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

Cablegram 205 WASHINGTON, 4 February 1942, 12.29 a.m.

IMMEDIATE SECRET

I saw Acheson [1] unofficially today on the subject matter of your telegram No. 133. [2] State Department and Treasury are just about to discuss this general subject. Acheson takes sympathetic and sensible view. He explains however that United States administration want to be able to say to their potential domestic political critics that every country was doing everything it possibly could by way of military and financial effort on its own account and in the common interest. He says United States administration want to be able to avoid criticism that it is lend leasing everything it possibly can and that at the same time American forces abroad have to pay cash for all their requirements. He realizes our difficulty in meeting our own constantly increasing war expenditure at home and abroad, and of meeting American requirements in Australia as well. He wants to be able to find a way round this obvious and easy criticism. He would like to have some rough analysis of the 'works' (first line of your telegram) and also some quantitative description of our sterling and dollar commitments overseas, in order to see if it is not possible to work out some indirect means whereby Australia can meet the cost of American requirements in Australia and United States can reimburse us by helping us to meet some of our other overseas financial obligations to roughly an equivalent amount. He suggested (quite unofficially) that we tell them what our dollar obligations are, outside of what we expect to get under lend-lease arrangements, so that they can see what dollar payments they might be able to relieve us of. He even suggested that we say what our sterling obligations are with the idea that something might possibly be worked out between United States, Britain and Australia, by which an offset would be arranged to meet the approximate equivalent of the cost of American requirements in Australia. He realizes that there is a limit to taxation and borrowing to meet our out go [3] beyond which we cannot go with safety, and that when this limit is reached some sensible means must be devised of coping with the situation. It would be helpful if you could reply on above within 48 hours. [4]

CASEY

1 U.S. Assistant Secretary of State.

2 Document 314.

3 The original was here annotated 'as received'.

4 See External Affairs Dept cablegram 151 of 6 February on file AA:A981, USA 181, i.

[AA:A981, USA 181, i]