Reciprocal Lend-Lease. Your telegram Nos. 657, 656, and 659. [1]
Have postponed further action up till Monday when Phillips leaves
for London but shall see him early that day. He will probably take
with him a draft memorandum from Acheson for United Kingdom on
lines of my advices to you as to scope, records, etc. As Dr Evatt
[2] from London and Sir Owen Dixon [3] from Australia will be here
next week you may prefer their participation before proceeding
further.

(2) The Australian approach, influenced by the United States
representatives in Australia, differs from that of the United
States and the United Kingdom. Interpreting your approach from the
United States and United Kingdom point of view undesirable that
R.L.L. should be generous but should be compensated by special
United States and United Kingdom action to assist our overseas
balance.

(3) The opposite view is that it is simpler to restrict our R.L.L.

to our capacities without special compensation.

(4) Acheson's desire in February to find ways of meeting our
position undoubtedly remains, but he has to deal with Morgenthau
[4] and others, and the embarrassments with other countries and
local interests that special action would create. The necessity
for special financial arrangements between United States and
Australia has to be established in just the same way as necessity
for special war action or supplies. Whether it is wise to limit
claims in any one field is a matter of high Government policy.

(5) It was necessary to get your specific directions on financial
policy in this connection and it is well for me to state clearly:

(a) That case for special United States action is not as strong as
it was.

(b) That Phillips appears to consider that it no longer exists.

(c) That it is easier to fit the scope of the R.L.L. to our
capacities than to get compensatory action with respect to a
larger scope.

(6) It is probably desirable that an agreement by exchange of
memoranda between United States and United Kingdom and United
States and Australia should be simultaneous, and if desired I
shall endeavour to delay United States-United Kingdom action
accordingly.

(7) Will discuss your views on shipping also. They are consistent
with general outlook on Australian position.