Agendum 60/1942 26 January 1942

AUSTRALIAN-AMERICAN SUPPLY CO-OPERATION

I refer to the question of Australian-American co-operation,
particularly in relation to supplies. Briefly, the position is as
follows:

(A) Cablegram No. 34 of 7th January from the Australian Minister
at Washington [1] advised that-
(i) The U.S.A. Authorities were in the course of arranging to send
a Lease Lend or Supply Mission to Australia to assist from the
Australian end to expedite the flow of requirements to Australia.

(ii) The Australian Minister had suggested to the American
authorities consideration of something like unified representation
in Australia on the supply side with authority covering-
(x) Expediting of Australian lend lease requirements, and
(y) Providing for requirements of all United States forces in
Australia whether by local purchase in Australia or sent from
United States.

(iii) U.S. Naval Supply Organization in Australia is being created
and that U.S. Army is also setting up a similar organization in
Australia.

(B) On 9th January the American Minister for the United States [2]
enquired officially whether the Australian Government would be
agreeable to the establishment by the U.S. Navy of a Navy
Purchasing organization in Australian as soon as practicable.

From the foregoing it will be seen that there are three American
Supply Organizations envisaged or proposed, i.e., Lease Lend, Navy
and Army.

The question of co-operation between Australia and America was
dealt with in War Cabinet Agendum No. 6 of 1942 [3] and the
decision was given in Minute No. 1693 of 13th January. [4] This
decision approved the formation of an Administration Planning
Committee under which there were to be several sub-committees
dealing with the particular items. The matters coming within the
purview of the Department of Supply and Development were excepted
from the operations of the Planning Committee and the subsidiary
Sub-Committees.

I have given this matter some thought and I feel that from the
point of view of policy and the broader field of supply generally
there are several basic principles which cannot be ignored. The
first is that the U.S. should not set up its separate purchasing
authorities because such would inevitably cause confusion, higher
prices to both them and ourselves and what is more serious it
would not be possible to plan our production on proper lines to
the extent that such can be done by a combined requirement.

The second is that there should be one American representative of
high standing to co-operate and co-ordinate with this Department
on the broader aspects of supply -the actual executive and
administration work being carried out by the existing Commonwealth
Departments. This is in line with Mr. Casey's thought of unified
American representation on the supply side. Should any such
representative be appointed, he could facilitate lease lend and be
the authority concerned from whom the U.S.

Naval and Military forces would seek advice and direction in
matters of more important policy. He would have to be clothed by
the American Government with proper powers and would have to be an
officer of appreciable status.

Thirdly-As lease lend supplies are assuming such importance both
directly and indirectly not only in connection with supplies for
Service requirements but also in relation to the whole of our
civil existence, we must consider this aspect almost at every
turn. For example, if we have to supply the American forces with
processed foodstuffs we will have to apply for a greater
allocation of tinplate under lease lend. Another example is that
the lease lend authorities are endeavouring to obtain 3' 6"

locomotives from the American Industry for the Queensland
railways, whilst the Services Supply sub-committee of the
Administrative Planning Committee is submitting a recommendation
that one hundred 5,000gallon railway tank waggons be obtained for
use in Queensland primarily to distribute supplies of aviation
spirit for the American forces but undoubtedly such tank waggons
would be of great value to the Australian Military Service. In
instances such as these-and there are others-there must be the
closest contact with the lease lend administration so that the
whole supply problem, both Australian Services, American Services
and also civil requirements, can be harmonised and a complete
picture obtained and the requisite action taken by a broad
approach to the problem rather than disconnected piece-meal
operations which will be to our disadvantage.

After considering the matter from all angles, I think that a small
working body should be formed to deal with and advise on the
higher questions of supply and all its angles and this should
function in my Department. It will probably be essential at times
for very quick decisions to be reached and this may necessitate
urgent approach to War Cabinet from time to time.

The body should be named the Commonwealth Supply Council and to be
effective should be kept to the smallest dimensions possible and I
propose that it shall be comprised of the Secretary, Department of
Supply and Development, Mr. A. V. Smith (Chairman), Mr. A. C.

Moore, Director of Import Procurement, Department of Trade and
Customs and a representative of the American Government. This
committee, particularly Messrs. Smith and Moore, would be in a
position to advise on the broad aspects of supply and to take
action where necessary. The Department of Supply would not be
concerned, nor would it interfere with the operation of lease
lend, but the tie-up would enable a more effective control of
supply generally and operation both within the Supply Department
and of lease lend each with a knowledge of the objectives to which
the other was working. The questions of Munitions and Service
representation on the Committee was considered but rejected
because the addition of four more members would tend to make the
committee unwieldy and lead to delays. The Supply Department has
direct access and is in constant touch with the Services and the
Department of Munitions and can co-opt officers from those
Departments as and when necessary.

As to War Cabinet Minute No. 1693, the following comments are
made-
(a) Relationship of the Administrative Planning Committee to the
Department of Supply and Development. I have concurred in an
arrangement whereby Army will ration the American troops ex Army
base supply depots or by the utilization of contracts arranged by
this Department. Similarly, where army supply equipment from their
own depots, they will make all the necessary accounting
arrangements with the American authorities and submit demands to
my Department for replenishment or replacement of supplies. It is
proposed to continue this method of supply where it is appropriate
but in cases where it is not convenient or appropriate my
Department will act direct with the American authorities.

(b) As to the Services Supply Committee of the Administrative
Planning Committee, it has already been made clear that the major
matters regarding petroleum storage handling and movement,
particularly in relation to bulk tanks and all matters affecting
the national stock, must be dealt with by my Department and it has
therefore been agreed that the Services Supply Committee will deal
with movement of services' stocks and matters which do not come
within the wider range of national supplies. It has been suggested
that my Department might nominate a representative(s) to the
Services Supply Committee to advise in connection with other
aspects of supply and I have agreed that this will be done to the
greatest extent possible.

Summarised therefore the action proposed is as follows-
(1) Take up with the Australian Minister in Washington the
question of unified American Supply representation in Australia.

(2) Explain personally to the American Minister in Australia the
difficulties regarding the setting up of a separate purchasing
organization for the U.S. Navy.

(3) With a view to the closest collaboration and direction in
major supply matters and to tie up Lease Lend, which must
inevitably be brought into the picture, a small working body is to
be formed under the control of the Supply Department, comprising
the Secretary of my Department, the Director of Import Procurement
of the Department of Trade and Customs, and the American
Representative mentioned in (1). This body will be called the
Commonwealth Supply Council.

(4) The Council will collaborate to the greatest extent with the
Administrative Planning Committee with respect to supply matters.

(5) My Department will nominate representatives to the Services
Supply Sub-Committee and will assist to the greatest extent
possible.

(6) Existing contracts and Departmental machinery will be used to
the greatest extent possible in supplying the American needs and
wherever practical these will be coordinated through Army, Navy or
Airforce-those Services demanding on my Department for replacing
or replenishment as the case may be.

I submit the matter for information and confirmation by Cabinet.

[5]

JOHN BEASLEY