that we assume that
provision will be made for the unconditional use of these
facilities (aerodromes, wireless installations,  etc.) by
any British air transport undertakings designated by B.M.
Government engaged in operation of air transport services
/between
between West Indies and North and South America, and further
that it will be provided in some appropriate manner that
these facilities will be made available to such British
undertakings at reasonable commercial charges".      In the
earlier part of this telegram Lord Lothian was authorised
to inform the President that in any communication' to
Congress he could give an assurance that as soon as we
obtained destroyers and other material, H.M. Government
would make available the naval and air lease facilities
which the Cabinet had decided to offer at their above-
mentioned meeting on the 29th July.      He was also told
that a similar assurance could be given in regard to the
further facilities mentioned by Colonel Knox, subject,
however, where necessary to the prior approval of the
Governments concerned, and v/e added that we should
much prefer that these further facilities should take
the form of leases, and not sale.      In his acknowledgment
of this telegram Lord Lothian informed us (see his
telegram 1653 of the 8th .August) that he had made it clear
that H.M. Government must stipulate that British air
transport undertakings should be afforded the facilities
for which we had asked (N,B> It is plain frote the passage
in his note to the U.S. Government under reference that
this request was imparted to the U.S. Government in a
personal letter to Mr. Sumner Welles of the 8th August).
4. As a result of further developments the facilities
offered by the Cabinet on the 29th July became obsolete;
President Roosevelt, informing the Ambassador on the 13th
August that this offer was too comp?ica-;ed and restricted,
to convince Congress that the security of the United
States would be increased as a result of the transfer
of destroyers to us (vide Washington telegram 1703 of
the 13th August). By t.he"22nd AugusV-the negotiations had
reached a point where the U\S: Government were insisting that
if we were to axure the Cszti^^r- wo rxs&b agree to an exchange of rotes
"by which thelLS G&ernnwnJ; would grs:;:;ua tfts CsiMroyers in return for naval and air
bases. Bil&BJiAz&sxi 1769 of the 22nd August Lord Lothian, after
commenting upon the proposed text of the.se letters and a
conversation which he had had with Mr. Sumner Welles on
that day for the purpose of securing amendments to them,
informed us that "it-l the other matters such as the
precise rights of each side in the naval and air bases,
the right to use air bases by British Commercial Airways,
etc., are matters to be worked out by joint agreement in
the leases themselves, and I have reserved the discussion
of these things in the leases".
5. It is evident from this summary of the past
history that in the absence of any revised instructions
on the point Lord Lothian did not realise that circumstances
had altered and remained under the impression that our
wishes as stipulated in paragraph 2 of our above-mentioned
telegram 1828 of the 8th August still held good.      It was
for this reason that he took the opportunity to renew
his previous intimation to the   State Department of the
8th August in the concluding passage of his note under
reference.
FOREIGN OFFICE,
25th October 1940