314 Commonwealth Government to Lord Cranborne, U.K. Secretary of State for Dominion Affairs

Cablegram 110 22 February 1941,

SECRET IMMEDIATE

Repeated to Prime Minister of New Zealand [1] No. 263.

Your telegram 101 of 17th February [2] re Lease or Loan Bill. We agree with your suggestions, namely- (i) Australian figures to be included with your own.

(ii) Orders, both for warlike stores and other commodities, to be placed through British Supply Council in North America, details to be arranged later.

(iii) Commonwealth Government to accept for its requirements corresponding liability to that assumed by United Kingdom Government for future repayment or replacement of goods covered by Bill.

2. Re Paragraph (2) warlike stores etc. It is noted information concerning Commonwealth orders is already in your possession and will be included with your own estimates.

3. We set out below estimates of our requirements in two groups, viz.:-

(i) Defence purposes based on approved programmes;

(ii) Essential civil requirements, including in some instances commodities for Defence which cannot be conveniently included in (i).

The estimates under (i) are- to 30th June 5,953,000 1941/42 18,598,000 It is necessary to point out that these figures do not include orders already placed through you direct by Army and Navy for armaments etc. They do, however, include all other orders placed through you. The figures are, therefore, with the exceptions referred to, an estimate of out complete requirements from U.S.A.

for war purposes.

4. Details according to classification in paragraph (4) are as follows. All figures represent thousands sterling.

Item (a) (b) 1. Metals, metal manufacturers [sic]

and aeroplanes 2,275 7,520 3. [3] Other raw materials 500 1,500 4. Food and tobacco for Navy 4 82 5. Machinery 2,000 6,010 6. General manufactures 634 1,736 7. Motor vehicles and spare parts 540 1,750

TOTALS 5,953 18,598 5. Above figures do not include motor engines and chassis for Army requirements, (a) 750,000, (b) 6,400,000 which will be obtained from Canada if possible but which may have to be obtained partly at least from U.S.A.

6. The figures include all requirements for aircraft, details of which were set out in Prime Minister's cable 1069 of 9th November, 1940. [4] The Air Board advises that, of these requirements, a firm order for 52 Hudsons complete with engines plus spares at a cost of 2,080,000 has been placed with U.S.A. Otherwise requirements remain as set out in that cable.

7. With regard to civil supplies of essential goods, the following estimates are submitted. In compiling these estimates, we have borne in mind the need for limiting requirements to essentials only. Further restrictions are now under consideration but it is felt the effect of these may be partly offset by diversion to U.S.A. of essentials previously obtained from other countries.

Figures represent thousand pounds sterling and are set out in accordance with your classification in paragraph (4).

Item (a) (b) 1. Metals and metal manufactures 1,000 2,500 2. Oil 600 1,500 3. Other raw materials 1,500 3,600 4. Food (including tobacco) 300 900 5. Machinery 1,000 3,000 6. General manufactures 650 1,400 7. Motor vehicles 400 1,400

5,450 14,300 Notes on items- 1. Figures provide for some diversion of tin plate purchases from U.K.

2. Figures for oil include defence requirements. Requirements represent mainly lubricating oil and tetra ethyl lead. Apart from these, all our petroleum supplies now come from Netherlands East Indies or other non U.S.A. sources. This position may be altered by any changes in the international situation.

8. It will be realized that all estimates given are roughly approximate. In addition they are based on current prices and may have to be revised if dollar prices vary substantially. This factor should not affect civil requirements greatly since, except in special cases, imports not covered by prohibitions are limited by value.

9. We have assumed the estimates you require for these commodities should be our total essential requirements, irrespective of whether provision would be made in the Lease or Loan Bill or whether they would be paid for by dollars or gold. We would therefore point out that we would be able to pay for a large portion of these commodities out of the proceeds of our exports of gold and other commodities, less payments for interest and other services.

1 Peter Fraser.

2 Document 306.

3 There was no item 2 in the original.

4 AA:A3196, 1940, 0.8656.

[AA:A3196, 1941, 0.2302]