1. The Government and the Advisory War Council have given the most earnest and careful consideration to the replies of President Roosevelt and yourself in the recent series of cablegrams on:-
(a) the concentration of superior naval strength in the Pacific ;
(b) the provision of aircraft for the R.A.A.F. ;
(c) the need for an increase in the land forces in the South-West Pacific Area. 
2. The Government has noted the views of the Combined Chiefs of Staff on the defence of Australia, communicated in the President's reply, and is deeply appreciative of the assurances which the President has given for the fulfilment of commitments of forces, supplies and equipment for the South-West Pacific Area.
3. The Australian Chiefs of Staff were asked to submit a new appreciation of the Australian defence position  in the light of the answers received to the representations initiated on their advice. In the course of this review they have carefully examined the manpower position and our capacity to meet our vital needs.
The following are their observations in regard to land forces:-
(a) The number required for the present order of battle in Australia is 541,000. The present strength is 485,000 and it is estimated that a further 34,000 might be obtained from a further review of classes 1 to 4 and from women. Class 4 comprises married men from 35 to 45 years. Class 5, comprising men between the ages of 45 and 60, has been made available for call-up by the Allied Works Council. There is thus a deficiency in the war establishment of 22,000.
(b) The Army's minimum need for replacement of wastage is 7,000 to 8,000 a month, against an estimated monthly intake in the coming year of 1,100 (youths turning 18). This does not enable existing army formations to be maintained. Eight infantry battalions have already been disbanded and absorbed into other units. This has involved the disbandment of the 10th Division and the absorption of its units into other formations. A further decrease in the number of battalions up to a total decrease of eleven battalions is contemplated.
(c) The Army forces in New Guinea are operating under extreme tropical conditions that will result in heavy wastage of personnel. The Ninth Division A.I.F. is also engaged in active operations, and it will require considerable reinforcements to maintain it. The provision of these reinforcements will make a heavy drain upon the manpower resources. Furthermore, the Army is fulfilling increasing commitments in Australia for coast defence and antiaircraft personnel for the protection of additional naval and air bases such as Cockburn Sound, Albany, Townsville and Cairns.
(d) It is possible that an Army force of a minimum strength of five divisions will be needed in New Guinea. There are at present the equivalent of three Australian divisions there. Two American divisions are available that could be sent there and one of these is in process of moving to New Guinea. It is not possible to send to New Guinea any further Australian formations, owing to the dangerously depleted strength of the forces available for the defence of the mainland. The Army resources of manpower will be taxed to the utmost to maintain the formations in New Guinea.
(e) It follows that reinforcements for the Ninth Division in the Middle East will not be available in the numbers required, and that, unless the Division returns to Australia, it cannot be maintained, and it will in a few months cease to be fully effective fighting unit, whereas it can be built up again in Australia by the allocation of personnel of other formations being disbanded.
4. The Government has consulted the Advisory War Council which as you are aware comprises representatives of the Opposition Parties and Sir Earle Page as an additional co-opted member. The unanimous conclusion was that the Government should request the early return to Australia of the Ninth Division A.I.F., in accordance with the arrangement in cablegram No. 245 of 14th April , when the Government agreed to the postponement of the return of this Division until it could be replaced in the Middle East and the necessary shipping and escort could be made available for its transportation to Australia. On 16th July in Johcu No. 37 , I outlined the looming difficulties in regard to maintaining the flow of reinforcements to the Middle East, and on 30th July I stated in Johcu No. 38  the strategical reasons from the Australian viewpoint which made it impossible for us at that time to do more than agree to an extension of the period for the temporary retention of the Ninth Division in the Middle East. The Government feel that these reasons have been fully confirmed by subsequent Japanese action in New Guinea and the Solomon Islands and the outcome of these operations is of the most crucial importance to the future of Australia.
5. Finally, the Commander-in-Chief, South-West Pacific Area, has expressed to the Government his apprehension at the growing shrinkage in Army combat troops consequent upon the reduction in the number and organisation of Australian divisions.  As we cannot maintain the Ninth Division in the Middle East we are not agreeable to the Division being broken up by replacement of wastage from ancillary or other units.
6. I would add that in the manpower review the following position was noted or conclusions reached in regard to overseas commitments for naval and air personnel:
(a) Navy. of a total personnel strength of 25,520 approximately 3,000 are serving on Admiralty account outside Australian waters.
The number required for the R.A.N. by 30th June, 1943, is 29,500.
There is no further commitment for manning Royal Navy ships.
(b) Air Force. The present strength of the R.A.A.F. is approximately 100,000 of whom 12,500 are serving overseas. The annual planned intake is 17,600 of whom 11,200 are for the Empire Air Training Scheme. The Government, after review of the matter in the light of the manpower situation and requirements for the Army, has agreed to the continued participation by Australia in the Empire Air Training Scheme to the extent that this may be practicable, having regard to the total manpower position in Australia and subject to the maintenance of a regulated inward flow of Australian air crew with war experience, in order to provide an experienced nucleus of pilots and aircrew in all R.A.A.F. units based on Australia.
7. A copy of this message has been forwarded to the President.