109 Department of Trade and Customs to Macgregor

Cablegram 836 [1] CANBERRA, 23 January 1943

SECRET

Your V.738 has been examined. [2] The action now being taken by War Production Board and Office of Lend Lease Administration with respect to these non munitions controlled materials opens up matters of vital importance to Australia and may well compel us to reconsider question of separate representation for Lease Lend purposes in Washington. It is appreciated, however, that this aspect would require careful preparation of all relevant data for the Government as well as an up-to-date appreciation of prospects of attainment if separate representation were decided by the Government to be desirable.

It is necessary that whilst this aspect is under consideration you should be sufficiently instructed to enable you to speak authoritatively on proposal now made by Lend Lease Administration and the consequential plan propounded by the Chairman, British Supply Council.

The fundamental principles on which our procurement of these United States supplies should be based are:-

(1) We should never allow ourselves to be placed in a position where General MacArthur, United States Army and Lend Lease Mission cannot assist in ensuring to Australia:-

(a) reasonable allocation;

(b) urgent treatment in special cases.

We should avoid placing ourselves in a position where such particular and general support would be rendered ineffective or where it might be impaired due to diffidence on part of War Production Board or Lease Lend Administration to interfere in what might be regarded as purely Empire consideration after global allocation had been made.

(2) We should avoid being placed in position where allocations of these United States materials should be controlled directly or indirectly by or from London.

(3) We should ensure that our needs should be presented by representatives who are thoroughly experienced with the classes of goods required and who are familiar with basic principles and procedural requirements established by United States Government.

(4) We should establish principle that such portion of our requisitions as are required by United States services operating in these areas should not be debited against British or Australian allocations.

We consider Australia is in special position by virtue of General MacArthur's position as Commander in Chief and we cannot accept any arrangement which would preclude him from making direct representations on Australian supply problems through United States War Department in cases where he might feel it necessary to do so.

Global allocations to the Empire as a whole may engender the feeling amongst Lend Lease Administration, War Production Board and United States War Department that they cannot take special steps to aid Australia without exposing themselves to the charge that they were participating in or taking sides in Empire squabbles or arguments. Whilst saying this we do not disagree with your view that for the time being it may be preferable to agree (but with appropriate safeguards) to proceed on the basis suggested by the Chairman of the British Supply Council in order to ensure that various units of Empire should first have the opportunity of coming to full agreement amongst themselves on the allocations.

However, it is important that in the event of disagreement and the matter being one which we would regard as vital, then you should make reservations that an appeal to the United States Authorities should not be denied to Australia nor interpreted as involving United States Administration in refereeing Empire disputes.

1 Repeated to the High Commissioner's Office in London as no. 740.

2 Dispatched 11 January. On file AA:A1608, A59/2/1, v. It referred to an American proposal that non-munition supplies should be allocated to the British Empire as a whole or be divided into two separate allocations, one going to the United Kingdom and the other to the rest of the Empire (excluding Canada).

[AA:A2680, 38/1942]