Reference cable No. 29 of 19th January.  Proposed Eastern Group Supply Council, whilst we are generally in accord with the proposals as a commencing point for the establishment of the Council, we desire to offer the following comments, related in each case to the paragraphs in your cable.
2. Paragraph 3(f): We would be glad to receive particulars of the Far East Internal Provision Office. 
3. Paragraph 5: We agree that the primary function of the Council should be the receipt from the Central Provision Office of demands and the allocation of orders amongst the participating Governments within their known capacities at the time and assume that demands will be coordinated by the Central Provision Office in consultation with the Council where necessary. We assume also that the Central Provision Office will confer with the Council regarding the acceptance of suitable substitutes in those cases where the group countries cannot provide supplies strictly in accordance with the service specifications.
We anticipate that priority questions may arise and that these would be determined by the Central Provision Office in consultation with the Council.
We feel that the functions of the Council will be developed as experience is gained and that some advantage will accrue from leaving some important points to be discussed after it has met and considered them.
4. Paragraph 6: We note you propose confining power to purchase and hold stocks in the case of the small supply offices only. The Delhi discussions regarding purchasing and holding were related in the main to seasonal supplies which are produced or available in quantity at certain periods of the year only. For example, we understand it was necessary for India to order timber supplies twelve months in advance in order to be in a position to meet anticipated demands from the Mid-East. The same difficulty may arise in regard to the supply of certain other materials and foodstuffs.
As to holding, we refer to War Office telegram received by the Government of India during the Delhi Conference suggesting that stocks should be accumulated at depots in India which would act as clearing houses for Mid-East supplies.
It was never contemplated that purchases would be made direct by the Council, and it is agreed that these should be made through the Governmental Machinery in the country of supply. We feel, however, if firm demands are not forthcoming in time that the Council should have power to incur liability for the purchase and holding, if necessary, in the country of supply, or elsewhere as may be determined, of seasonal supplies and materials likely to be in short supply. Experience indicates the need for such policy to enable anticipated demands to be met.
5. Paragraph 7: Though it is agreed certain items of equipment are unobtainable within the Group we suggest that the proposed initial list of items to be excluded from the operations of the Council should be referred to the Council for comment in the light of its knowledge of the manufacturing capacities of the Eastern Group Countries.
We consider it essential that each member of the Group should be free to supply to the extent practicable from its own resources the requirements of its forces at home or abroad.
6. Paragraph 8: We had assumed the inclusion of instruments and medical supplies and concur with the exclusion of petroleum and coal.
We consider Navy, R.A.F. supplies and raw materials should be brought into the scheme to the greatest extent practicable and that this matter should receive early consideration.
7. Paragraph 9: We await particulars of the financial powers proposed to be granted with particular reference to our observations in our paragraph 4 above, but agree that at present the Council should not have authority to incur capital commitments in relation to the expansion of existing industries or the creation of new ones without reference to the Governments concerned.
8. Paragraph 10: We refer to the terms of reference to the Delhi Conference which was asked to direct its attention to the essential needs of industry and commerce for the maintenance of the defence services, and the civil population. However, we agree that in the main, the Council should deal with Civil Economic questions in so far as they arise in connection with and are incidental to Military supply. At the same time, civil requirements are in many cases so wrapped up with Military requirements that it will be difficult to divide them. Moreover there may be certain essential civil requirements not directly related to Military requirements but which would have a very important reflex [sic] on the general situation and it may be necessary as time goes on for the Council to advise in connection with these matters. It would seem desirable, therefore, that while concentrating upon the general question of Military requirements and civil requirements associated with Military requirements steps should be taken which would enable Council to have at its disposal information as to the essential civil needs of the Eastern Group Countries, particularly in those items where short supply exists or is threatened in respect of important commodities so that, should it become necessary for action to be taken by or advice tendered by the Council, time would not be wasted at that stage in gathering information.
9. Paragraphs 13 and 14: While we agree that any major transference of plant machine tools and skilled personnel from the U.K. or North America must be one for decision by His Majesty's Government in Great Britain, as the exigencies of the war situation may dictate, we sincerely hope that any limited requests that the Australian Government may make for skilled personnel plant or machine tools will receive prompt and sympathetic consideration.
10. Your cablegram No. 42 of 25th January : We have appointed Sir Bertram Stevens, formerly Premier of New South Wales, as Australian representative and he is due to leave Sydney by air on 28th February. With him will travel Mr. W. Howie as adviser on munitions and military stores generally. Mr. Gollan, at present Australian Trade Commissioner in India and a member of our Delhi Delegation, will be seconded as adviser on supply generally probably with an assistant. Mr. 0. C. W. Fuhrman, formerly attached to Australia House, will act as Official Secretary and will leave Sydney on 21st February. Stevens will have a personal secretary also. We are agreeable to making the above staff available for Council office work also as far as is practicable.
We welcome your appointments and suggestions as to clerical staff.
Any further information on office and other arrangements would be helpful.