1. I have been in touch with Moore and it is proposed that I sign
agreement as set out in paragraph two. [1]

2. Full agreement as now recommended by Moore is as follows:

Begins-

Agreement Between the Government of the United States of America
and the Government of the Commonwealth of Australia on Settlement
for Lend Lease Reciprocal Aid Surplus War Property and Claims
The Government of the United States of America and the Government
of the Commonwealth of Australia (hereinafter referred to as the
Commonwealth of Australia) have reached agreement as set forth
below regarding settlement for Lend Lease Reciprocal Aid and
surplus war property located in Australia and for the financial
claims of each Government against the other arising as a result of
World War II. This settlement is complete and final. Both
Governments in arriving at this settlement have taken full
cognizance of the benefits already received by them in the defeat
of their common enemies, and of the aid furnished by each
Government to the other in the course of the war. No further
benefits will be sought as consideration for Lend Lease Reciprocal
Aid and surplus war property or for the settlement of claims or
other obligations arising out of the war, except as herein
specifically provided.

1. (A) The term 'Lend Lease article' as used in this agreement
means any article transferred by the Government of the United
States under the Act of March 11, 1941. (i) to the Commonwealth of
Australia, or (ii) to any other Government and retransferred to
the Commonwealth of Australia.

(B) The term 'Reciprocal Aid article' as used in this agreement
means any article transferred by the Commonwealth of Australia to
the Government of the United States under Reciprocal Aid.

2. In recognition of the mutual war-time benefits received by the
two Governments from the interchange of Lend Lease and Reciprocal
Aid neither Government will make any payment to the other for Lend
Lease and Reciprocal Aid articles and services used in the
achievement of the common victory.

3. The Commonwealth of Australia in discharge of its pre-existing
commitment to compensate the Government of the United States for
the post-war value of machine tools transferred during the war to
the Commonwealth of Australia by the Government of the United
States under Lend Lease and in consideration of the post-war value
of the other capital equipment transferred during the war under
Lend Lease including the non-combat aircraft and spare parts
therefor described in the annexe to paragraph 8 (A) hereof and in
order to further educational and cultural relationships between
the two countries by means of Scholarships or otherwise in a
manner mutually agreeable will pay to the Government of the United
States the sum of [$]27,000,000 as follows-
(A) [$]20,000,000 in United States dollars within ninety days from
the effective date of this agreement, and
(B) [$]7,000,000 by any of the following methods or any
combination thereof designated by the Government of the United
States (employing the rate of exchange between United States
dollars and Australian pounds now in effect).

(i) By delivery to the Government of the United States by the
Commonwealth of Australia of title to real property and
improvements of real property in Australia, as selected and
determined by agreement between the two Governments aggregating in
value not more than [$]2,000,000.

(ii) By establishment of a fund in Australian pounds for
expenditure by the Government of the United States, in accordance
with agreements to be reached between the two Governments for
carrying out educational and cultural programmes of benefit to the
two countries, or
(iii) In the event that, after three years from the date of this
agreement, the two Governments should mutually agree that the
purpose described in sub-sections (i) and (ii) above cannot be
carried out to the full extent now contemplated, any residue will
be paid by the Commonwealth of Australia in United States dollars.

4. (A) The Commonwealth of Australia hereby acquires, and shall be
deemed to have acquired as of September 2nd, 1945, full title,
without qualification as to disposition or use, to all Lend Lease
articles in the possession of the Commonwealth of Australia, its
agents or distributees, on September 2, 1945, and not subsequently
returned to the Government of the United States, other than Lend
Lease articles on that date in the possession of the armed forces
of the Commonwealth of Australia, but including the non-combat
aircraft and spares described in the annexe to this agreement.

(B) The Government of the United States agrees to complete as
early as possible the transfer (which term, except as hereinafter
provided, shall include delivery aboard ocean vessel in a United
States port) of the articles selected by the Commonwealth of
Australia which were covered by Lend Lease Requisition filed by
the Commonwealth of Australia with the United States Foreign
Economic Administration and which were under contract, or were
completed, but had not been transferred, on September 2nd, 1945,
and such articles and services as have been designated by
agreement between the two Governments for inclusion in the Lend
Lease pipeline of the Commonwealth of Australia. Such transfer
will be made in the quantities and according to the specifications
and other conditions, except as to time of delivery, set forth in
the covering Requisitions, to the extent that such articles are or
will be available to the Government of the United States for
transfer to the Commonwealth of Australia. Title to the articles
covered by this paragraph shall pass to the Commonwealth of
Australia immediately upon loading of the articles on board ocean
vessel in a United States port, provided the risk of loss not
recoverable from the supplier, carrier or other third party, shall
be assumed by the Commonwealth of Australia upon shipment from the
factory or other premises of the supplier. Title to any articles
that shall not have been loaded on board ocean vessel in a United
States port prior to midnight on July 31st, 1946, or two months
after receipt by the Commonwealth of Australia of notice of
availability, whichever is later, shall be deemed to have been
transferred at such later date, and thereafter the Commonwealth of
Australia shall be responsible for storing and moving such
articles within the United States and for delivering such articles
aboard ocean vessel in a United States port. The Government of the
United States will pay the cost of ocean transportation to
Australia on United States flag vessels only of such of the
articles covered by this paragraph as were loaded aboard ocean
vessel berthing in United States ports prior to January 1, 1946.

