(1) I am sorry you have gained impression [2] that I have
expressed views contrary to my instructions which include the
Australian - New Zealand points of agreement. [3]

(2) When you have had an opportunity to read, as a whole, the
minutes of the meetings and the concluding report of the
Conference [4], I feel sure you will agree with me that our
position has been fully safeguarded and that your impression is
the result of the sort of misunderstandings that so often arise
from cabled summaries.

(3) The purpose of the present discussions has been to explore at
an official level and without commitment to Government's possible
methods of giving effect to Article VII of the Mutual Aid
Agreement to which the various Governments have subscribed.

(4) Accordingly, in the course of the discussion I have
necessarily had constantly before me the terms of Article VII
which provide for agreed action directed towards the expansion of
production, employment and consumption, the reduction of trade
barriers and the elimination of all forms of discriminatory
treatment in international commerce.

(5) In addition, of course, I have also had constantly before me
the instructions of the Australian Government and I have at all
times taken great care to ensure that the officials of the United
Kingdom and the other Dominions fully appreciate the Australian
approach to the carrying out of Article VII. I therefore strongly
urged-
(a) That the major emphasis must be put on the positive aspects of
Article VII (i.e. the expansion of production, employment and
consumption) not only because of their deeper significance as an
end, but also because it is only by successful measures in these
fields that the reduction of trade barriers and the elimination of
preferences, etc. can be safely undertaken.

(b) That, in addition, any proposals for the reduction of trade
barriers and the elimination of preferences must avoid sweeping
and sudden measures which might cause distress and must permit
economic measures necessary to ensure maintenance of employment
and the development and diversification of industries.

(6) The particular paragraphs on preferences to which you have
taken exception should, I suggest, be read in the foregoing
context. Even when considered in isolation they do, I believe,
satisfactorily safeguard the Australian position. Whilst admitting
the ultimate objective, they indicate that before the Australian
Government could actually effect reductions, it would want more
information, they express our doubts as to whether the tariff
reductions proposed for other countries would adequately
compensate us for the cuts proposed in preferences and they
conclude by foreshadowing that for these reasons, Australia may
need to retain preferences in the United Kingdom.

The Minutes show that we strongly stressed how serious the
consequences to Australian primary industries would be if
preferences were substantially reduced and other measures proposed
under Article VII were found to be inadequate.

(7) However, if the Government desires any alterations to the
paragraphs in question I shall write to the appropriate United
Kingdom authorities asking that the alterations be made and that
the delegations of the other Dominions and India be informed. In
this connection I would add that your telegram arrived after the
paragraphs had been finally dealt with.

(8) With regard to your 52 [5], I did not discuss it or the
preparation of my reply [6] with anybody whatsoever except
McCarthy [7], because of the importance of preferences to his
Department, and Wheeler, who is assisting me with cables. In view
of the terms of your telegram I did not even show it to the rest
of the delegation. Neither have I been subjected to any pressure
other than the general arguments advanced at the Conference table.

These have been fully reported to you in my telegrams. Mr. Bruce
has not participated in the Conference in any way, but I have
naturally kept him informed of the progress of events.

Accordingly, I did inform him of your telegram and my reply, but
only after my reply had been despatched.

(9) With regard to the New Zealand attitude, the views expressed
by New Zealand officials have been reported in my earlier
telegrams. On preferences, the text of their final summary was
quoted in full in my 44. [8] Generally there has been a
substantial similarity in the views expressed, but the New Zealand
officials have not participated in the discussions to the same
extent as ourselves. Neither have they, possibly because of the
differences between the economies of the two countries, stressed
all the difficulties raised by us. This particularly applies to
preferences and the formula approach to tariff reductions.

(10) I have just received your official telegram 2784 [9] and
shall reply urgently. In all the circumstances, however, I am
despatching this personal telegram without alteration.