Reference your No. 267. [1]

1. I appreciate your action in replying so promptly after your
assumption of office, to my cablegram No. 189 [2] relative to the
basing of the British Pacific Fleet on Australia, and fully
realise you would not have had time to make yourself fully
conversant with the ramifications of this problem.

2. We are pleased to note that you are fully conscious of the
strain imposed on Australia's economy by the continued demands of
the Japanese war and the relationship of this strain on our
depleted resources to our ability to meet the requirements of the
Royal Navy.

3. I note your advice that the procedure has been followed of
asking Australia for the needs of the Fleet and then trying to
make up from your own limited resources whatever Australia cannot
provide. It is a matter for some regret that this advice as to the
practice being followed was not furnished earlier, as I feel it
would have led to a better mutual understanding of the position.

In regard to the capacity of Australia to provide for the needs of
the British Fleet, I would particularly recall the views expressed
by Mr. Curtin when in London in May 1944 on the limitations of
Australia's capacity to accept additional commitments without
reducing her war effort in some other direction. The stringency of
the situation was emphasised by the references to the measures
then in hand and still continuing, for the release of men from the
Forces to relieve pressing needs which are essential to the
maintenance of a balanced war effort. Subsequent advices, as to
the result of the examination of programmes of requirements,
continued to lay emphasis on these limitations.

4. It is felt that the Australian Government has been placed in
the somewhat embarrassing position of having to justify its
decisions, in the face of strong pressure, in imposing unavoidable
limitations on the extent of our assistance. It was this point
that led to my cablegram No. 133 [3] when the impression had been
gathered from Admiral Fraser's representations that he understood
the Commonwealth Government had accepted a commitment to meet the
needs of the British Pacific Fleet as might be requested by him in
Australia. In the circumstances, it should be ensured that the
full implications of the practice being followed are understood by
all concerned and particularly by the Royal Navy Authorities in
Australia.

5. I am unable to accept the interpretation which you have placed
on the last two lines of paragraph 7(A) of my cablegram No. 174.

[4] Read as a whole, this paragraph does not suggest that there is
no sound strategical reason for increasing the striking power of
the British Pacific Fleet, but it does state that it is neither
logical nor equitable for Australia to reduce her own fighting
effort and at the same time accept additional commitments to make
this increased striking power possible. In regard to the
maintenance of the prestige of the British Commonwealth in the
Pacific, the Australian Government, as far back as October, 1943,
in cablegram No. 267 [5], emphasised the impossibility of the
Australian war effort sustaining this prestige alone, and stressed
the fact that Australia did not have the manpower and material
resources to meet all the demands being made upon her. The latter
was the fundamental consideration emphasised by Mr. Curtin in
London when the basing of British Forces on Australia was under
discussion. The importance of marshalling the maximum strength in
order to bring about the defeat of Japan at the earliest possible
moment has been the aim which the Commonwealth Government has
consistently advocated for the prosecution of the war in the
Pacific. The dimensions of the Australian War Effort have been the
practical demonstration of the Commonwealth's views. In addition,
we have accepted commitments totalling over 25,000,000 to assist
the United Kingdom Government in implementing its undertaking to
deploy its Forces in the Pacific. As stated in cablegram No. 189,
we have also delayed action to remedy the serious housing shortage
by the diversion of men and materials to works for the Royal Navy.

As indicated later, we have depressed the priorities of the works
programmes for the Australian Services to give the highest
priority to the Royal Navy programme.

6. The considerations which have forced you to concentrate the
Fleet's facilities in Australia are noted. In raising the
question, in my telegram No. 174, as to whether some of your
requirements could not be met by the use of some of the very
considerable aerodrome facilities already provided in forward
areas and largely unused, we were influenced by the fact that such
a proposal formed part of the plan for the basing of the Royal
Navy which was under consideration in the earlier part of this
year.

7. Regarding the camp for dockyard ratings to which you refer as
being essential for the maintenance of the Fleet, this project has
been allotted the highest priority and is now under construction.

8. In so far as your other requirements, including aerodromes, are
concerned, it is noted that there are, in Australia, or on the
way, 3,000 Royal Marine Engineers who are equipped and trained for
constructional work and available for employment on Royal Navy
Works projects. The advice of the Vice-Admiral (Q.) [6] was that
1,500 were available for such work. The doubling of this number
will be of material assistance in carrying out the Royal Navy
Works Programme, although their employment does not, of course,
alleviate the shortage of building materials towards the
requirement of which it had been hoped the United Kingdom
Government would have made a substantial contribution. The
programme of works which can be carried out within the overall
limit of 6,562,500 is in the main in hand.

9. With regard to your suggestion that some review of priorities
might also help in the actual period up to October, I would
mention that high priority and other works have been the subject
of constant review and the priorities allotted projects for our
own Services have been depressed wherever possible to enable Royal
Navy works to proceed under the highest priority classification.

CHIFLEY