260 Dunk to Evatt

Cablegram 249 CANBERRA, 22 September 1945

SECRET

Your E.C.16 19th. [1]

1. Understand that Prime Minister has replied to your B.C. 10 [2] conveying full information on Cabinet decision on Tokyo force.

2. I fully agree on the importance of present talks of Keynes- Halifax Mission in Washington. It is quite evident that they will have a vital bearing on United States trade in particular and world commerce generally. We are not well informed on the discussions nor are we adequately represented in Washington for such an important issue. Legation advise us today that United States have 'finished their factual exposition of the British case'. We are entirely in the dark here on what is included in the 'British case' but all the indications are that it goes far beyond mere question of lendlease termination and buffer period of supply.

3. United Kingdom is playing up the reduction in supply purchase from United States because of dollar shortage. How much this is background to negotiations and how much is intended in fact is difficult to judge but there seems to be no doubt that there is a strong element of British opinion which is quite satisfied to retire behind the ramparts of a Sterling bloc economy.

4. To my mind nothing could be better calculated to impair living standards throughout the world. Even if one had to accept this as inevitable (and I do not) it would remain for Australia to become immediately interested in its trade relationships with United Kingdom on the two major questions:

(a) The price and volume of our exports to U.K. and (b) Freedom to further develop our secondary industries.

The present talks provide a full background to the projected world trade and employment conference. The danger is that the effects arising from the present discussions will necessitate trade policies which the world conference may not be able to vary. In short the world will confer but with its hands already tied by bilateral United Kingdom United States discussions.

5. The background at the moment is currency and therefore primarily a Treasury interest. The Treasury approach from here is that we should assist United Kingdom in every possible way in its present dollar conservation policy. It is difficult to disagree with this provided that the trend of the discussions is towards better trading conditions and it leaves us reasonable hope for the future.

6. Leaving out altogether the question of dollar requirements Australia's own balance of payments position looks like being extraordinarily difficult in the next few years. If Tange can give me personally any information on the British case I would very much appreciate it. In the meantime Burton and I are concerned [at] the range of the present discussions and their likely effect on commerce and employment and what we feel to be inadequate representation.

7. I doubt whether we can advance your particular point on effect of external relationships at this stage. Undoubtedly if a situation develops which limits our ability to trade with America external relationships will suffer but for the moment the talks are cloaked under currency and I do not think that any specific commitments on tariff adjustment which will affect Australia, in particular, Empire preference, are likely to result without us being consulted.

8. I have brought your paragraph 3 to the notice of the Acting Minister and asked him to pass it on to the Prime Minister. I think you can rest content that there is a very real appreciation here of the value of the voice which you have had in peace treaty arrangements there, and also of the fact that it was largely through your personal force that this position was obtained.

9. I am writing you on staff matters and although I know how busy you must be I would ask you to read my letter as soon as it is possible and give me early comment.

1 Document 253.

2 Document 246. In cablegram 247 to Evatt, dispatched 21 September (on file AA : A816, 52/301/222), Chifley drew Evatt's attention to the decision conveyed in Document 256.

[AA : A1066, ER45/1/6]