CANBERRA, 19 March 1944

PERSONAL IMMEDIATE FOR MELVILLE ALONE FROM MINISTER FOR EXTERNAL
AFFAIRS
SECRET

1. I must express great disappointment in your 44. [2] I can
imagine the pressure to which you must be subjected from many
quarters, but you were fully warned and I would like you to inform
me privately through Stirling the External Affairs Officer whether
you have discussed my telegram [3] with any other person. I asked
you previously to communicate with me through this channel in
order that you could inform me frankly and without reserve what
the various attitudes are. In particular I desire to know whether
Bruce is participating in any way.

2. I am discussing commercial policy and other matters with the
sub-committee [4] early next week and meanwhile the following
detailed comments will help you to know probable attitude.

(a) I disagree with your interpretation of Article VII except in
the sense that elimination of preferences may ultimately result
from a long-term policy of full employment, increased standards
and a series of commodity arrangements. To commence with such
elimination puts the cart before the horse. Our employment
approach demonstrates the true principle.

(b) Supposed intentions of the United States of America as
interpreted by United Kingdom or Canadian officials are a poor
foundation on which to base present tactics. The United States of
America with United Kingdom assistance refused bilateral
arrangement with Australia. [5] Moreover even if this report of
United States of America attitude is correct the fact is that the
United States of America can hardly press for honouring a
commitment in relation to preferences if as stated by Keynes (see
your 31 paragraph 1(iii) and paragraph 7 [6]) they are not
prepared to honour the all-important obligation to maintain
employment.

(c) Your reference to Ottawa agreement [7] is noted. No British
Government would live if it terminated Ottawa agreement against
wishes of Australia and New Zealand.

(d) Primary industries are of equal concern to this Government as
secondary industries and before any expression of views we will
wish to know far more about post-war markets, British and European
and American agricultural policies and assurance of rising levels
of consumption.

(e) The final summary of your view in paragraph 3 expresses a view
that some reduction of preferences is inevitable under the Mutual
Aid Agreement. Your delegation has no authority whatever for
saying so. It is expressly contrary to your instructions [8] which
also include the Australian - New Zealand firm Agreement on
interpretation of Article VII which specifically mentions 'British
Commonwealth Preferences' as a measure we may have to retain. I
suggest you should frankly but firmly remind your co-delegates
that they must assist you in carrying out Government instructions.

3. Full text of my statement on Canadian agreement has been
repeated to you. [9] This is also in accordance with Government
policy although of necessity it could not be quite so specific as
Australian New Zealand Agreement on economic collaboration. [10]

4. I especially desire to know whether New Zealand delegates have
acted in accordance with such agreement.