458 Mr R. G. Menzies, Prime Minister, to Mr A. W. Fadden, Acting Prime Minister

Cablegram General 174 NEW YORK [1], 14 May 1941

In reply to your message of 12th instant [2], I may say that, both before and since the receipt of your telegram, I have thoroughly discussed the question of Lease-Lend with Casey [3], Macgregor, and Clapp. [4] Following is the situation. Namely:-

Firstly. The Act places wide powers in the hands of the President.

[5] He can determine categories of goods to be supplied, to which countries and for what considerations.

Secondly. President has given a broad authorization for supply to the United Kingdom of various classes of defence material and civilian supplies which the United States can spare, but there are some border-line cases.

Thirdly. He is for the present unwilling to give blanket authorization for the Dominions. To meet this, our representatives here have worked out with the British Supply Council a system of transfer under which at the time of placing of a requisition by the Supply Council, an observation would be made to the effect that whole or a specified portion of goods are for transfer to Australia. It is thought that by a process of building up a series of precedents, gradually the greater portion both of our defence needs from America also of essential civil requirements may be obtained under Lease-Lend.

Fourthly. It should be observed, that under Lease-Lend at the time requisition is accepted, there is no irrevocable assurance that the goods will be delivered to us. The position in this respect is not much different from that obtaining where we order for cash. If the United States entered the war some materials might be temporarily or permanently diverted. Both on cash basis and under Lease-Lend we are always subject to diversion but where we pay cash there is implied moral obligation.

Fifthly. The procedure under Lease-Lend is not yet functioning fully and our representatives are following the procedure of placement of our orders for cash if delay seems not involved. This will not be continued indefinitely however as priorities and other controls tighten up. A further point is that it is embarrassing for the British if we pay cash and they procure under Lease-Lend.

Sixthly. Macgregor has advised you of the Canadian plan which is something to be observed, but we should adhere to our decision to work through the British Supply Council.

Seventhly. There will be three major aspects which our representatives will have under continual review with the British Supply Council. With respect to the saving of dollars, there should be very little disagreement with United Kingdom representatives as our interests should be almost identical. As regards allocation of supplies, our representatives will require to see that we get our share of what we need and will have to satisfy us as to the reason for any order not being fully filled.

Diversion of American Shipping from Australia to the United Kingdom may be another question respecting which there may be some disagreement with the United Kingdom representatives. In all such questions it is better for our representatives to have the matter out with the United Kingdom on the spot rather than that the Dominions should appear before the United States authorities as rival supplicants. Naturally we will be kept advised.

Macgregor is telegraphing you [6] in reference to your message regarding records. [7]

MENZIES

1 This cablegram was sent through the New York office of the Government Trade Commissioner in the United States, L. R.

Macgregor.

2 Document 450.

3 Minister to the United States.

4 Head, Australian Division, British Purchasing Commission in the United States.

5 Franklin D. Roosevelt.

6 See cablegram General 182 of 19 May on file AA: A1608, A59/2/1, i.

7 Commonwealth Govt's cablegram 1283 of 12 May (AA: A3196, 1941, 0.6082).

[AA: A3195, 1941, 1.7736]