(1) I heard confidentially a few days ago that the President [1]
was getting depressed at continuous reverses and had sought advice
from his principal advisers as to where a real stand could be made
in an area where we (i.e. Anti-Axis Forces) could make ourselves
secure in air and on ground, and sea and air lines, reinforcement
to which could be ensured. He had the war against Japan
principally but not exclusively in mind.

(2) After hearing this, I have seen a number of the President's
Senior Service and other Advisers (including Harry Hopkins) and
have advanced the view that the mainland of Australia and New
Zealand represents the only area that conforms to the President's
specification and which at the same time offers hope of eventually
regaining areas already lost to Japan.

(3) I have said that the United States forces already in and en
route to Australia represent formidable vanguard to above end but
that a great deal more will be necessary if we are to avoid
continuance of slow retreat southward in face of superior Japanese
forces.

(4) (I may say that the information confidentially available to me
here regarding Wavell's [2] chance of holding Java is very
pessimistic.)
(5) Considerable discussion is going on in high places here
arising out of contents of paragraph 1 above and (probably quite
independently of any representations of mine) prominent in these
discussions is the proposal that United States should make itself
responsible for the formidable reinforcement of Australia and New
Zealand (additional to what has gone and is going) particularly
with mechanised forces (aircraft, tanks, antiaircraft and field
artillery etc.); and pressing Britain to undertake similar
additions to Burma and India. Above division of responsibility not
to be exclusive, i.e. United States would probably undertake
supply of bombing aircraft to India as well as to Australia.

(6) Harry Hopkins asked me privately today whether if such a
proposal was agreed upon and if United States undertook to send
forces of a stated (and considerable) strength to Australia,
Australia was likely to agree to two Australian divisions from
Middle East being diverted say to India or Burma, which President
naturally regards as of very great importance to hold. He prefaced
this by saying that this was on assumption (which lie hopes will
not come about but which looks possible now) that it turned out to
be inadvisable when the time came to land them in Java. I said
that of course I could not answer this question but that I would
pass it to you at once.

(7) Subject matter of paragraph 5 above [3] was of course not a
formal request but for his own information as one of the small
group of senior individuals considering general subject matter of
this telegram. Any reply to this query that you may care to send
me would be treated [as] completely confidential.

(8) Shipping is definitely the main problem in respect of any
substantial reinforcement to Australia, although Hopkins believes
that by being ruthless it can probably be got together. I do not
think he was speaking without [sic] any precision but he used the
figures at one stage 150,000 or 60,000 troops with their
equipment'.

(9) I fully realize that shipping at present allocated to the
transport of Australian cargoes from United States to Australia is
fully engaged in carrying material of a varying, although
generally high average, of priority. However, it occurs to me that
it would probably be extremely helpful to the above large project
if we were able to say that, notwithstanding the urgency with
which we need the goods now allocated to the above-mentioned
shipping to Australia, we are willing to forgo (as a contribution
towards problem of shipping the equipment as apart from personnel)
several thousand tons (a figure to be stated spread over say next
six weeks) of our contemplated cargoes in favour of carrying an
equivalent tonnage of weapons and equipment for contemplated
American forces.

(10) I have consulted McCarthy [4] on paragraph 9 above. After
reviewing the sailings already listed and cargoes coming forward
to fill them, he believes that it would be practicable for us to
contribute about 25,000 tons deadweight during the month of March,
without sacrificing vital war materials such as aircraft, tanks,
lubricating oil, machine tools and materials for munitions
manufacture. The main items of cargo displaced would be wood pulp,
sulphur, lumber, newsprint and the like.

(11) Grateful for earliest possible reply as I believe this matter
will be decided within very few days.