1. In continuation of my P.M.49 , the meeting with MacArthur  today was convened to achieve the following purposes:-
(i) That the Australian Government might ascertain the views of the Commander in Chief as to the forces necessary for the defence of Australia as a base for offensive operations and for the ultimate offensive itself.
(ii) That the Government could then relate its policy to the general plan in respect of the forces, war equipment and supplies which it can provide towards the common end.
(iii) That the Government could support the plan of the Commander in Chief through its representatives on the United Kingdom War Cabinet and the Pacific Councils in London and Washington, in order to secure the provision of the forces, war equipment and supplies which are necessary for its fulfilment.
2. MacArthur was in entire agreement with the following observations that were submitted:-
(a) Security of Australia as a Base for Offensive Operations (i) The Australian Chiefs of Staff have indicated that the defence of Australia as a base for offensive operations can be secured by adequate naval and air forces, otherwise extensive land forces are necessary. 
(ii) The United Kingdom Chiefs of Staff have replied that this is a matter between Australia and United States of America, and the aim should be to build up land, air and local naval forces in Australia to a point where they can stand without the immediate support of the United States fleet and can hold out until the United States fleet can sever the communications of an invading force. 
(iii) The Australian Government understands that, in addition to certain miscellaneous troops, two United States of America divisions are so far definitely assigned to Australia.
It has been advised by the Minister for External Affairs of the number of aircraft allocated to United States forces in the Australian area. 
In regard to naval forces, no advice has been received of any increase or intention to increase the American strength in the south-west Pacific area.
(iv) The directive of the Commander-in-Chief imposes on him the following obligations :-
(a) Hold the key military regions of Australia as bases for future offensive action against Japan, and strive to check Japanese aggression in the south-west Pacific area. In view of the responsibilities of the Combined Chiefs of Staff in Washington to deal with the grand strategy of the war, which presumably implies the duty of allocating forces and equipment to theatres of operations, it is essential that a clear indication should be given of the programme of intended allotments to the south-west Pacific area. In their statement of policy for the near future, the United Kingdom Chiefs of Staff stated in March that it was essential to provide reinforcements as quickly as possible to safeguard essential points vital to the continuance of the struggle against Japan, such as Australia. 
(b) Offensive Policy (i) The directive of the Commander in Chief provides as follows:-
Prepare to take the offensive.
(ii) The United Kingdom Chiefs of Staff state that, for the present, we must remain strategically on the defensive, both in the Indian and Pacific Oceans, until the minimum defensive strength has been built up, until the United States Pacific fleet has regained parity with the Japanese and the necessary offensive in forces and equipment are ready. 
(iii) It is essential that the Combined Chiefs of Staff should indicate the programme for the allotment of forces and equipment to the south-west Pacific area.
(c) General (i) It is of interest to note that the United Kingdom Chiefs of Staff, in intimating on 3rd April that the defence of Australia is now a matter to be concerted between Australia and United States of America, qualify the degree of American support by stating- 'There is a danger that by over-insurance in Australia we may prejudice the building up of adequate forces in the Middle East and India. We also have to consider Russia who is likely sooner or later to come into conflict with Japan.' 
(ii) The south-west Pacific area is the only one with unity of command. This provides for directness of action and promptness of decision. It is of vital importance that these advantages should not be discounted or lost through tardiness in laying down a clear-cut plan and providing the necessary forces and supplies for its fulfilment.
3. MacArthur is now to work out with the Chiefs of Staff a statement of his case for the forces and equipment he requires.
4. As you will have read, the Australian combat forces were assigned to the Commander-in-Chief at midnight on 18th April , and all arrangements are running smoothly. However MacArthur has not yet received his directive from his own Government.