Since arrival in Washington [1] I have met and discussed the
Australian position with President Truman, Dean Acheson, Will
Clayton, Assistant Secretaries of State, Collado, Economic Chief
to Clayton, Harry White, Assistant Secretary of Treasury,
Schwellenbach, Secretary of Labour, judge Patterson, Secretary of
War, Under Secretaries of Navy Kenney and Sullivan, and Secretary
of Agriculture Clinton Anderson. I have still to see Secretary of
State Byrnes and Thomas McCabe and a few others.

From the President down I find the warmest and friendliest
feelings towards Australia and keen disposition to maintain the
closest possible relationship with Australia.

The principal subjects I have discussed with them have been Lend
Lease settlement, commercial policy and Bretton Woods. Most of the
people referred to have introduced the subject of food supply to
Europe and to India.

Lend Lease Settlement
As reported to you on the telephone I am not at all worried about
our position on Lend Lease settlement. [2] Moore reported to me
that he was satisfied with the trend of the negotiations he had
been conducting and my discussions here confirm his view. My own
opinion is that we should be able to attain our objective of a
washout. Everyone I have spoken to recognises and ha[s] generously
praised the overall Australian war effort and the contribution
made by Australia to United States Forces. Most of them have given
me assurances that there should be no difficulty in arriving at a
mutually satisfactory agreement and President Truman has stressed
to me on three occasions that if any difficulty arises I am to
carry the case to him.

In the Working Committees Moore reported that United States
officials are acting on the defensive and appear quite worried
about the United States position. There [is] infinite detail in
sorting out the whole negotiation and in the interminable costing
of individual items. It may be quite a few weeks before they have
reached t[he] stage where they have a clear picture. Moore is in a
better position than United States officials to appraise the
overall position at this stage and considers that until the
picture clears with them they will be in no position to make any
significant demands upon us. I am working closely with Moore on
these detailed negotiations.

Commercial Discussions
These will be delayed for several months and it is obvious that my
original plan to complete Lend Lease negotiations and then engage
in commercial policy discussions cannot be proceeded with and that
I will have to return to Australia after Lend Lease negotiations
[are] completed.

The delay on the British loan [3] appears to make it inevitable
that at some stage United States Government will have to postpone
discussions on account of November elections. The Senate Committee
is still investigating the loan and after this is completed it
will have to go to the House of Representatives Committee for
similar examination which is expected to be even more exacting
than the Senate Committee investigation. After this it would need
to pass both Houses. The present expectation is that it should be
approved by the end of May but it is possible that it may run into
June. The Americans would require three months after the loan is
approved before they could get down to business on trade
discussion. [4] This would land them into the middle of the
election campaign. Already they have their outriders out on the
elections. It would be unwise for Australia to attempt to enter
into negotiations before the November elections are held as the
administration would be too afraid of losing the wool producing
States if the wool duties were an issue in the negotiations prior
to the elections. The United States predicament is not dissimilar
to our own [5] and there would be a mutuality of interest in
postponing our negotiations with both the United Kingdom and the
United States until after November. Some of the above-mentioned
persons have raised with me the desirability of postponement until
November and having regard to our own position I have given
encouragement to their point of view. I did so feeling certain
that you would agree with this.

In discussions with Clayton and Acheson I raised the question of
Australian wool and was informed that although it was an extremely
difficult item they were resolved to see that something was done
and that it was the policy of the Administration to assist us in
this matter. This is very significant and having regard to their
elections I would ask you to keep this secret.

