REVIEW OF PRESENT POSITION

In our report of 1st June 1942 [1], we stated two main
propositions:-

(1) Naval policy and shipping resources must dictate the moment
for commencing an offensive in the Pacific as until Japanese sea
supremacy has been successfully challenged, combined operations on
a large scale with the object of regaining lost possessions must
be attended with considerable risk.

(2) Offensive operations with limited objectives within the
capacity of the forces that are or will be available in Australia
should be undertaken as soon as it is practicable to do so.

2. Since that review was made, the following developments have
taken place which bear materially upon an Appreciation of the
present situation:-

(a) With the collapse of the Philippines, Malaya, Burma and the
Netherlands East Indies, the concentration of the Japanese Navy,
together with commensurate ground and air forces, has, for the
first time, moved towards the South-West and South Pacific Areas.

The centre of gravity of this concentration is in the general
Rabaul-Truk area. Whilst the mass of the enemy's troops are
concentrated in the north, e.g., China, Manchukuo, etc., many of
his shock units are being moved forward to Rabaul.

(b) Apart from the increased enemy concentration mentioned above,
the Naval position in the Pacific since the battle of Midway (4th
June) has changed for the better, and Allied Naval strength in the
Pacific is now approximately equal to the Japanese (see Comparison
of Naval Forces in Pacific-Appendix 'A' [2]). The exact
disposition and strength of United States Naval forces in any
particular area is not known, but it is assumed that this will be
determined, as far as possible, by the anticipated strength of the
enemy in that area.

(c) New Caledonia and New Hebrides are strongly held by United
States forces.

(d) United States forces have occupied certain islands in the
Solomons group. As expected, this has caused the Japanese to send
a large force of ships, including men-of-war, transports and
supply ships, to this area, at a great distance from Japan,
thereby extending very considerably their line of communication
and exposing their ships to attack by Allied Naval and Air forces
along this line and ultimately in an area chosen by us.

(e) In New Guinea, Port Moresby has been reinforced by land and
air forces and Milne Bay has been occupied. The Japanese have
occupied areas on the north coast of New Guinea opposite to Port
Moresby, whence they have advanced through the Owen Stanley Ranges
to within about 40 miles of Port Moresby. There they are meeting
with determined and successful opposition.

(f) Transfer of the Sixth and Seventh Divisions of the A.I.F. from
the Middle East has been completed. of these, the Seventh Division
and part of the Sixth Division, A.I.F., with two Brigade Groups,
A.M.F. [3], are engaged in the operations in New Guinea. Two
United States divisions have continued their training in Australia
and one of these is also moving to New Guinea. The Ninth Division,
A.I.F., has moved from Syria and is now engaged in active
operations in the Western Desert.

(g) The whole Army forces in Australia have become a more
effective fighting force by reason of increases in equipment and
the further period of training.

(h) The strength of the Allied Air Forces in Australia has been
substantially increased and our relative air position vis-a-vis
the enemy in areas adjacent to Australia is, on the whole,
substantially more favourable than in June. This is due to:-

(i) Additional aircraft. There are now in Australia and New Guinea
approximately 1,100 operational aircraft, but this total includes
about 200 aircraft of obsolescent types similar to those used for
training purposes. The Japanese strength in New Guinea, the
Solomon Islands, Timor, Ambon and the Celebes Islands is estimated
to be about 400 land-based and 100 carrier-borne aircraft.

(ii) Development of more advanced bases.

(iii) Improved means of long range warning and fighter control
organisation.

POSSIBLE JAPANESE MOVES
3. The aim of the Japanese in the Southwest Pacific as we see it
is to encircle Australia, thus cutting off Australian
communications with America and possibly with the Middle East. The
Japanese have experienced a check to the fulfilment of this aim by
the recapture of certain islands in the Solomons group, and can
therefore be expected to make a most determined attempt to regain
control of this area.

4. Concurrently with the Japanese attempt to recapture the Solomon
Islands, we think it likely that they will continue their
operations in New Guinea with a view to capturing Port Moresby.

5. Now that there is an increased Japanese concentration in the
South-West Pacific Area, the possibility of a diversionary attack
on the Northwest coast of Australia cannot be ignored unless our
forces are strong enough to maintain sufficient offensive action
to contain these enemy forces in the New Guinea-Solomons area.

6. So long as the Solomon Islands, New Caledonia and Port Moresby
are held, we think an invasion of the east coast of Australia is
unlikely.

COURSES OF ACTION OPEN TO US
7. The foregoing review of the present position and possible
Japanese moves, considered in conjunction with the salient points
from the messages exchanged between the Prime Minister, the Prime
Minister of Great Britain and the President of the United States,
which are set out in the terms of reference [4], lead us to the
conclusion that the strategy enunciated in the two propositions
quoted in paragraph 1 of this Appreciation from our report of 1st
June still hold good.

8. In reaching this conclusion, we have considered that, as the
forces at present assigned to the South-West Pacific Area are not
sufficient to enable major offensive operations to be undertaken,
there are only two courses of action open to us:-

(1) To endeavour to secure the mainland by defensive measures
within Australia. This, as we stated in our Appreciation of
February 1942 [5], would necessitate Australia being strongly
defended at every point, which, failing adequate Naval and Air
strength, would require large Army forces of a strength which has
been estimated at 25 divisions.

(2) To undertake offensive operations with limited objectives with
the object of clearing the enemy out of bases now in his
occupation, from which he can launch attacks against Australia and
interfere with our lines of communication.

9. With a view to determining what limited offensive operations
can be undertaken, it is necessary for us to consider what forces
are or can be available in Australia.

[A detailed analysis of the manpower resources of the Australian
armed services has been omitted. The main points are summarised in
Document 62.]

CONCLUSIONS
21. We think that our main objects should be:-

(a) To hold Port Moresby and Milne Bay and to drive the Japanese
from the mainland of New Guinea by the capture of enemy bases on
the north coast successively.

(b) To drive the Japanese out of the Solomon Islands and secure
these as bases for future offensive operations.

(c) To maintain Naval and Air attack on the enemy's lines of
communication between Japan and New Guinea and the Solomon
Islands.

(d) To attack Japanese Naval forces whenever a favourable
opportunity occurs.

(e) To maintain our present tactics in Timor.

22. Such operations would:-

(a) make a most valuable contribution to global strategy by
containing the Japanese Fleet;

(b) contribute directly to the defence of Australia by preventing
the enemy from securing further bases from which he could
interfere with the lines of communication to the United States or
attack the Australian mainland;

(c) keep enemy forces engaged in an area where we have good
prospects of dealing satisfactorily with them, thus preventing the
enemy from using these forces elsewhere, either in Australia or in
another area;

(d) secure for the Allies suitable bases for the eventual carrying
out of major offensive operations.