Following for Prime Minister  from Prime Minister.
Reference cablegram No. 169  relative to the extension of the Anzac Area and the machinery for its control, we have now had an opportunity of discussing this with a special delegation of representatives of the New Zealand Government, and their Chiefs of Staff. The whole matter has been considered as one of urgency in the light of the rapid deterioration in the strategic situation.
After an exchange of views with the New Zealand Government, the following conclusions have been unanimously reached by the Australian Advisory War Council :-
(A) PRESENT MILITARY POSITION (1) Japanese successes place Australia and New Zealand in danger of attack. Darwin, Port Moresby, New Caledonia and Fiji are immediately threatened. Other points of likely attack are the North-east and Northwest coasts of Australia, the New Hebrides and Tonga Tabu. The Japanese have decisive air superiority and control in the seas in the areas in which they are operating especially as there seems to be no present prospect of such a concentration as would enable the main Japanese fleet to be defeated.
(2) The loss of Australia and New Zealand would mean the loss of the only bases for offensive action by the Allied nations against the Japanese from the Anzac Area. The defensive aspect is, of course, vital if these bases are to be held.
(3) The basis of our planning must be not only to ensure the security of Australia and New Zealand, but to use them as areas from which offensive action will be launched.
(4) The immediate problems which are of great urgency are to secure the lines of communication from the United States to Australia and New Zealand and to prevent the southward movement of the enemy.
(B) DEFINITION OF ANZAC AREA We are in agreement with the proposal of the Chiefs of Staff of the United Kingdom that the Anzac Area should include the mainland of Australia and we now recommend that it shall embrace:-
(a) The present Anzac Area.
(b) The whole of Australia and its Territories, New Zealand and the Islands within the boundaries of the present Anzac Area to the extent not included in (a).
(c) An area to the west and north-west of Australia including Timor, Ambon, the whole of New Guinea and such sea area within an agreed distance of the coast of the west of Australia as may subsequently be determined.
(d) The sea area to the south of Australia.
This extension would involve considerable increased naval responsibility, and to meet this, it would be necessary for additional naval forces to be provided to cover this additional commitment.
(C) MACHINERY FOR HIGHER DIRECTION OF POLICY AND OPERATIONS IN ANZAC AREA The United Kingdom Chiefs of Staff stated that it is desirable 'that the Supreme Commander of the Anzac Area should receive his instructions from the same authority as the Commander of the ABDA Area and that machinery for ensuring that these instructions represent the views of the United Nations concerned, should be the same in both cases.' The original ABDA Command has now been dispersed, but you will be aware from Cablegram No. 102  that the experiences of the Commonwealth Government did not indicate that the organisation, machinery and procedure were satisfactory for coping with the vital problems with which we are being brought face to face.
Further confirmation of this view was obtained during the final days of the ABDA regime.
Our views on the machinery required for the higher direction of the Anzac Area are as follows:-
(i) Governmental Machinery A United States-United Kingdom-Anzac Council comprising accredited representatives of the following Governments:-
The United States of America, United Kingdom, Australia, New Zealand.
The Chairman to be President of the United States of America or his deputy and the Council to be located in Washington.
The membership might be increased as determined by the Council in the light of events and experience. Thus Canada would be added if she were to send forces to the Anzac Area. The Council would be responsible for the higher policy of the war in the Anzac Area and would deal with questions of policy and the provision of forces and supplies.
The proposed Council does not replace the Pacific Council. The future demarcation of functions and relationship of the two bodies can be determined by experience and the changing strategical position.
(ii) Strategical Control The general strategical control of the Anzac Area would be vested in the Combined Chiefs of Staff Committee at Washington, but to this Committee should be added for the purpose of Anzac strategy one naval, one army and one air force officer, from each of the Dominions, to be appointed by the Governments of Australia and New Zealand after consultation with the Supreme Commander. This representative closely approximates the arrangement suggested by the President  for the participation of Australian and New Zealand service officers in discussions involving their national interest and collaboration under the ABDA scheme.
(iii) Supreme Commander The Council or the Governments concerned will appoint a Supreme Commander preferably a United States Officer who would be subject to the general strategic direction of the Combined Chiefs of Staff Committee in Washington, as specially constituted in (ii). The functions of the Supreme Commander would be:-
(a) To exercise general strategic direction over the land, sea and air forces allocated to the area.
(b) To allocate within the area the forces and equipment that are available, subject to the discretion of the Governments concerned to retain their own troops in their area should the circumstances in their opinion necessitate it.
The Supreme Commander should be guided by the principle of the delegation of authority to his commanders. It should be no part of his duty to control the details of actual operations. The control of these should be left to the local commanders.
(iv) Commanders of Naval, Military and Air Forces Under the Supreme Commander and responsible to him there would be:-
(a) A Naval commander of all the naval forces allocated to the area as at present;
(b) An Army and Air commander for each of the following:-
(i) Australia, its Territories and New Caledonia.
(ii) New Zealand, Fiji and all the Islands, for which New Zealand is responsible.
(D) DIRECTIVE TO SUPREME COMMANDER A directive in accordance with the general principles embodied in the one to the Supreme Commander of the ABDA Area would be issued to the Supreme Commander of the Anzac Area.
2. GENERAL OBSERVATIONS (i) The establishment of a Council as suggested is considered essential from the Governmental aspect to provide for an effective voice by the Australian and New Zealand Governments in the higher policy of the war in the Anzac Area, in view of their responsibilities to the people and Parliaments of these Dominions for local defence and the fact that the whole of their forces are being placed under the operational control of the Supreme Commander.
(ii) The Council will provide a direct and expeditious means for prosecuting a vigorous war policy in the Anzac Area and will give that centralized supervision which is so essential to the conduct of a war by Allies. Its location at Washington will have a number of advantages, including greater proximity to the theatre of war.
(iii) The adoption of the foregoing proposals would have the following additional advantages within the Anzac Area:-
(a) The area would be a workable area and one that would accord with strategic and administrative requirements both for defensive and offensive warfare against the enemy.
(b) Within the area there would be unified control of land, sea and air forces to ensure:-
(i) The most effective distribution of the forces available according to prevailing conditions.
(ii) The employment of all forces and equipment available according to a strategical plan that will be based upon the single aim of defeating the enemy and will not be dependent upon regard for national boundaries.
(iii) The most effective machinery for allocating the available forces.
(c) The machinery for co-ordination of Allied effort within the area would be the minimum necessary for effective co-ordination and a wide measure of responsibility would be accorded to local commanders.
(iv) In regard to the Supreme Commander to be appointed by the Council, the Government would welcome the immediate appointment of General Brett of the United States Army  in view of his experience as Deputy Supreme Commander of the ABDA Area, the knowledge he has gathered of Australia and New Zealand requirements, and the Government and Service contacts he has made.
(v) The Advisory War Council representing all political parties in Australia regard the whole matter as one of over-riding urgency.
(vi) You will doubtless hear from the Prime Minister of New Zealand  within a matter of hours. Both of us agree that it will be better for you to consider the proposal and we request you to recommend its adoption by the President.