118 Mr R. G. Casey, Minister to the United States, to Department of External Affairs

Cablegram Ausco 35 WASHINGTON, 19 November 1941,

(1) After preliminary talk on November 14th Australian Supply Council (self, Macgregor [2], Lormer [3] for Clapp and McCarthy [4] and Watts present at my request) discussed Cosau 296 from Prime Minister's Department today. After discussion Macgregor stated that he felt that he could not commit himself to final views for several days. In view of the urgency of your telegram I am forwarding the following views concurred in by self, Clapp, McCarthy, Watt. Will telegraph Macgregor's views as soon [as] available. [7]

(2) We had seen Campbell's telegrams to Eden [8] and since the receipt of your telegrams [9] have had the views of American Lease-Lend representatives and British Supply Council.

(3) Lease-Lend officials state that their proposal, viz. that requisitions should be submitted by Dominion representatives but should be countersigned by the British Supply Council, deals only with procedure. In particular they draw attention to the present procedure under which requisitions are first passed by the British Supply Council and (2) (even though there is personal contact between Australian and American representatives) the actual authority to supply Australia takes the form of a re-transfer from the United Kingdom to Australia.

(4) Lease-Lend officials are not proposing separate agreements between themselves and individual Empire countries. In reply to specific questions American officials stated that their proposal is designed merely to improve existing machinery. They state further that:

(a) It would not affect Empire pooling arrangements for currency 'dollar pool'.

We need not stress the importance to Australia of maintenance of single Empire dollar pool. Later if separate Lease-Lend agreements were to be negotiable between individual British Dominions and United States we think that continued existence of Empire dollar pool might be threatened and, as South Africa is by far the greatest contributor to the pool through her gold production, the other Empire countries including Britain and Australia might be adversely affected as regards dollar funds.

Although (see above) this does not arise in this instance it is suggested it be kept in mind for the future.

(b) It would not involve or necessitate separate Lend-Lease agreements with each Dominion.

(c) It would not affect present arrangements for determining priority as between Empire countries where the latter are seeking supplies in excess of totals available.

(5) South Africa, India and New Zealand have notified their agreement with the United Kingdom that every effort should be made to continue the present arrangements, but this may be due to the fact that Dominions Office telegram 697 [10] assumes that matters of high policy are involved although this view is apparently not taken by American officials.

(6) We are inclined to think that the significance of proposed change has been exaggerated and could have been settled in Washington. We feel some doubt in resisting without qualification proposals of the Americans, which, according to their statements, have for their object improvements in organization only. If there are other motives we think we would have to secure more evidence that they exist before basing resistance on them.

(7) We are therefore of the opinion that on fundamental matters of principle, e.g. those mentioned in paragraph (4) above, Empire countries should act as one unit, and if the Government agrees such a view should be communicated to Dominions Office. In stating this view to United Kingdom it might be added that it is thought that any question arising out of procedure which the Americans might put forward and which has for its declared object improvements in organization should be sympathetically considered at Washington. It is suggested that the proposal in question comes into this category and that it should be examined in detail here purely on its merits.

(8) Answers to your specific questions (paragraph 2 your Cosau 29) are as follows:

(1) No.

(2) Some slight improvement in this respect is possible although not certain. Present machinery in this regard is being slowly improved.

(3) Do not think this likely.

(4) No.

(9) As regards your suggestion that Australia might be represented on Anglo-American financial committee, main function of committee has been to supervise control of dollar credits, and it was therefore vitally interested in the degree to which [Lease-Lend] [11] might relieve the demand for dollars. Its influence is probably diminishing. There appears now to be a tendency to reduce the demand on Lease-Lend which involves an increase in demand on dollars. We are following up question of desirability of representation on the committee and will give you definite answer to your question in a few days.

(10) We are definitely of the opinion that representation on British [Supply] Council would be an advantage.

(11) In conveying view to United Kingdom that on all points of policy or principle on Lease-Lend we would wish to work as one unit, we would suggest you ask that consultation between United Kingdom and Dominions take place before any commitments, even of a tentative character, are made and that our representatives be included in any preliminary discussions.

1 This cablegram was dispatched in two parts.

2 Government Trade Commissioner in North America.

3 Administrative assistant to F. B. Clapp, Australian representative on the British Purchasing Commission in the United States.

4 See Document 107, note 8.

5 First Secretary of the Legation in Washington.

6 Document 107.

7 Dispatched in cablegram Anson 37/General 577 on 26 November. On file AA : A1608, A59/2/2, i.

8 See Document 107 9 Documents 107-8 and cablegram Cosau 30 of 13 November on file AA : A3300, 106.

10 Dispatched 15 October. On file AA : A816, 42/301/201.

11 Words in square brackets have been corrected from the Washington copy on file AA : A3300, 106.

[AA : A3830, 1941, 3127 AND 3131]