325 Department of External Affairs to Mr R. G. Casey, Minister to the United States

Cablegram 172 CANBERRA, 10 February 1942

SECRET

Your telegram No. 34 of 7th January. [1] We have been giving attention to the questions raised by you and other related ones and the following is the position- Your paragraph 3-Official request was received from the United States Minister in Australia [2] seeking agreement of the Commonwealth to the setting up of United States Naval Purchasing Agency in Australia. You also indicated that United States Army were setting up similar organization. The Army has not in fact set up such an organization but is working through established Commonwealth Government channels and its requirements are being co-ordinated with our own. For example United States troops are being provisioned from Australian Army depots or direct by military contractors supplying Australian Troops. Camp and barrack equipment is being drawn from Australian Army ordnance stores.

The Australian Army renders accounts to United States Army administration in Australia and also places demands on Supply Department for replenishment of its own stocks, taking into consideration the quantities drawn by the United States forces.

This system is working satisfactorily and has the advantage of unified buying, and control does not interfere with any purely service supply systems such as United States Army Service Corps.

A recent request was made by the United States Army authorities here for the supply of 10,000 tons of foodstuffs, much of it canned for shipment at very short notice. This matter was arranged by Supply Department in consultation with United States and Australian Army representatives.

The shortness of time available and the size of the demand necessitated purchase of stocks held in canneries, diversion of deliveries under current Australian Army and Navy contracts, and the drawing of the deficiency from Army and Naval stocks with subsequent replenishment by the Supply Department.

It will be appreciated that in demands of this nature no independent buying authority could achieve the results required.

Demands generally are becoming increasingly heavy and it is essential that unified control of buying be maintained not only for the United States Military and Naval forces, but also for our own requirements of a similar nature. The combined requirements are of such magnitude under existing conditions (and it would not be unreasonable to anticipate that they may be greater in future) that long range manufacturing programmes and planned production are necessary, in order to meet all demands.

It will be obvious that if there are two or three competing buyers prices will be difficult to control but what is more important the disconnected demand (probably often at short notice) will mean that supplies may not be forthcoming.

As to your paragraph 1-We would welcome any steps taken by the United States Government to assist the flow of lease lend supplies to Australia and would observe that these supplies in certain instances may be linked with the demands received from our Allies.

For example, if further heavy demands are received from United States Army for shipment abroad of canned foodstuffs, we may have to increase our requisitions on United States for tinplate.

Certain projects in the north of Australia, involving the erection of aviation spirit storage tanks and the supply of aviation spirit and aero engine lubricating oils will be related also to lease lend and will involve co-ordination of demand and a revision of our storage capacity.

Summarised, the position seems to us to be that the United States Government had in mind three supply representations or sections in Australia.

(A) The Lease Lend Supply Mission mentioned in your paragraph 1.

(B) The U.S. Naval Purchasing Agency mentioned in the official request from the American Minister here.

(C) Possibly a separate Army Purchasing organization.

As an efficient Purchasing and Supply organization already exists in Australia under the direction of a War Cabinet Minister [3], and as there are branches of the organization in every State, and also as Lease Lend has been concentrated under the Minister for Customs [4] and the Director of Import Procurement [5], we consider the most effective method of handling the whole situation would be for the United States Government to appoint an official of appropriate status to be its mouthpiece on all major supply problems and to be available in Australia to obtain a broad outline of the general situation.

Already, to link up lease lend with war requirements we have established an Allied Supply Council consisting of, at the moment, the Secretary of the Supply Department [6] and the Director of Import Procurement, and we would hope that the United States official would become a member of this Council. The Council will deal only with broad questions of supply and existing Governmental machinery would be charged with carrying out the detail work both on our own behalf and on behalf of the United States services. It is emphasised, however, this would not interfere with the ordinary internal supply organisation of the United States Navy or Army.

The N.E.I. have also raised the point as to whether they are to be represented on the Council and our feeling is that their request will be acceded to. Council has only been appointed and is not yet effectively functioning although it is intended that it shall operate with the minimum of formality, major decisions only being recorded. We are desirous of avoiding a heavy set-up which possibly would have a delaying effect in this important field of our war activity.

The matter has been discussed with the United States Minister here and he has already cabled Washington in connection with the request for the setting up of a naval purchasing agency pointing out the practical difficulties which would be encountered not only by ourselves but also by the United States services if such action were taken. In addition, matter has been discussed with Commander Antrim [7] and he appreciates difficulties which would be encountered if separate buying organisations were set up.

We invite the United States Government, therefore, to send to Australia as their member one man on broad supply problems, an official of appropriate status who would be empowered to make decisions and thus expedite the work of supply in its broadest sense.

Any expeditors of lease lend material we suggest should report to such an officer who, as a member of the Council, would be in immediate touch with the Lease Lend Administration in Australia, and likewise any broad questions of procurement or supply which might be initiated in Australia and/or United States could be dealt with by the Council. In other words, this official would be sitting in with the Departments dealing with both lease lend and supply and would at that one point obtain a broad appreciation of the problems and be able to advise his Government as to the general situation more comprehensively and satisfactorily than would be possible by several organizations working separately.

In addition to the Allied Supply Council there has been created a Cabinet Supply Committee consisting of the respective Ministers of the two Departments, i.e. the Minister for Supply and Minister for Customs, to whom immediate approach is available on all important questions. United States Minister in Australia could be invited to attend Ministerial meetings when matters of policy affecting U.S.A. were under consideration.

The whole objective is to streamline the dealing with supply problems and we think we have evolved what should be a satisfactory scheme with a minimum of red tape and paper work.

The status of the United States official and his authority should be such as to enable him to make decisions with us on major supply matters affecting- (1) requirements of United States services in Australia (2) Lease Lend supplies (3) pooled supplies for all Allied forces.

It has been suggested that it may be preferable to appoint high official from United States lease lend administration who has been working close to Stettinius [8] provided he would be in a position to deal with major Navy and Army supply issues. This suggestion was made solely on grounds that official from that organization may be more familiar with the problems which concern us and with broad question of supply to united nations. We appreciate, however, that decision is one for United States Government.

The time factor is vitally important. There are large scale developments occurring here and the supply position will rapidly get out of hand if United States Government does not appoint high official to coordinate with us. We would ask that this matter be treated as one of extreme urgency.

Finally, before raising question with Department of State, we desire you to discuss matter with Macgregor. [9] If he can do anything in the way of securing favourable reactions to proposals from lease lend organization commencing with Stettinius he should do so.

Would appreciate early advice. [10]

1 See Document 303, note 1.

2 Nelson Trusler Johnson.

3 J. A. Beasley, Minister for Supply and Development.

4 Senator R. V. Keane.

5 A. C. Moore.

6 A. S. V. Smith.

7 Officer in charge of supply and purchasing for U.S. Navy in Australia.

8 U.S. Lend-Lease Administrator.

9 Director-General of Australian War Supplies Procurement in the United States.

10 Casey replied the same day that he understood the viewpoint expressed in this cablegram and would discuss it with the relevant authorities at once. He pointed out that because of the rivalry between the U.S. Army and Navy, and the fact that the former was regarded as the senior service, the only way to achieve unified U.S. supply arrangements in Australia was to place an U.S. Army officer in charge. See cablegram 246 on file AA:A1608, L41/1/5.

[AA:A1608, L41/1/5]