Your telegram No. 34 of 7th January. [1] We have been giving
attention to the questions raised by you and other related ones
and the following is the position-
Your paragraph 3-Official request was received from the United
States Minister in Australia [2] seeking agreement of the
Commonwealth to the setting up of United States Naval Purchasing
Agency in Australia. You also indicated that United States Army
were setting up similar organization. The Army has not in fact set
up such an organization but is working through established
Commonwealth Government channels and its requirements are being
co-ordinated with our own. For example United States troops are
being provisioned from Australian Army depots or direct by
military contractors supplying Australian Troops. Camp and barrack
equipment is being drawn from Australian Army ordnance stores.

The Australian Army renders accounts to United States Army
administration in Australia and also places demands on Supply
Department for replenishment of its own stocks, taking into
consideration the quantities drawn by the United States forces.

This system is working satisfactorily and has the advantage of
unified buying, and control does not interfere with any purely
service supply systems such as United States Army Service Corps.

A recent request was made by the United States Army authorities
here for the supply of 10,000 tons of foodstuffs, much of it
canned for shipment at very short notice. This matter was arranged
by Supply Department in consultation with United States and
Australian Army representatives.

The shortness of time available and the size of the demand
necessitated purchase of stocks held in canneries, diversion of
deliveries under current Australian Army and Navy contracts, and
the drawing of the deficiency from Army and Naval stocks with
subsequent replenishment by the Supply Department.

It will be appreciated that in demands of this nature no
independent buying authority could achieve the results required.

Demands generally are becoming increasingly heavy and it is
essential that unified control of buying be maintained not only
for the United States Military and Naval forces, but also for our
own requirements of a similar nature. The combined requirements
are of such magnitude under existing conditions (and it would not
be unreasonable to anticipate that they may be greater in future)
that long range manufacturing programmes and planned production
are necessary, in order to meet all demands.

It will be obvious that if there are two or three competing buyers
prices will be difficult to control but what is more important the
disconnected demand (probably often at short notice) will mean
that supplies may not be forthcoming.

As to your paragraph 1-We would welcome any steps taken by the
United States Government to assist the flow of lease lend supplies
to Australia and would observe that these supplies in certain
instances may be linked with the demands received from our Allies.

For example, if further heavy demands are received from United
States Army for shipment abroad of canned foodstuffs, we may have
to increase our requisitions on United States for tinplate.

Certain projects in the north of Australia, involving the erection
of aviation spirit storage tanks and the supply of aviation spirit
and aero engine lubricating oils will be related also to lease
lend and will involve co-ordination of demand and a revision of
our storage capacity.

Summarised, the position seems to us to be that the United States
Government had in mind three supply representations or sections in
Australia.

(A) The Lease Lend Supply Mission mentioned in your paragraph 1.

(B) The U.S. Naval Purchasing Agency mentioned in the official
request from the American Minister here.

(C) Possibly a separate Army Purchasing organization.

As an efficient Purchasing and Supply organization already exists
in Australia under the direction of a War Cabinet Minister [3],
and as there are branches of the organization in every State, and
also as Lease Lend has been concentrated under the Minister for
Customs [4] and the Director of Import Procurement [5], we
consider the most effective method of handling the whole situation
would be for the United States Government to appoint an official
of appropriate status to be its mouthpiece on all major supply
problems and to be available in Australia to obtain a broad
outline of the general situation.

Already, to link up lease lend with war requirements we have
established an Allied Supply Council consisting of, at the moment,
the Secretary of the Supply Department [6] and the Director of
Import Procurement, and we would hope that the United States
official would become a member of this Council. The Council will
deal only with broad questions of supply and existing Governmental
machinery would be charged with carrying out the detail work both
on our own behalf and on behalf of the United States services. It
is emphasised, however, this would not interfere with the ordinary
internal supply organisation of the United States Navy or Army.

The N.E.I. have also raised the point as to whether they are to be
represented on the Council and our feeling is that their request
will be acceded to. Council has only been appointed and is not yet
effectively functioning although it is intended that it shall
operate with the minimum of formality, major decisions only being
recorded. We are desirous of avoiding a heavy set-up which
possibly would have a delaying effect in this important field of
our war activity.

The matter has been discussed with the United States Minister here
and he has already cabled Washington in connection with the
request for the setting up of a naval purchasing agency pointing
out the practical difficulties which would be encountered not only
by ourselves but also by the United States services if such action
were taken. In addition, matter has been discussed with Commander
Antrim [7] and he appreciates difficulties which would be
encountered if separate buying organisations were set up.

We invite the United States Government, therefore, to send to
Australia as their member one man on broad supply problems, an
official of appropriate status who would be empowered to make
decisions and thus expedite the work of supply in its broadest
sense.

Any expeditors of lease lend material we suggest should report to
such an officer who, as a member of the Council, would be in
immediate touch with the Lease Lend Administration in Australia,
and likewise any broad questions of procurement or supply which
might be initiated in Australia and/or United States could be
dealt with by the Council. In other words, this official would be
sitting in with the Departments dealing with both lease lend and
supply and would at that one point obtain a broad appreciation of
the problems and be able to advise his Government as to the
general situation more comprehensively and satisfactorily than
would be possible by several organizations working separately.

In addition to the Allied Supply Council there has been created a
Cabinet Supply Committee consisting of the respective Ministers of
the two Departments, i.e. the Minister for Supply and Minister for
Customs, to whom immediate approach is available on all important
questions. United States Minister in Australia could be invited to
attend Ministerial meetings when matters of policy affecting
U.S.A. were under consideration.

The whole objective is to streamline the dealing with supply
problems and we think we have evolved what should be a
satisfactory scheme with a minimum of red tape and paper work.

The status of the United States official and his authority should
be such as to enable him to make decisions with us on major supply
matters affecting-
(1) requirements of United States services in Australia
(2) Lease Lend supplies
(3) pooled supplies for all Allied forces.

It has been suggested that it may be preferable to appoint high
official from United States lease lend administration who has been
working close to Stettinius [8] provided he would be in a position
to deal with major Navy and Army supply issues. This suggestion
was made solely on grounds that official from that organization
may be more familiar with the problems which concern us and with
broad question of supply to united nations. We appreciate,
however, that decision is one for United States Government.

The time factor is vitally important. There are large scale
developments occurring here and the supply position will rapidly
get out of hand if United States Government does not appoint high
official to coordinate with us. We would ask that this matter be
treated as one of extreme urgency.

Finally, before raising question with Department of State, we
desire you to discuss matter with Macgregor. [9] If he can do
anything in the way of securing favourable reactions to proposals
from lease lend organization commencing with Stettinius he should
do so.

Would appreciate early advice. [10]