My immediately preceding telegram. The Prime Minister's message to Bruce of the 5th February  suggests that the withholding of Australian crossbred wool from Japan is a special ground for criticism of United Kingdom authorities.
The position is as follows. On the 14th September, as a result of a meeting here the previous day, Bruce reported to the Prime Minister personally that we should be reluctant to agree to any substantial part of the Australian crossbred dip being supplied to Japan.  At that date, it will be appreciated that the United Kingdom had not even acquired the Australian clip. At a time, therefore, when there was no commitment on our part even to purchase the Australian clip, it was foreshadowed that we might be unable to committ ourselves to any sale of crossbred wool to Japan. From that day to this, we have given no undertaking to do so, although for a time it was thought possible for a certain quantity of the highest grades of crossbred to be disposed of The alarming shortage of crossbred in this country made it necessary in December further to limit, and in January entirely to stop, any further sales of crossbred to neutrals. We do not desire to interfere with the January and February sales to neutrals, which have been arranged by the Central Wool Committee, but after February we are quite unable to allow any crossbred to be released.
The general crossbred position was fully discussed at a meeting of the Central Priority Organization under Ministerial Chairmanship on the 24th January, when the total amounts available were examined in relation to detailed estimates of the requirements of ourselves, the Dominions, France, etc., and results of this examination showed a serious shortage of crossbred to meet these requirements. Requirements have, therefore, to be largely scaled down; even then it is necessary to purchase substantial quantities of crossbred in South America in the immediate future at high prices and in difficult currencies. Canada is also left short of crossbred to the amount of about 10 million lbs. (clean weight).
We feel no doubt that once they are seized of these facts, the Commonwealth authorities and interests concerned will realise that it would be impossible for us to entertain the suggestion that Australian crossbred should be made available to Japan. It is true that in spite of the difficulties a comparatively small total quantity of crossbred stocks was set aside for certain neutral countries in Europe from whom, however, corresponding concessions are secured of vital interest in the prosecution of the war.
Australia has been allocated, in accordance with her requirements, three million lbs. (clean weight) of New Zealand crossbred, in addition to some fourteen million lbs. (clean weight) of Australian crossbred retained for domestic consumption.