303 War Cabinet Submission by Mr J. A. Beasley, Minister for Supply and Development

Agendum 60/1942 26 January 1942

AUSTRALIAN-AMERICAN SUPPLY CO-OPERATION

I refer to the question of Australian-American co-operation, particularly in relation to supplies. Briefly, the position is as follows:

(A) Cablegram No. 34 of 7th January from the Australian Minister at Washington [1] advised that- (i) The U.S.A. Authorities were in the course of arranging to send a Lease Lend or Supply Mission to Australia to assist from the Australian end to expedite the flow of requirements to Australia.

(ii) The Australian Minister had suggested to the American authorities consideration of something like unified representation in Australia on the supply side with authority covering- (x) Expediting of Australian lend lease requirements, and (y) Providing for requirements of all United States forces in Australia whether by local purchase in Australia or sent from United States.

(iii) U.S. Naval Supply Organization in Australia is being created and that U.S. Army is also setting up a similar organization in Australia.

(B) On 9th January the American Minister for the United States [2] enquired officially whether the Australian Government would be agreeable to the establishment by the U.S. Navy of a Navy Purchasing organization in Australian as soon as practicable.

From the foregoing it will be seen that there are three American Supply Organizations envisaged or proposed, i.e., Lease Lend, Navy and Army.

The question of co-operation between Australia and America was dealt with in War Cabinet Agendum No. 6 of 1942 [3] and the decision was given in Minute No. 1693 of 13th January. [4] This decision approved the formation of an Administration Planning Committee under which there were to be several sub-committees dealing with the particular items. The matters coming within the purview of the Department of Supply and Development were excepted from the operations of the Planning Committee and the subsidiary Sub-Committees.

I have given this matter some thought and I feel that from the point of view of policy and the broader field of supply generally there are several basic principles which cannot be ignored. The first is that the U.S. should not set up its separate purchasing authorities because such would inevitably cause confusion, higher prices to both them and ourselves and what is more serious it would not be possible to plan our production on proper lines to the extent that such can be done by a combined requirement.

The second is that there should be one American representative of high standing to co-operate and co-ordinate with this Department on the broader aspects of supply -the actual executive and administration work being carried out by the existing Commonwealth Departments. This is in line with Mr. Casey's thought of unified American representation on the supply side. Should any such representative be appointed, he could facilitate lease lend and be the authority concerned from whom the U.S.

Naval and Military forces would seek advice and direction in matters of more important policy. He would have to be clothed by the American Government with proper powers and would have to be an officer of appreciable status.

Thirdly-As lease lend supplies are assuming such importance both directly and indirectly not only in connection with supplies for Service requirements but also in relation to the whole of our civil existence, we must consider this aspect almost at every turn. For example, if we have to supply the American forces with processed foodstuffs we will have to apply for a greater allocation of tinplate under lease lend. Another example is that the lease lend authorities are endeavouring to obtain 3' 6"

locomotives from the American Industry for the Queensland railways, whilst the Services Supply sub-committee of the Administrative Planning Committee is submitting a recommendation that one hundred 5,000gallon railway tank waggons be obtained for use in Queensland primarily to distribute supplies of aviation spirit for the American forces but undoubtedly such tank waggons would be of great value to the Australian Military Service. In instances such as these-and there are others-there must be the closest contact with the lease lend administration so that the whole supply problem, both Australian Services, American Services and also civil requirements, can be harmonised and a complete picture obtained and the requisite action taken by a broad approach to the problem rather than disconnected piece-meal operations which will be to our disadvantage.

After considering the matter from all angles, I think that a small working body should be formed to deal with and advise on the higher questions of supply and all its angles and this should function in my Department. It will probably be essential at times for very quick decisions to be reached and this may necessitate urgent approach to War Cabinet from time to time.

The body should be named the Commonwealth Supply Council and to be effective should be kept to the smallest dimensions possible and I propose that it shall be comprised of the Secretary, Department of Supply and Development, Mr. A. V. Smith (Chairman), Mr. A. C.

Moore, Director of Import Procurement, Department of Trade and Customs and a representative of the American Government. This committee, particularly Messrs. Smith and Moore, would be in a position to advise on the broad aspects of supply and to take action where necessary. The Department of Supply would not be concerned, nor would it interfere with the operation of lease lend, but the tie-up would enable a more effective control of supply generally and operation both within the Supply Department and of lease lend each with a knowledge of the objectives to which the other was working. The questions of Munitions and Service representation on the Committee was considered but rejected because the addition of four more members would tend to make the committee unwieldy and lead to delays. The Supply Department has direct access and is in constant touch with the Services and the Department of Munitions and can co-opt officers from those Departments as and when necessary.

As to War Cabinet Minute No. 1693, the following comments are made- (a) Relationship of the Administrative Planning Committee to the Department of Supply and Development. I have concurred in an arrangement whereby Army will ration the American troops ex Army base supply depots or by the utilization of contracts arranged by this Department. Similarly, where army supply equipment from their own depots, they will make all the necessary accounting arrangements with the American authorities and submit demands to my Department for replenishment or replacement of supplies. It is proposed to continue this method of supply where it is appropriate but in cases where it is not convenient or appropriate my Department will act direct with the American authorities.

(b) As to the Services Supply Committee of the Administrative Planning Committee, it has already been made clear that the major matters regarding petroleum storage handling and movement, particularly in relation to bulk tanks and all matters affecting the national stock, must be dealt with by my Department and it has therefore been agreed that the Services Supply Committee will deal with movement of services' stocks and matters which do not come within the wider range of national supplies. It has been suggested that my Department might nominate a representative(s) to the Services Supply Committee to advise in connection with other aspects of supply and I have agreed that this will be done to the greatest extent possible.

Summarised therefore the action proposed is as follows- (1) Take up with the Australian Minister in Washington the question of unified American Supply representation in Australia.

(2) Explain personally to the American Minister in Australia the difficulties regarding the setting up of a separate purchasing organization for the U.S. Navy.

(3) With a view to the closest collaboration and direction in major supply matters and to tie up Lease Lend, which must inevitably be brought into the picture, a small working body is to be formed under the control of the Supply Department, comprising the Secretary of my Department, the Director of Import Procurement of the Department of Trade and Customs, and the American Representative mentioned in (1). This body will be called the Commonwealth Supply Council.

(4) The Council will collaborate to the greatest extent with the Administrative Planning Committee with respect to supply matters.

(5) My Department will nominate representatives to the Services Supply Sub-Committee and will assist to the greatest extent possible.

(6) Existing contracts and Departmental machinery will be used to the greatest extent possible in supplying the American needs and wherever practical these will be coordinated through Army, Navy or Airforce-those Services demanding on my Department for replacing or replenishment as the case may be.

I submit the matter for information and confirmation by Cabinet.

[5]

JOHN BEASLEY

1 R. G. Casey's cablegram is on file AA:A981, Defence 66.

2 Nelson Trusler Johnson.

3 AA:A2671, 6/1942.

4 in AA:A2673, vol. 10.

5 On 27 January War Cabinet approved the proposals set out in this agendum and also authorised the establishment of a Ministerial Committee consisting of Beasley and the Minister for Trade and Customs, Senator R. V. Keane, with the power to invite Johnson to meetings when it was considered desirable to do so. See AA:A2673, vol. 10, minute 1778.

[AA:A2671, 60/1942]