59 Watt to Hood
Letter WASHINGTON, 29 February 1944
PERSONAL AND CONFIDENTIAL
At the risk of being regarded as pro-American or anti-Australian or both, I feel I should give you an indication of my personal views on certain important matters which have arisen recently affecting Australian - American relationships. These matters are as follows:
(a) The final Australian communication  after the trade treaty negotiations had broken down (b) The Australian decision not to agree to include raw materials under reciprocal aid , and (c) The Australia - New Zealand Agreement. 
Before commenting on these matters perhaps I should distinguish once again between the attitude of Americans as a whole towards Australians as a whole and the attitude of the American Administration towards Australia. So far as the attitude of Americans towards Australians is concerned, there has in recent months been little change if any. Australians, as citizens of one of the Dominions, still have a more favoured position in this country than Englishmen; moreover, Americans are primarily interested in the Pacific and, as Australians are fighting in that area alongside Americans, Australians have if anything a special advantage over the peoples of other Dominions. Again, Americans know nothing of our trade negotiations nor of the breakdown of these negotiations; nor have they as yet heard anything about our refusal to include raw materials under reciprocal aid. They have heard of the Australia - New Zealand Agreement but very few of them understand it. Some newspapers and columnists have criticised the Agreement and have provided a background which could probably be developed to Australia's disadvantage if the Administration or Congress or an important group of newspapers and columnists and commentators so desired. At the moment, however, this has not taken place and the regard of Americans for Australians remains substantially unaffected.
The attitude of the Administration is a different thing altogether. it is extremely difficult to discover with any certainty what is their precise reaction to any of the three matters mentioned above, with the exception of course of their attitude towards the proposed International Conference in Australia, which has been set out in a formal document transmitted to the Australian Government.  American officials have been 'cagey' in discussing any of these three matters; nevertheless, I feel little doubt that some Administration quarters have been considerably disturbed by all three. If you asked me to quote chapter and verse for this I should probably be unable to quote anything sufficiently specific to be of much value. My interpretation at times is based upon the absence of comment and on atmosphere rather than on specific remarks. Any views based on so little evidence may seem rather valueless but I give them, nevertheless, for what they are worth.
Trade Negotiations The final Australian Note on the breakdown of the trade negotiations is not accepted as a full and impartial statement of the facts. I think the Americans are quite prepared to admit what they would regard as their due share of responsibility for the breakdown of negotiations; nevertheless, in their view the Australian Note assigns to them complete responsibility for the breakdown-which they do not accept. There have been odd rumours from time to time that a stiff reply was being prepared, because some people in the Commercial Treaties Division, at least, felt that the Australian Note could not be allowed to stand on the record uncontroverted in certain parts. Nothing has come of these rumours so far and perhaps nothing will come of them. I believe we should remember, however, that this feeling does exist whether or not any formal expression is given to it.
Raw Materials Australia's decision not to include raw materials under reciprocal aid, when first conveyed to the United States, caused surprise rather than resentment. F.E.A. seemed to feel that the Australian decision must have been based upon a misunderstanding as to the nature and scope of the proposed raw materials programme. As they regard this question of raw materials as an important element in the general case being built up to convince Congress at the end of June of this year that Lease Lend should be continued, they decided to refer the matter to Australia again for reconsideration, giving fuller information. We in the Legation of course have only seen the copy of the memorandum  prepared by F.E.A. and forwarded officially through Nelson Johnson. What happened in Australia we can only guess at. Indeed, we do not know officially that the Australian Government came to any decision on the matter when it was put to them for the second time. We were surprised to learn about a week ago informally through the State Department that the decision had apparently been taken in Australia and communicated to Nelson Johnson some weeks earlier.
 So far as I can judge, American officials do not understand the reasons for this second refusal and we are certainly not in a position to enlighten them.
Australia - New Zealand Agreement The official attitude of the United States Government on the proposal to hold a further International Conference in Australia has been communicated formally to Canberra. I confess that I was slightly surprised that a formal Note was sent at all and that the Note was based upon an interview with the President and was rather 'stiff' in tone. I should not have been surprised if verbal representations had been made through Nelson Johnson. The importance of this official notification of views should not, I feel, be under-estimated, and to see it in proper perspective I think it should be regarded as a document decided upon after consideration not merely of the Australia -New Zealand Agreement but also of our Note on trade negotiations and our decision on raw materials. The United States Government apparently decided that the Australia - New Zealand Agreement and the proposals contained therein were sufficiently important to compel it to go on record.
The tone of their Note, however, has been influenced to some extent by their reactions to the other two matters I have mentioned.
