338 Dunk to McFarlane

Cablegram 1080 [1] WASHINGTON, 6 November 1944, 11.06 p.m.

TOP SECRET

McFarlane from Dunk.

1. Your telegram 1730 [2]-Stage II.

2. No direct question continuance of Reciprocal Aid was put to us at our meeting with the Top Committee. I think that it is less likely to come up on the second line which will be concerned mainly with details of the programme and questions of eligibility.

3. I fully appreciate the necessity for the non-committal attitude. On the other hand in presenting our case both Keynes and ourselves have stressed Reciprocal Aid. Any sudden change of Australian policy would have a bad effect here.

4. The Australian Reciprocal Aid record speaks for itself and I have found the keenest appreciation in the United States Army Administration. They have no desire to disturb the present arrangements and will not, I am sure, press us for any fine definition on eligibility. Foreign Economic Administration are not so well informed and their approach is solely on narrower lines.

5. We expect to be able to avoid the issue but, if it arises, you will be immediately advised.

6. There has been some publicity in the last few clays on Stage II Lend-lease and on the presence of Keynes to negotiate. This may slow up discussions.

7. Re your paragraph 8, I think that it would be very unwise to raise here the question of limiting Reciprocal Aid. I am convinced that we will get substantial relief after the end of this year as a result of the transfer of United States Forces. In addition, I am satisfied that the United States Army here and in Australia will co-operate fully in the gradual reduction of demands for particular goods if we ask it, for reasons of local shortages, etc. I have mailed notes of conversation with General Edgerton

this.

8. Keynes has marred [4] me (his term) a copy of the United Kingdom presentation on Stage II Lend-lease. It is a comprehensive and well prepared document on National economy balance sheet lines. As a case for assistance it is entirely convincing, but as a statement of financial facts rather depressing. Brigden and I have an appointment with him to-day for general discussion and will let you know if anything specific emerges.

[AA:A571, L41/915A, V]

1 Sent through the Legation in Washington.

2 Document 334.

3 Maj Gen G. E. Edgerton, Head of the Foreign Economic Section, U.S. War Dept. A copy of the notes of conversation is on file AA:A571, L41/1303, vi.

4 A sign here indicated 'as received'.

[3], United States Army International Division, which bear on