Reciprocal Lend-Lease
Our 811 [1] and your 671. [2]

Comment on draft exchange of notes.

Following from Brigden. [3]

(1) Proposal that Australia should sign the master agreement is a
reversal of the attitude when Dr. Evatt [4] arrived from
Australia, and is not in line with the recent United Kingdom
views, but Dr. Evatt will have direct information. Phillips [5]
offered no comment on this aspect, but concurs with comments made
in other paragraphs. The question is one of high politics and
judgment as to whether the Empire countries would do better now
and in post-war settlements as a group, as the United Kingdom has
been suggesting. A separate master agreement for Australia implies
that United States Lend-Lease will be direct and not through the
United Kingdom and that the ultimate settlement will also be
direct.

(2) Paragraph 3 of the draft conforms with your views but as a
standard document makes no provision for Australia's special
problems. The most appropriate course might be to add a paragraph
at the end.

(3) Paragraph 4 of the draft might be limited by inserting words
in its preamble restricting the Australian offer to the United
States forces within Australian territory and to such other United
States forces as may be determined. The words 'when it is found
that they can most effectively be procured in Australia' are
ambiguous. It may be physically possible but financially or
economically inequitable.

In 4(b) of the draft the words 'administrative expenses' should be
inserted.

Para. 4(d) goes further than we have contemplated hitherto.

(4) Paragraph 6 of the draft does not require that record of aid
given or received shall be agreed as between the parties at the
time.

(5) Paragraph 7 of the draft is of course new and far-reaching,
especially when read in conjunction with paragraph 2. To accept it
is to undertake to make similar agreements with Russia, China and
many other nations.

(6) The draft is for comment and discussion, and is of course
designed as a comprehensive objective from the United States point
of view. It appears to have been conceived quite independently of
our discussions and the practical considerations we have had under
review. In effect we are to start again.

(7) Your 671 may therefore be a new start for us. Acheson's [6]
modest ideas have been superseded. As the United States now
proposes large-scale reciprocity, your case for special assistance
to justify it has a new significance. Action must, however, be
delayed somewhat. There will be important people in Washington
this week who may hasten events. I am sending more by bag today.

[matter omitted]