366 Embassy in Washington to Department of External Affairs

Cablegram 870 WASHINGTON, 15 September 1949, 6.15 p.m.

IMMEDIATE SECRET

F.E.C.122.

509. [1]

At this morning's meeting, we pressed issue to vote as instructed in your telegram under reference. Result of voting on Australian resolution 'that issuance of directive be postponed until matter fully investigated and decided by F.E.C.' is as follows:

For: Australia, China, India, New Zealand, Philippines, U.S.S.R.

Abstentions: Canada, Netherlands, United Kingdom (Dening told us last night that he had protested vigorously to State Department about proposed directive. He had also spoken to Thai Finance Minister and urged a very early settlement of outstanding claims against Thailand).

Against: United States.

France did not participate in vote. Resolution was thus lost on United States veto.

2. Following is summary of progress of meeting:

(a) New Zealand, China, Philippines and India made statements in support of our position.

(b) United States made statement repeating its previous arguments that Thailand and France were legally entitled to earmark gold and stating that this matter was not one of policy, but rather of implementation by S.C.A.P. under a supplementary directive issued by the United States in accordance with Section I of paragraph III of the terms of reference of F.E.C. United States also gave answers to questions posed by Australia at last F.E.C. Meeting.

(See F.E.C. Document 343/1 sent under cover of P/L No. 493/49 of 13th September which included statement that gold for Thailand was in respect of purchases of rice, tin and rubber.) (c) We then made statement pointing out that this was a matter of principle which should, pending a Peace Treaty, be decided by the F.E.C., that F.E.C. should decide whether any countries should be given preferential treatment in the distribution of assets in Japan and that Thailand has not settled outstanding debts. We noted in passing that whilst we had doubts about the legality of French Government's tide to gold, it might be that F.E.C. would, after mature consideration, decide that gold should be released to France. In this event, Australian Government would be willing to give due consideration to claims of France. We also referred to possibility that gold might be in payment for services performed by Australian and other allied prisoners of war in Thailand, and moreover, that the property of Australian commercial interests in Thailand, for instance, tin belonging to Australian mining companies, might fall within the category of services for which Thailand may be given payment. In conclusion, we asked for vote on substantive questions [of whether or not] [2] directive be reviewed to S. C.A.P., recess followed and it was clear that there was no support for this motion, but that certain of our colleagues would support a motion to postpone issuance of directive. We therefore fell back on your second proposal.

(d) U.S.S.R. took line that vote at today's meeting was not essential and apparently accused the United States of hastening vote for political reasons. We then pointed out that we had asked for vote today.

3. United States representative, in reply to Indian question stated that the United States proposed to issue directive and intended at time of issuance to release statement to press, giving background (presumably) explaining United States position. We suspect that story of today's meeting will be leaked and have already been approached by press, but have given no comment.

Should we maintain this attitude to press when United States issues its press release? [3]

4. Other questions were discussed at meeting which will be reported in later telegram.

1 Document 364.

2 Words in square brackets inserted from minutes of Far Eastern Commission meetings 15 September 1949, paragraph 39.

3 A press release on 5 October 1949 announced that the directive to release the gold had been sent to MacArthur that day.

[AA:A1838/283, 452/6/1]