Cablegram unnumbered LONDON, 24 March 1938, 4.35 p.m.
Reference statement Prime Minister of Great Britain.  Draft has
presented grave difficulties and my view of the result is as
satisfactory as could have been expected.
Paragraphs 3 and 14 are intended as an indication to
Czechoslovakia that she must be reasonable and this will be
reinforced by diplomatic representations, with which it is hoped
that France will be associated, to the Czechoslovakian Government.
Paragraph 10 following on the general statement in paragraphs 4 to
9 is intended as an indication to Germany that unreasonable
attitude on her part would probably lead to intervention by the
Paragraphs above quoted are designed to meet the points set out in
my telegram of 21st March  under the heading of Czechoslovakia.
Rearmament paragraphs are reasonably satisfactory particularly in
the admission that vital rearmament requirements cannot be met
without some dislocation to normal trade and the priority that is
given to the requirements of the Royal Air Force and anti-aircraft
defences. Provided that the course outlined is resolutely pursued
points I have been urging on Prime Minister with your approval
should begin to be met.
I understand that the Conference the Prime Minister had last night
with representatives of trades unions Congress was satisfactory.
Spain. I am by no means happy as to the position but probably at
the moment and in view of discussions with Italy, Prime Minister's
limited statement is wisest course.
Suggest your considering whether it would be desirable for you to
make a statement indicating acceptance and approval of Prime
Minister's statement, welcoming determination to accelerate
rearmament and pointing to your statement as evidence of
Australia's preparedness to co-operate with the United Kingdom
Government in their defence efforts.