We have been considering the question of the future of the United Kingdom element of the British Commonwealth Occupation Forces in Japan. New Zealand Government in their telegram addressed to you No 29 of 22nd February asked for your opinion of the value of B.C.O.F. generally and in your telegram 100 repeated to New Zealand 114 of 18th April [you] stated that rather than deal with this matter by telegram it should be left for discussion at time of Canberra Conference. We understand however that in the event discussions did not take place on this matter during the Canberra talks.
2. It is clear to us in view of the grave situation which confronts us as regards both finance and manpower that we must now cut down to a minimum our defence expenditure overseas. I have already sent you messages regarding our general financial position and I do not expect that in the light of wh[at] I have told you it will come as a surprise that we have reached the conclusion that we ought to withdraw forthwith the remainder of the United Kingdom forces from Japan. For your own private information we are now conducting a review of our defence commitments which may result in drastic cuts or withdrawals from overseas.
3. We have reached this conclusion in regard to the United Kingdom element of the B.C.O.F. with very great reluctance. We should be sorry to take away our contingent from a force in which the United Kingdom, Australian and New Zealand Troops have been working in close co-operation but in the circumstances we feel that we have no alternative. I should be grateful therefore if you would let me know as soon as possible the views of the Australian authorities on the United Kingdom conclusion, if as I hope you understand and concur in out proposal we should then ask you to obtain the concurrence of the United States authorities to the immediate withdrawal of the United Kingdom contingent.