McFarlane from Dunk.

1. Your telegram 1730 [2]-Stage II.

2. No direct question continuance of Reciprocal Aid was put to us
at our meeting with the Top Committee. I think that it is less
likely to come up on the second line which will be concerned
mainly with details of the programme and questions of eligibility.

3. I fully appreciate the necessity for the non-committal
attitude. On the other hand in presenting our case both Keynes and
ourselves have stressed Reciprocal Aid. Any sudden change of
Australian policy would have a bad effect here.

4. The Australian Reciprocal Aid record speaks for itself and I
have found the keenest appreciation in the United States Army
Administration. They have no desire to disturb the present
arrangements and will not, I am sure, press us for any fine
definition on eligibility. Foreign Economic Administration are not
so well informed and their approach is solely on narrower lines.

5. We expect to be able to avoid the issue but, if it arises, you
will be immediately advised.

6. There has been some publicity in the last few clays on Stage II
Lend-lease and on the presence of Keynes to negotiate. This may
slow up discussions.

7. Re your paragraph 8, I think that it would be very unwise to
raise here the question of limiting Reciprocal Aid. I am convinced
that we will get substantial relief after the end of this year as
a result of the transfer of United States Forces. In addition, I
am satisfied that the United States Army here and in Australia
will co-operate fully in the gradual reduction of demands for
particular goods if we ask it, for reasons of local shortages,
etc. I have mailed notes of conversation with General Edgerton