The following background information and tentative comments are submitted to assist you in reaching policy decisions on disarmament.
1. The question comes before the Security Council through- A. General Assembly resolution of December 14th, Disarmament. 
B. Atomic Commission's Interim Report.
C. Subsidiary but related Assembly resolution on troops in foreign territory.
2. During past examinations at United Nations headquarters we have witnessed- A. Period when all Soviet activities within United Nations clearly subserved current contests in Europe.
B. Period following the close of the Paris Conference when Soviet appeared to engage in propaganda first to discredit Anglo-American policies (e.g. in Balkans, China, Spain) and second to represent the Soviet as the only power genuinely serving peace.
3. The disarmament proposals were probably produced in Assembly partly to challenge Britain and America, partly to maintain Soviet reputation and possibly also to avoid the approaching crisis in the Atomic Commission. Because several countries including United Kingdom, United States of America, Australia and Canada were prepared to meet the challenge, the situation was turned to good account and the outcome was General Assembly resolution on disarmament and approval by 10 votes of the Atomic report while the Soviet had been led so far along the common path that Gromyko abstained from voting against report. Nevertheless there is not the least doubt that the Soviet still differs on one fundamental, namely the place of the Security Council and hence veto in implementation of disarmament and atomic controls and in spite of what optimists say the Soviet clearly thinks about disarmament in different terms to others, for example they see disarmament primarily in terms of specific weapons such as atomic bomb rather than in terms of total military strength. (They apparently place Article 43 low on priority list and it is still uncertain exactly what meaning they give to controls and safeguards.)  Nevertheless they are in a position at the moment when they must come along or denounce their public professions and our best line would surely be to place the highest possible value on their professions and act with confidence that Soviet intentions are good until the Soviet itself gives any cause for doubt. Soviet participation is essential.
4.  For example, when the Soviet proposed a Commission to prepare plans, United States responded immediately with proposal to give priority to Atomic Report. (Texts in our Security 213). I submit that for the time being we should try to avoid repeating December pattern of moves and counter-moves, while chances of Security Council acceptance of Atomic Interim Report within the next two or three weeks would appear better if the Council had previously considered in good faith the Soviet proposal to set up the Disarmament Commission. I submit that our broad objective might be to bring about parallel work on the following lines- A. Commission established by Security Council starts work immediately on preparation of general disarmament plans.
B. Atomic Energy Commission proceeds with the next stage of the work.
C. Military Staff Committee commences intensive work on Article 43.
It is clear progress in any one will depend on progress in the others. Co-ordination will come through common representation.
5. A further difficulty arises from American personalities.
Senator Austin, who impresses me as being rather sententious and who has hitherto spoken of disarmament as a worthy ideal rather than a political and technical problem, shortly takes over leadership of the United States Mission to United Nations. Baruch  told me in strict confidence that his Atomic team will disband largely because of the difficulty of fitting into the new regime under Austin who will have strong authority. Nevertheless, Baruch intends to be active backstage with Truman and Byrnes. His own view of further progress is similar to that outlined in paragraph 4 above. There may, however, be brief period of American indecision during which Australia might play an active role.
6. First decision will concern proposals now before Security Council and I submit for your consideration that we should support the Soviet proposal for immediate establishment of the Commission, making clear that the Commission would work within full field of Assembly resolution and not in any pre-selected part and that this work will not prejudice in any way own province and continuance of work of A.E.C. in its early consideration of Interim Atomic Report. While Trieste may occupy the greater part or whole of the Council Meeting on January 7th, your instructions are urgently needed.