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

Cablegram 811 WASHINGTON, 1 June 1942, 10.48 p.m.

IMMEDIATE SECRET

Following is draft exchange of notes referred to in my telegram 810. [1]

From the Australian Minister to the Secretary of State.

With a view to Supplementing articles Nos. 2 and 6 of Agreement of May (blank) 1942 [2] between our two Governments for provision of reciprocal aid, I have the honour to set forth below my understanding of the principles and procedures applicable to provision of aid by the Government of Australia to the armed forces of the United States and the manner in which such aid will be correlated with the maintenance of those forces by the United States Government.

(1) Each of our Governments pledged itself in the United Nations declaration of January 1st, 1942 [3], to employ its full resources, military or economic, against those of nations with which it is at war. Each Government undertook in the Agreement of May (blank) 1942 to provide others with such articles, service facilities or information, useful in prosecution of their common war undertaking, as each may be in a position to supply. The general principle to be followed in providing such aid is that the war production and war resources of both nations should be used by the armed forces of each, and of other United Nations, in ways which most effectively utilize available materials, manpower, productive facilities and shipping space.

(2) Where appropriate, decisions as to the most effective use of resources shall be made in common, pursuant to the proper plan for winning the war.

(3) As to financing the provision of such aid within the fields mentioned below it is my understanding that the general principle to be applied is that as large a portion as possible of the articles and services to be provided by each Government to the other shall be in the form of reciprocal aid so that the need of each Government for currency of the other may be reduced to a minimum. It is accordingly my understanding that the United States Government will provide in accordance with the provision, and to the extent authorised under the Act of March 11th, 1941, the share of its war production made available to Australia. The Government of Australia will provide, on the same terms and as reciprocal aid, in accordance with the Agreement of May (blank) 1942, the share of its war production made available to the United States.

(4) The Government of Australia will provide the United States or its armed forces with the following types of assistance as such reciprocal aid, when it is found they can most effectively be procured in Australia:

(a) All military equipment, munitions and military and naval stores.

(b) Other supplies, materials, facilities and services for the United States forces, except for pay and allowances of such forces and such local purchases as its official establishments may make other than through official establishments of the Australian Government as specified in paragraph (5).

(c) Supplies, materials and services needed in the construction of military projects, tasks and similar capital works required for the common war effort in Australia, except for wages and salaries of United States citizens.

(d) Supplies, materials and services needed in the construction of such military projects, tasks and capital works in territory other than Australia or territory of the United States to the extent that Australia is a more practicable source of supply than the United States or another of the United Nations.

(5) Request by the United States Government for such aid will be presented by duly authorized authorities of the United States to official agencies of the Commonwealth of Australia which will be designated, or in Canberra and in areas where the United States forces are located for the purpose of facilitating provisions for reciprocal aid.

(6) It is my understanding that all aid accepted by the President of the United States or his authorized representatives from the Government of Australia will be received as a benefit to the United States under the Act of March 11th, 1941. Insofar as circumstances will permit, appropriate record of aid received under this arrangement, except for miscellaneous facilities and services, will be kept by each Government.

(7) The aid to be provided each other by the signatory Governments under the Agreement of May (blank) 1942, and as indicated above, will be provided on the same terms by each Government to the forces of such of the other United Nations as shall enter into similar arrangements with them.

If the Government of the United States concurs in the foregoing, I would suggest that the present note and your reply to that effect be regarded as placing on record the understanding of our two Governments in this matter.

I have the honour to be, etc.

Draft reply.

From the Secretary of State to the Australian Minister.

I have the honour to acknowledge the receipt of your note of today's date concerning the principle and procedures applicable to the provision of aid by the Government of Australia to the armed forces of the United States, the terms of which are as follows:

(The Australian Minister's note is here quoted.) In reply I have the honour to inform you that the Government of the United States agrees with your understanding as expressed in that note and that, in accordance with the suggestion contained therein, your note and this reply will be regarded as placing on record the opinion of our two Governments in this matter.

Accept, Sir, the renewed assurances of my highest consideration.

Ends.

1 Document 511.

2 See Document 511, note 2.

3 See Documents 236 and 246, note 4.

[AA:A981, USA 181, i]