Lend Lease Stage 2. Following for Chifley from Keane.

1. Yesterday, as a result of the Conference with the U.K.

delegates, the U.S. State and War Depts. and ourselves, we cleared
the point of difficulty on extension of the area for reciprocal
aid.

2. It was necessary to concede that where for strategic reasons it
is necessary to transfer to other areas supplies which have
already been provided to the local U.S. Command, no objection
would be raised to the transfer.

3. I do not think this of great importance as it will still leave
the whole of requisitioning and allocations on a South West
Pacific Member Command basis. It is in line with the proposal
mentioned in McFarlane's telegram 1847. [2] We have been under
considerable pressure on extension of Mutual Aid and I think that
we have been fortunate to clear it with only this limited
concession.

4. Stage 2 programmes have been cleared and it is expected that
all finalities will be completed this week.

5. Full text of a draft note which we put in as a statement of the
Australian reciprocal aid position follows in a separate cable.

[3]

6. No publicity should be given to Stage 2 until you hear further
from me.