Addressed to the Prime Minister, Mr. Curtin.
I have now had an opportunity of fully discussing the points raised in your telegram 70  of the 9th November with Alexander  and responsible officers in the Admiralty. In these discussions I emphasised facts that our manpower problem is even more acute than that existing here and that the facts with regard to it have been brought clearly to their notice, both in your telegrams and by your statements and the information you supplied when you were here. I pointed out that in pursuance of your promise to render all the aid in your power you had set up a special committee of the War Cabinet to consider how far we could help, but that their task had been rendered impossible by a steady flow of supplementary requirements after the Cabinet Committee had commenced consideration of their original substantial requests. I said that in the demands they were making they appeared to be ignoring the facts of the manpower position in Australia and almost appeared to be trying to shift some of their own manpower embarrassments on to Australia's already overburdened shoulders.
All this Alexander took quite well. He repudiated any idea of trying to unload their troubles on to us, said that the Admiralty fully realised Australia's manpower difficulties and stated that the sole object of their telegrams  had been to discover what men Australia could provide so that the best solution could be reached of the manpower problems involved in implementing the Octagon  decisions.
Following our discussions with the Admiralty, Alexander has now sent me a note setting out the Admiralty's position. The following is a summary.
The Admiralty state they are faced with serious difficulties in finding men for shore services in Australia in view of the manpower situation in the United Kingdom which is also stretched to the limit, and which has been further aggravated by the prolongation of the war in Europe. In fact, the Navy have recently had to transfer men to the Army for maintenance of strength on the Continent.
Apart from the known desire of the Commonwealth Government to help if they could, the Admiralty were also influenced by the consideration that the maximum Australian assistance would:-
(a) Alleviate the persistent shortage of shipping.
(b) Reduce the loss of man hours which is bound to occur while men are awaiting passage and are on passage from this country.
You will be aware that an undertaking has been given to the Americans that the British Pacific Fleet will be self-supporting.
Manpower requirements arising from this fall broadly into two categories:-
(a) Ship repair and supply service labour.
(b) Works labour.
As regards the first, the Admiralty are working on plans to produce a limited number of repair ratings by accepting reductions in base facilities elsewhere. In many of the categories of specialised. rating who alone possess qualifications for these duties the Navy already faces a deficit and if more men are to be earmarked to man up facilities in Australia, the strength of the seagoing fleet might well have to be further reduced. Some ships have already been paid off to save men and the Admiralty are most anxious for obvious reasons to avoid carrying the process further.
You will be aware that they have very much in mind the imminent prospect of a new U-boat offensive.
The Admiralty have the further problem of ensuring minimum requisite base facilities for future operations in the Indian Ocean area to which they are committed. This particular problem is specially acute as regards works labour, and it is already difficult to see how minimum requisite works facilities can be completed in time. The possibility of further inroads on the civilian building labour force in this country is precluded by the very grave housing situation due to the destruction and damage caused by enemy attacks, particularly be flying bombs in London since June.
To sum up, the Admiralty are fully alive to and sympathise with the Australian difficulties and the object of their various requests and enquiries is to ascertain how far Australia can help.
Within their existing resources, the contribution which the Admiralty themselves can make is limited and in view of the general manpower stringency in the United Kingdom, they must be able to state clearly, and to substantiate fully to the United Kingdom War Cabinet what further manpower bids they may have to make on United Kingdom manpower in order to meet any deficit remaining after taking account of Australian contribution, P.O.W.[s] and the limited number of men who can be skimmed off from existing Admiralty resources. In view of the urgency of the problem, the Admiralty felt it best to put their cards on the table and state the full estimated requirements at the outset.
The Admiralty add that it would greatly assist them if the report referred to in paragraph 2 of your telegram No. 298  to the Dominions Office could be expedited.