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

Cablegram 806 WASHINGTON, 30 May 1942, 2.43 p.m.

IMMEDIATE SECRET

Reciprocal Lend-Lease. Your telegram Nos. 657, 656, and 659. [1] Have postponed further action up till Monday when Phillips leaves for London but shall see him early that day. He will probably take with him a draft memorandum from Acheson for United Kingdom on lines of my advices to you as to scope, records, etc. As Dr Evatt [2] from London and Sir Owen Dixon [3] from Australia will be here next week you may prefer their participation before proceeding further.

(2) The Australian approach, influenced by the United States representatives in Australia, differs from that of the United States and the United Kingdom. Interpreting your approach from the United States and United Kingdom point of view undesirable that R.L.L. should be generous but should be compensated by special United States and United Kingdom action to assist our overseas balance.

(3) The opposite view is that it is simpler to restrict our R.L.L.

to our capacities without special compensation.

(4) Acheson's desire in February to find ways of meeting our position undoubtedly remains, but he has to deal with Morgenthau [4] and others, and the embarrassments with other countries and local interests that special action would create. The necessity for special financial arrangements between United States and Australia has to be established in just the same way as necessity for special war action or supplies. Whether it is wise to limit claims in any one field is a matter of high Government policy.

(5) It was necessary to get your specific directions on financial policy in this connection and it is well for me to state clearly:

(a) That case for special United States action is not as strong as it was.

(b) That Phillips appears to consider that it no longer exists.

(c) That it is easier to fit the scope of the R.L.L. to our capacities than to get compensatory action with respect to a larger scope.

(6) It is probably desirable that an agreement by exchange of memoranda between United States and United Kingdom and United States and Australia should be simultaneous, and if desired I shall endeavour to delay United States-United Kingdom action accordingly.

(7) Will discuss your views on shipping also. They are consistent with general outlook on Australian position.

1 All dispatched 29 May (on file AA:A981, USA 181, i).Cablegram 659 asked Brigden to discuss with Dean Acheson (U.S. Assistant Secretary of State) and Sir Frederick Phillips (U.K. Treasury representative in the United States) the question of assistance for Australia's balance of payments.

2 Minister for External Affairs.

3 Minister designate to the United States.

4 U.S. Secretary of the Treasury.

[AA:A981, USA 181, i]