In discussions with Clinton Anderson, Secretary of Agriculture, I
again raised the question of wool duties. He referred to the great
stockpile of American wool in this country and stated he had
submitted a plan to the United Kingdom Government whereby it would
be liquidated within 18 months. It would involve prohibition on
importation into the United States of the coarser type wool for a
short period and greater importation of finer types. He further
stated that the United Kingdom Government stated the plan was
unacceptable and wanted [6] cartel to control the disposal of wool
which he stated would never have any hope of being accepted by the
United States. He said there would be great opportunity for
Australian wool in this country. He stated that their sheep
population had fallen from 540 [7] million to 38 million and under
his proposed plan it would have been certain that a number of the
uneconomic wool producing areas in the United States of America
would have gone out of production with a fall in sheep population
to 30 million but that failure of the United Kingdom to adopt his
plan would indicate that they might have to continue to bolster up
these uneconomic areas with probable gain in sheep population. He
also claimed that he had put forward the plan solely with a view
to assisting in disposing of world surplus of wool and referred to
the fact that their returned soldiers found it impossible to
obtain suitings to make clothes.

He agreed that it would be in the Australian interest to defer
consideration of wool duties until after the November elections
and assured me that they were in any case prepared to do something
substantial on wool in the way of assisting an Australian trade
negotiation. I will be seeing him again at a later stage.

I would appreciate your views on the possibility of deferment.

I appreciate that this might involve consultation with Attlee on
your part but in view of our own election I consider it would be
worthwhile for you to sound him out. In my opinion, Truman and his
Administration have agreed to number of major problems on their
hands of high political significance which will in any case make
them wary without the added distraction of a detailed negotiation
with 14 separate countries on a wide range of products which would
cause all round political anxieties within both the Administration
and the Democratic Party. If the United States Administration ask
for deferment as I feel they will at or about the time the loan
goes through, then it would be foolish for Australia to have
landed herself into Empire discussions in London before our own
election. In my opinion we would be putting ourselves into the
cart for no purpose whatsoever.

Incidentally I understand all Union leaders will be testifying
before the Senate Committee supporting British loan.

Bretton Woods
I found profound regret prevalent here especially among those
showing the greatest friendliness toward Australia that we had not
taken a decision to join. I was informed that Australian
representatives at the Bretton Woods Conference had made such
outstanding contributions to the whole plan that they had been
hoping that Australia would join and obtain an Executive
Directorship. From the way they spoke they would have supported an
Australian appointment to the Board. I mentioned the objections
which had been taken, namely-
(1) The charge that it was return to the gold standard.

(2) That it would prevent betterment of working conditions and
development of social services and welfare schemes, -and (3) That
Russia had not joined.

I was informed that the wrapping up of Bretton Woods was important
from the point of view of the United States and it was admitted
that some of the wording gave the appearance of pandering to the
gold standard but that in substance it was not so. The Treasury
Department here in particular were anxious not to do too great a
violence to that additional thought. on the other hand the United
Kingdom Government had claimed that Bretton Woods had put an end
to the gold standard for all time.

As regards the second point, it was pointed out to me that it was
the Australian Delegation to Bretton Woods that was instrumental
in having special provision made in Section 5 of Article 4 of the
Articles of Agreement whereby no objection should be taken to a
proposed change in the currency of a country because of the
domestic, social or political policies of the member proposing the
change. They also referred to the trends concerning working
conditions in this country and the establishment of a 40 hour
working week.

With reference to Russia's non-participation confidentially I was
shown the letter received from the Russian Embassy in Washington
wherein it was stated that Russia would be an observer at the
Savannah Conference. [8] It was not known there whether Russia's
attitude towards Bretton Woods was due to the trouble which Russia
was creating generally or to any particular dislike of Bretton
Woods itself. in discussions with Hie [9] and Collado who were
present at Bretton Woods Conference it was stated by them that
Russia showed every sign of being keen on the whole proposal. The
Department of State representatives rather felt that if Russia
does not participate it will be due to her general pattern and
attitude towards world affairs and her non-participation would be
based on her uncooperative attitude.

Collado in particular could not see how we could become a member
of Bretton Woods as no provision existed in the agreement for
admitting members who deferred joining at the time of the Savannah
Conference until another meeting was held which might be twelve
months hence, unless ways and means could be found at the
Conference to make special provision. He stated that the only
countries that would not be joining in membership at Savannah
would be Liberia, Haiti, Russia and Australia.

I discussed this aspect with Melville before he left for Savannah
and he stated that he would endeavour to obtain a deferment of
membership date for a period of six months.