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235 Department of External Affairs to Dixon

Cablegram 781 CANBERRA, 5 July 1943

SECRET

1. In transmitting draft agreement for Relief and Rehabilitation
the United States Government suggested that before proceeding to
definitive action any questions or suggestions from Commonwealth
Government might be discussed through diplomatic channels in
Washington. [1] Accordingly you are asked to approach the
Department of State along the following lines:-

Political
2. We note that the proposed Central Committee of the Council will
be composed of the 'Big Four' but that some provision is made for
representation of other countries when questions affecting them
are under discussion. Our general view is against the undue
domination of any postwar councils by a restricted group of powers
and in the present case we hope that full opportunity for
effective participation by smaller countries in the Relief
Administration will be secured through subsidiary committees. This
is particularly important in the case of the Committee of Supplies
and Committee for the Far East. You are asked to make discreet
soundings regarding American ideas on the membership, chairmanship
and location of the various Committees. We should be interested to
hear the views of the United States regarding the limits of the
Far Eastern region, for example, whether it includes India and
Burma.

Legal
3. Article 1, paragraph 2(a) and the corresponding paragraph of
the explanatory memorandum indicate that no formal incorporation
of the Administration has been provided, but it is assumed that
the action of the United Nations in establishing the organisation
will bestow upon it all necessary powers. Can we assume that the
organisation will function in much the same way as other
international bodies, i.e. that it will not carry on any form of
business in a corporate capacity with persons within the territory
of a member government wherein that member government exercises
administrative authority, but will deal exclusively with
governments as such: in other words, that the organisation will
formulate plans which will be carried out by member governments.

4. We note that Article 1 paragraph 1 purports to confer certain
powers upon the Administration, e.g. to enter into contracts. It
is difficult to see how these powers could be exercised by the
Administration in the absence of some formal incorporation.

5. Paragraph 2(b) of Article 1 raises the question of the
constitutional competence of the Federal Parliament and Government
to pass measures and take administrative action for relief
purposes therein defined and, though it is probable that the
external affairs and defence powers will be sufficient, it is
conceivable that some of the Government's actions may be
challenged for want of constitutional authority. This point is
also relevant to Article 8, which provides for amendment of
agreement by a two-thirds vote of a Council. In view of the
absence of any limit as regards the nature of amendments which may
be made it is impossible to say what the obligations of the
Commonwealth under the agreement might be at some future time. It
appears that questions of constitutional competence of member
States might fall for examination during consideration of any
projected amendments.

6. The prevention of activities by foreign voluntary relief
agencies, as laid down in Article 4 paragraph 2, would presumably
require legislation by the legislative authority in any area
affected. There may be some doubt as to the power of the
Commonwealth to pass legislation of this character, although point
will not be relevant unless Australia is recipient of relief.

Economic
7. We should like to reach a clearer understanding regarding the
way in which measures for rehabilitation of war-stricken countries
will impinge on long-term reconstruction and post-war
reorganisation of world trade. It appears inevitable that
rehabilitation, as distinct from relief, will merge into
reconstruction or, at the very least, help to create the
circumstances in which more permanent international arrangements
will have to be negotiated. It appears to us that this should be
frankly recognised in the draft agreement and it is suggested that
a new paragraph should be added to Article 1 to the effect that,
in all its activities, the Administration shall take into account
agreements actual and prospective for carrying out the policy of
Article 7 of the Mutual Aid Agreements, to the end that action
taken for rehabilitation shall not conflict with the policy laid
down or proposed to be laid down in such agreements.

8. In support of this view, attention is drawn to the objects set
out in paragraph 2(a) of Article 1. We suggest that facilitating
production of basic necessities and furnishing essential services
may actually include not only restoration of old agricultural
industry and power plants, but initiation of new production
because of world shortages. Further, the explanatory memorandum
suggests that the object is to enable countries to provide for
their own basic needs. In the case of countries dependent on
exports such as rubber, phosphates, or tin, this could only be
done by restoration of export industries. We wish to avoid any
action taken under the plea of urgent rehabilitation which might
introduce or perpetuate uneconomic industries or which might
conflict seriously with plans for stabilisation of primary
products or for expansion of trade.

9. Article 5, paragraph 3, does not appear to be capable of exact
interpretation because of the difficulty of distinguishing clearly
between purchases for relief and rehabilitation purposes and
purchases for meeting essential needs of local populations during
war-time. While sympathising with broad objectives of co-
ordinating purchase programmes and preventing undesirable
diversion of supplies from war uses to relief stocks, we doubt
whether paragraph under reference represents a comprehensive
approach to the subject. It appears to us that the greater need
for preventing competition between the Relief Administration on
the one hand and countries with financial resources on the other
hand will arise after the war when, however, the Relief
Administration will have only the limited authority given in
Article 1 paragraph 2(b). (See note in explanatory memorandum on
paragraph 3 of Article 5.) We suggest that participating nations
might be asked to enter into a more explicit undertaking to
collaborate with the Relief Administration both during and after
the war so as to ensure as equitable a distribution as possible of
scarce resources.

10. Similar point might be made in regard to shipping. Except in
Article 1 paragraph 2(b) no explicit reference is made to shipping
and, as in the post-war co-ordination of purchases, Relief
Administration can only make recommendations. If our
interpretation of Article 1 (i) set out in paragraph 4 above is
correct, it is doubtful whether the Administration would have the
power to charter ships. We suggest that signatories might
undertake specifically to collaborate with the Relief
Administration in the provision of shipping.

11. We assume from Article 5 and the corresponding paragraphs of
the explanatory memorandum that the relief project is wholly
contributory and that contributions may be made by providing
credits as well as by gifts in kind. We would appreciate any
elucidation which can be given at this stage regarding the nature
of the transactions which may be expected to result from the
expenditure of these credits by the Relief Administration and the
manner in which they can be carried out. [2]

1 Nelson Trusler Johnson's note to Curtin of 11 June is on file
AA:A989, 43/735/781, but the copies of the draft agreement and
explanatory memorandum originally attached thereto have not been
found. A revised draft dated 20 September is on file AA:A1608,
C23/3/2, i.

2 A summary of the Commonwealth Govt's views on the draft
agreement was dispatched to Bruce in London on 27 September. See
cablegram 139 on file AA:M100, September 1943.


[FA:A3196, 1943, 0.18165, 0.18180-3]
Last Updated: 11 September 2013
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