176 War Cabinet Minute

Minute 565 CANBERRA, 17 October 1940

SECRET

EASTERN GROUP CONFERENCE

(Previous reference Minute No. (545) [1]) War Cabinet confirmed the following directions given by the Prime Minister [2] to the Leader of the Australian Delegation to the Eastern Group Conference [3], prior to his departure:-

1. GENERAL BASIS OF POLICY As indicated in War Cabinet Minute No. (545), any policy of dependence on India is not acceptable to the Commonwealth Government, in view of the Imperial Conference principles of responsibility for local defence and the development of self- sufficiency in the production of munitions, and for the following particular reasons put forward by the Defence Committee:

(a) The risks associated with the control of sea communications between the Eastern group of Empire countries which geographically are widely separated.

(b) Political factors, e.g., India's attitude on the attainment of self-government and the internal and external security of India.

Though these reasons could not be stated in conference they had been communicated to the United Kingdom Government. [4]

Our policy might be summarised as production up to the maximum capacity of the things that we can produce and, having provided for our own needs first, we would be willing to become exporters of the balance. We were not prepared to be importers of the things we can produce. As to the relation of our tariff policy, there was no intention of entering into commitments which might cramp the development and expansion of our secondary industries.

2. COMMODITIES (a) Cotton Textiles Nothing should be done to weaken the protectionist policy relating to this developing industry. In regard to supplies for the A.I.F.

in the Middle East, it was agreed that cotton fabrics should be made up in India under contract with the Supply Board, Delhi, and shipped to the Middle East. This was the rational and most advantageous course, in view of the pressure on shipping space.

(b) Steel Raw material is being exported from Australia, fabricated in the United Kingdom and supplied to countries which could be supplied more readily with their manufactured needs by Australia. The latter arrangement would also result in a saving of shipping space.

(c) Australian Civil Needs In regard to the priority of needs between the civil population in Australia and the military forces of other parts of the Empire, it was decided that, as a general principle, the latter should have priority in cases where the military effort of the part of the Empire concerned was such as to warrant preference for its military needs.

(d) British Forces in Egypt In view of the large quantities of supplies being sent from Australia for the British Forces in Egypt, a cablegram [5] had been sent to the United Kingdom Government, pointing out the importance of bringing these into the general picture and stating that it was assumed the United Kingdom Delegation will be authorised to deal with this aspect.

3. PERMANENT CO-ORDINATING MACHINERY The nature and location of the machinery that might be set up to give effect to the recommendations of the Conference would hinge upon the conclusions reached. In view of the basis of policy laid down that India could not be accepted as the main source of supply, the ultimate machinery might be found to be of a joint and reciprocal nature located in the countries concerned.

4. NETHERLANDS EAST INDIES In regard to the proposal of the Government of India to issue an invitation to the Government of the Netherlands East Indies to send representatives to the Conference as observers, a cablegram [6] had been sent agreeing to this proposal, subject to certain qualifications on the security aspect.

1 Incorrectly printed as 542 in the original. See Document 149.

2 R. G. Menzies.

3 Sir Walter Massy-Greene.

4 See cablegram 536 of 14 October (AA:A3196, 0.7654).

5 See cablegram 536 of 14 October (AA:A3 196, 0.7654).

6 See cablegram 84 of 12 October to War Board, Simla, on file AA:A2671, 217/1940.

[AA:A671, 217/1940]