Lend-lease.

(1) I have seen the draft of the exchange of notes on reciprocal
lend-lease proposed by the State Department [1] which I understand
has been approved by the President. [2] It is very comprehensive
but I see no reason to object. Australian obligations must be
interpreted reasonably from time to time but this is implied. I
suggest that you authorize me to state that you will favourably
consider the reciprocal lend-lease proposal in principle.

(2) In the meantime the United States suggest a separate master
agreement on the lines of the United States-United Kingdom
Agreement of February 23rd and draft on reciprocal lend-lease
assumes that such prior agreement will have been made. If you
concur it will be necessary to authorize me to sign. China and
other United Nations will sign in the same terms as the United
States-United Kingdom Agreement. There is no reason why we should
not sign separately.

(3) Our original intentions were to provide all we could by
reciprocal aid but we wanted the same treatment for ourselves. The
new United States document sets no limits on United States
supplies and I understand we have lately been getting more
supplies under lend-lease.

(4) It is impossible to bind ourselves or any United Nations to
specifically perform any particular undertaking and I favour the
broad terms of United States draft to any attempt at detail. Each
Government must interpret its obligations and discuss their
practical effects as circumstances change, including of course
effects on internal budgets and external liabilities.

(5) My arrangements with Kingsley Wood [3] (following on
Robinson's [4] discussions with the Treasury) in London have in my
view disposed of the problem of our overseas balance as far as it
can be dealt with under war conditions, and I understand that you
have accepted that position. I see no reason for raising the
question again here but your definite concurrence with this view
seems desirable.

(6) I feel that we should lead and not appear to follow in these
matters of reciprocal aid, and that our early concurrence with the
present United States proposals as to reciprocal lend-lease is
highly desirable. The exact terms of the draft are open to
variation but they are well phrased.

Doubtless the United States would accept a clause safeguarding our
right to interpret details or limits, or the special position of
British countries inter se if either is desired. A clause might
state explicitly that the note, if acceptable, will be followed by
a supplementary memorandum on application of its principles to
Australia.

(7) The immediate problem is the conclusion of the master lend-
lease agreement and it should, I think, be signed at once with an
intimation that reciprocal lend-lease is being favourably
considered.