Addressed to the Acting Prime Minister, Mr. Forde.
Reference your 40  and 54. 
Our manpower position as I see it in the light of the discussions which I have had so far is broadly as follows:-
(i) The basing of British Forces on Australia, apart from strategical factors still undetermined is largely governed by the capacity of Australia to augment the Forces and the capacity to maintain them.
(ii) In view of the fact that we are now stretched to the limit of our resources we can only make a contribution to this maintenance by subtracting something from our war effort in another direction.
(iii) We must be wary about accepting additional commitments for the expansion of any of the Forces, otherwise we shall never extricate ourselves from our manpower difficulties.
(iv) Furthermore, it is noted that, although the intake into the services was limited to a total of 5,000 per month, the actual figures for the five months ending February were much short of this figure.
(v) One of the reasons for War Cabinet's decision of 1st October  relative to Naval overseas commitments was to meet one of the contingencies now mentioned by you of enabling crews to be transferred to new ships which could be done without prejudice to the ranks of the members or the corporate nature of the ships' companies.
(vi) I have pressed the Prime Minister for the reply to our cable.
 In the meantime I have no objection to increasing the Navy intake by reducing the Army and Air intakes by 130 and 70 respectively as indicated in paragraph 9 of your No. 40, but I presume that the residual quotas for the Army and Air Force will meet their essential needs.
(vii) I shall advise you on the wider question later on, but I cannot fail to comment on the comparison between the tardy manner in which War Cabinet's decision of 1st October on Naval overseas commitments has been handled in certain quarters and the urgency with which additional commitments have been pressed.