I have now read carefully our reply  to the American Note and also the New Zealand reply  and I confess I do not feel happy about the result. At the moment, I can only guess at American reactions and guesses are not very useful-but, once again, here they are for what they are worth.
American officials will undoubtedly compare closely the text of the Australian reply with the text of the New Zealand reply. Where the two texts agree with one another this will cause no surprise, because prior consultation between the two Dominions is now to be expected under the terms of the Agreement. What will interest them more particularly will be the points of difference between the Australian and New Zealand replies. Here they will find one notable difference between the two texts, namely, that Australia has chosen to quote in a formal document remarks made by the President of the United States at various meetings of the Pacific War Council, a body which keeps no official records and the proceedings of which are unknown to American Departments including the State Department. This is a grave decision, the effects of which can only be awaited. I have little doubt that the President, himself, will be very annoyed. Although he has clearly been, on occasion, indiscreet at meetings of the Pacific War Council, this is unlikely to modify his resentment. The State Department is also likely to be annoyed, because it will probably feel that the President of the United States has been 'put on the spot'. I do not know whether the President will feel able or impelled to make some formal comment on such references to proceedings of the Pacific War Council. I should think, however, that in any event there are likely to be even fewer meetings of the Pacific War Council than there have been in the past and that if and when meetings are held the President will in future give no information and express no views which are of any importance.
In making the above-mentioned comments, I do not wish to be misunderstood. As you know, I have been very critical of developments in this country during the past six to twelve months as the Presidential election period approaches. I have wondered from time to time whether, after this war, we might find ourselves without any international organisation or without any effective international organisation, with the United States devoted to a somewhat ruthless policy of economic imperialism. Again, I have felt that the United States could have helped us much more than she did at the end in trying to arrange a trade agreement; that her reduction of Lend Lease supplies and increase of demands for reciprocal aid was putting Australia in an impossible position;
and that Australia was wrongly being left out of the conferences which were deciding so speedily the fate of the world, and more particularly the fate of the Pacific. I agree that Australia was compelled to take appropriate action within the limits of her power to remedy these situations. I question only the method and the form in which she has set about doing this.
You will remember that I wrote to you not so long ago, drawing attention to the manner in which Canada had pressed her own claims and secured acceptance of many of them.  I have not the letter in front of me but my recollection is that I drew attention to the fact that Canada pursued a policy of persistent pressure at the most appropriate moment and temporary withdrawal of pressure if she found the opposition too great. In each case, as far as I can recollect, she secured informal agreements to what she proposed to do before in fact doing it. It may conceivably be said that her method has been old-fashioned and perhaps unnecessarily considerate of the sensibilities of others. I do not agree with this point of view. My experience even in this country leads me to believe that in the long run use of the firm hand in the velvet glove is more effective and less risky than use of the bare fist.
I do not wish to exaggerate in any sense the importance of the views I have expressed and, for that matter, I feel no great confidence in their accuracy. Nevertheless, I feel I should let you know that during the past month or two I have had the feeling, almost for the first time since Pearl Harbour, that the work of this Legation has suddenly become political once again. There are political problems to be solved, not merely technical problems.
There are individuals who have to be handled with rather more care than usual.
As to the position at the Australian end, you are in a far better position than I to judge. I have now been away from Australia for so long and so much has happened in the meanwhile that I find it difficult to assess reactions and developments in Australia. I do no more than suggest for your consideration that considerable thought should be given in Australia to the extent to which Australia is in a position to stand up to the United States on her own and the extent to which Australia can and will be supported by the United Kingdom against the United States if it comes to a showdown on any major issue. There are many signs in Washington from time to time that, while the United Kingdom holds different views from the United States on many matters and is occasionally annoyed at American policy, nevertheless, the United Kingdom still feels herself unable to resist American pressure on major matters.
The United Kingdom is of course in an extremely difficult position with the war still not won and the prospect after the war of a strong Russia on the one hand and a strong United States on the other. I would not assume too easily that the United Kingdom will be able, even if she so desires, to support Australia as against the United States on vital issues.
In my view, if one looks twenty to fifty years ahead, Australia needs the support of the United States in the Pacific and this fact should constantly be kept in mind when considering our day to clay problems and differences. I believe that we should indicate to the United States our views on world and Pacific problems with the utmost frankness and firmness and do our best to get support elsewhere to give effect to our desires. In pressing our views, however, I would suggest that from time to time we give due expression to our gratitude to the United States for the help she has given Australia in this war and that we should also consider carefully the form, the method, and the content of our representations.