Your 166 1st August , Lloyd has been accorded every facility for full and frank exchange of views with both the Joint Planning Staff and the British Chiefs of Staff. Discussions have also proceeded direct with Admiral Mountbatten and his planning staff.
I have now received the following report from him of the results to date. Report Begins:
Proposed Theatre Re-Organisation-South West Pacific Area.
At Potsdam it was agreed in principle that portion of South West Pacific Area should pass from United States to British Command as soon as possible. The British Chiefs of Staff undertook to investigate and report the earliest practicable date on which transfer could be effected. It is now clear that there are major difficulties associated with this proposal and a decision has been taken to refer proposal back to the United States Chiefs of Staff.
This reference marshals respective difficulties of Australia, Mountbatten and the British Chiefs of Staff and requests consideration of modified counter-proposals. Our acute manpower difficulties and our complete inability to accept further Military commitments are now appreciated. Mountbatten is not yet in a position to exercise effective command of or to allocate forces to an area far removed from his present theatre at a time when all his energies and resources are taken up with preparations for operations against Malaya and Singapore and to the clearing up of Burma. Provision of British Land Forces from sources outside South East Asia Command to assume responsibility for the area between South East Asia Command and the Western limits of Australian Mandated New Guinea is not practicable solely clue to the complete inability to provide shipping for their transportation and subsequent maintenance. The counter proposals to Washington involve postponement of the transfer of responsibility and seek agreement for a gradual change. Effect could be given to this conception along the following lines:-
Mountbatten could now make preparations for the Eastern extension of his existing boundary by assuming responsibility for future operational planning including planning for clandestine operations and civil affairs. This would involve certain intelligence personnel and records being made available to him now. The next phase would be dependent on the successful development of operations against Malaya when Mountbatten could assume responsibility up to the Celebes including and providing necessary reliefs for Australian troops in Borneo. The final stage of assumption of the control up to the Western Boundary of Australian Mandated Territory could then be planned. In the meantime the preservation of the status quo follows but it has been made clear to Washington that provided necessary shipping could be furnished control of current operations in the area of the First Australian Army could pass now to the Australian Command. The problem of Rabaul is of course expressly reserved.
Australian Participation in Operations against Singapore.
Mountbatten is anxious to employ a small Australian Force if it could arrive in the operational area in time. The force contemplated is a paratroop battalion and two armoured regiments.
An examination has been directed of the feasibility of moving either the whole force or alternatively the paratroop battalion only before any approach is made to the Australian Government.
The British Commonwealth Force for Participation in Operations against Japan.
Certain proposals of General MacArthur were tabled at Potsdam by the United States Chiefs of Staff and have been closely studied here for subsequent detailed examination at Manila in late August, 1945. These proposals include the following:
British participation to be limited to corps of three divisions, one British, one Canadian and one Australian. The corps to be available in the objective area about March 1946 and to be employed initially as an assault reserve afloat. The corps to be fought as an integral part of United States Army with the right to detach Divisions to other United States Corps in emergency circumstances. The Corps to be completely equipped and organised as far as possible on American equipment and be maintained by United States Administrative Organisations.
General British Policy will be conditioned by the view that having offered a British Commonwealth Force to serve under United States Company we should as far as possible comply with United States requirements and General MacArthur's wishes. In particular it seems certain that the British Division will be trained, equipped and mounted from the United States together with the Canadian Division. Of the three Divisions at present planned, two will be assault mounted, the British and Australian Divisions. The necessary assault shipping for the Australian Division will be provided from forces now deployed in support of South East Asia Command and its detachment to lift the Australian Division from Brunei will be made as soon as the Straits of Malacca have been opened and Singapore masked. This shipping will carry to Borneo the Garrison Troops to relieve Australians in Borneo.
At Manila Staff talks, the British Representatives will be instructed to press for the inclusion of a New Zealand Division in the later stages of the operation.
The views of the Australian Government on command of the British Commonwealth Force and the maintenance of machinery to ensure adequate control over employment of Australian formations have been stressed and you will be fully consulted on both issues.