STRATEGICAL APPRECIATION IN RELATION TO LOCAL DEFENCE-THE EFFECT
OF THE POSSIBLE OCCUPATION OF THE NEW HEBRIDES AND NEW CALEDONIA
BY JAPAN

(The three Chiefs of Staff were present for the discussion of this
subject).

Consequent upon a press report that the probable peace terms to be
imposed on France by Germany and Italy would include allotment to
Japan of the New Hebrides and New Caledonia, the War Cabinet
consulted the Chiefs of Staff in regard to the possible courses of
action that might be taken.

The Chief of the Naval Staff [1] pointed out that a condominium
existed in the New Hebrides, and failing the continuance of French
participation it was assumed that the British would remain in sole
charge. New Caledonia, on the other hand, is a purely French
possession. The Chief of the Naval Staff advised that should the
Commonwealth decide to carry out a military occupation of these
islands it would be unable to hold them against Japanese action,
because of the superior sea-power of Japan.

The Chief of the General Staff [2] feared that the occupation of
New Caledonia might give the Japanese a precedent for seizing the
Netherlands East Indies, though the same deterrent to action, in
the shape of the United States Fleet, might exist in this case
also.

Reference was then made to the possibility of invasion of
Australia by Japanese action, and whether action should be taken
to reinforce Darwin and Port Moresby.

The Chief of the Naval Staff stated that, if Japan should come in
and U.S.A. should not, there would be no point in holding Darwin,
and the naval oil supplies there should be drained in such a
contingency. The whole position in regard to the defence of the
northern part of Australia hinged on a battle fleet based at
Singapore. If such was not possible, the situation became
radically changed.

The Chief of the General Staff was of the opinion that Japan's
attack would be against British naval forces and bases, and with
their defeat and capture Japan could bring the Commonwealth to
terms by the exercise of sea-power alone, without the need for
invasion.

Questions were then raised as to the scale of attack against which
preparations are being made by the Australian Defence Forces. The
Chief of the General Staff stated that the provision of munitions
was being based on the minor scale of attack, plus the
requirements of the A.I.F. Figures on this basis had been
furnished to the Director-General of Munitions [3] as an
indication of the initial requirements of the Army, and not as a
final statement of objectives. The latter would be furnished when
the Director-General had commenced production.

The Prime Minister [4] pointed out that the basis of the
Government's defence measures in peace had been the continual
development of an effective policy, the first objective of which
had been laid down by the Government's advisers as the completion
of the defence against the minor scale of attack. Some time before
the war a programme for the expenditure of 43,000,000 had been
approved. This had subsequently been increased to 63,000,000 and
expanded to greater dimensions after the Munich crisis. The
present position in regard to the Services was that the Navy had
in commission all the ships that we could obtain or build. The
strength of the Army for local defence was being increased to
250,000 men. The Air programme was based on the early completion
of the Salmond Schemes, plus our contribution to the Empire Air
Scheme. In regard to munitions, the Director-General had been
informed that the sky is the limit and time is the essence of the
contract. He had a mandate for the production of the greatest
possible quantity in the shortest possible time.

It was generally agreed that the Services and the Munitions
Department had been set maximum objectives. It was also decided
that the Prime Minister should despatch an urgent cablegram to the
Dominions Office regarding the New Hebrides and New Caledonia. [6]