480 Mr J. B. Brigden, Financial Counsellor at the Legation in Washington, to Department of External Affairs

Cablegram 671 WASHINGTON, 3 May 1942, 2.30 a.m.

Reference P.M.51 to Dr. Evatt April 2[1st]. [1] From Brigden.

Copies to Prime Minister [2] and Treasury.

(1) Full information on reciprocal Lend Lease sent by bag last week and expected to have reached you now but have now learned that bag delayed. [3] Following gives summary of position to date.

(2) Have commenced joint discussions with Acheson [4] for United States, Phillips [5] for United Kingdom and Nash New Zealand Minister. While Acheson is considering the position I am conferring with the United Kingdom and U.K.-N.Z. on important details. Expect further joint discussions with Acheson early next week.

(3) On enquiry prompted from here concerning our adverse balance Phillips has now been informed that United Kingdom Chancellor [6] has seen Bruce [7] and agreed to suspend Australian liability for debt arising from the war pending general consideration after the war with the object of avoiding war debt all round. Meanwhile no interest to accrue or to be paid, and adequate funds to be held in London. These and other aspects to be discussed with Dr. Evatt [8] in London. Presumably you have been informed more fully and including the special position of Canada.

(4) United Kingdom position is that future obligations in dollars are not now important but that debts aggregating from 400 to 500 million pounds a year are accruing to South America and other neutral countries while British securities in those countries are not readily realisable and adverse balances in currencies outside sterling and dollar areas are an anxiety.

(5) Incidentally if there are to be post war debts, the United Kingdom wants to know whether its debts to neutrals will be shared and also its losses of foreign securities already sold or pledged.

This problem is chiefly between the United Kingdom and the United States but it affects the outlook on claims by Australia and other Dominions.

(6) Australia's position is recognised by both the United States and the United Kingdom to be a special one and action already taken in Australia is appreciated. Acheson is now considering ways of meeting our position directly instead of through the United Kingdom by retrospective transfer to Lend Lease of goods purchased in the United States and possibly Canada also. I have suggested in a memorandum en route to you that we should accept the assistance we need if given by United States indirectly through the United Kingdom if that method is preferred by United States.

(7) The United Kingdom had already asked for retrospective action of this kind but the President [9] had said that the time was not propitious. It would become more propitious when reciprocity can be announced, and particularly for Australia.

(8) At present Australia and the United Kingdom agree that reciprocal Lend Lease should be limited to supplies to United States troops within the area of the supplying government i.e.

Australian territory, unless otherwise determined by the supplying government. Mr. Nash objects to such limits but New Zealand is in a different position. I think United States would consider the limit quite reasonable especially as the scale of an offensive based on Australia might be very large.

(9) As to works, the magnitude of the programme for Australia is realized and caution in pledging unlimited acceptance of obligation by Australia is understood.

(10) Extent of spending by United States troops is important in relation to the dollar balance. United States expect pay and allowances issued in local currencies will average from fifteen to twenty dollars per soldier per month but the spending may be rather more.

(11) On the other hand the United Kingdom is spending at present per United States soldier the following pence per day:

8 on oil fuel and lubricants 15 on accommodation with fuel and light and 15 on rail transport. Food which is not provided by the United Kingdom would probably bring the total to 60.

(12) These figures may be of interest to you for purposes of comparison but your own estimates would help us here and any advice on the points mentioned herein and in papers sent by bag.

Please give urgent attention to such papers. Both the United States and the United Kingdom are anxious to reach agreement and have so far accepted our view that as much detail as possible should be left to local interpretation.

1 Document 472. The date was incorrectly cited in the original as April 26.

2 John Curtin.

3 See file AA:A981, USA 182.

4 U.S. Assistant Secretary of State.

5 U.K. Treasury representative in the United States.

6 Sir Kingsley Wood.

7 High Commissioner in the United Kingdom.

8 Minister for External Affairs.

9 Franklin D. Roosevelt.

[AA:A981, USA 181, i]