1. I had interview with President [1] today.

2. He spoke at length on changeable attitude on the part of the
United States army and navy regarding the Philippines (see my
telegrams 328 [2] and 642 [3]) which have been and are still being
substantially reinforced with bombing and fighting aircraft and
tanks. From believing Philippines could not be held in the event
of war with Japan, army and navy now believe that they could be
held at least for a considerable time and indeed that United
States air strength would represent formidable deterrent to
Japanese movement southward towards Singapore or Netherlands East
Indies. He threw out the suggestion (he said that he had not
discussed it with the army or navy) that Australia might consider
[practicability of plans] [4] for Australian air squadrons
operating from North Borneo in the event of war with Japan in
order to co-operate with the United States air forces based on the
Philippines.

3. In reply to my enquiry about American-Japanese discussions he
said that in spite of the straightforward talking at the
discussion between the Secretary of State [5] and the Japanese
Ambassador [6] here at Secretary of State's apartments, he
(President) thought that the prospect of anything (save gain in
time) maturing was not hopeful. Japanese wanted to fob them off
with general vague undertakings including evacuation of Japanese
troops from defined areas. Japanese Premier [7] wanted to have
meeting with President but he (President) had stipulated that
exploratory conversations must first reach a stage showing promise
of successful conclusion, and this stage did not seem possible to
reach. [8] President said he realised that the Chinese were
fearful of arrangement being reached which would be inimical to
China but that they need have no such fear.

4. In reply to my query regarding long range economic aims (points
four and five of Churchill-Roosevelt Atlantic declaration)
President said he wanted to reach situation of 'non-
discrimination' in trade between United States and British
countries. He realised this meant the end of Ottawa Agreements but
he believed that the target he was aiming at meant a great deal
more for world and for British countries than limited pre-war
bilateralism on the Ottawa model. [9] (I am on the track of
further explanatory information on the above from American and
British sources here which I will telegraph or air-mail shortly.)
President went on to expose his views on objectives in respect to
basic commodities, wheat, meat etc. by means of Governments
holding surplus stocks ('ever normal granary') and so ensuring
reasonable supplies and reasonable prices to producers and
consumers.