5. The Government of the United States hereby acquires, and shall
be deemed to have acquired as of September 2nd, 1945, full title,
without qualification as to disposition or use
(a) to all Reciprocal Aid articles transferred to the Government
of the United States and not subsequently returned to the
Commonwealth of Australia or lost, destroyed or consumed, other
than Reciprocal Aid articles which on that date were in the
possession of the armed forces of the Government of the United
States, and
(b) to all Reciprocal Aid articles transferred to the Government
of the United States between September 2nd, 1945 and December
31st, 1945, both dates inclusive and not subsequently returned to
the Commonwealth of Australia.

6. (a) The Government of the United States, with respect to Lend
Lease articles (other than those described in the annexe to this
Agreement) and the Commonwealth of Australia, with respect to
Reciprocal Aid articles, reserve a right to recapture,
respectively, at any time after September 1st, 1945, any such
articles which, as of date upon which notice requesting return is
communicated to the other Government, are in the possession of the
armed forces of the other Government, although neither Government
intends to exercise generally this right of recapture, except that
the Commonwealth of Australia will return to the Government of the
United States all vessels of the United States Navy transferred
under Lend Lease and in the possession of the Commonwealth of
Australia on September 2nd 1945. In respect of cases where either
Government wishes from time to time to exercise this right of
recapture, each Government will give reasonable notice of its
intention and will provide full opportunity to the other
Government for discussion of that Government's need for the
articles in question, without limiting the right of recapture.

(b) The Commonwealth of Australia may, without restriction, divert
any Lend Lease articles now held by the armed forces of the
Commonwealth of Australia to any uses in or outside Australia, but
will not transfer [without the prior consent of the Government of
the United States] [2] and without payment of any proceeds to the
Government of the United States, any Lend Lease articles held by
the armed forces of the Commonwealth of Australia in the
categories of arms, ammunition and other lethal weapons, to any
third country.

(c) The Government of the United States may, without restriction,
divert any Reciprocal Aid articles to any uses in or outside the
United States, but will not transfer, without the prior consent of
the Commonwealth of Australia and without payment of any proceeds
to the Commonwealth of Australia, any Reciprocal Aid articles held
by the armed forces of the Government of the United States in the
categories of arms, ammunition and other lethal weapons, to any
third country.

7. (a) The Commonwealth of Australia hereby assumes responsibility
for the settlement and payment of all claims against the
Government of the United States or members of the United States
Armed Forces arising from acts or omissions occurring before June
30th, 1946 in the course of military duties of members of the
armed forces of the Government of the United States in Australia.

(b) Financial claims between the two Governments where the
liability for payment has heretofor been acknowledged, and the
method of computation mutually agreed, are not covered by this
settlement as they will be settled in accordance with such
arrangements. The following are examples of such claims which will
be dealt with in accordance with procedures already established or
to be established after appropriate discussion
(i) claims arising out of cash reimbursement, Lend Lease
requisitions filed by the Commonwealth of Australia, (ii) claims
covered by the 'memorandum concerning disposition of and payment
for cargoes carried on twelve Dutch ships diverted to Australia'
and 'memorandum concerning disposal of and payment for cargoes
carried on certain United States ships diverted to Australia' both
dated December 20th, 1944.

(iii) obligations or claims arising out of the 'knock-for-knock'
agreement of March 8th, 1945, covering the mutual waiver of, and
legal aid in connection with, maritime claims. (iv) the obligation
heretofor assumed by the Commonwealth of Australia in connection
with silver transferred by the Government of the United States
under Lend Lease.

(c) In consideration of the mutual undertakings described in this
agreement, and with the objective of arriving at as comprehensive
a settlement as possible and of obviating protracted negotiations
between the two Governments, all other financial claims whatsoever
of one Government against the other which arose out of Lend Lease
or Reciprocal Aid, or otherwise arose on or after September 3rd,
1939 and prior to September and, 1945, out of or incidental to the
conduct of World War II, and which are not otherwise dealt with in
this agreement are hereby waived, and neither Government will
hereafter raise or pursue any such claims against the other.

8. (a) The Government of the United States in partial
consideration of the payments to be made by the Commonwealth of
Australia pursuant to Section 3 of this agreement, agrees to
transfer property, selected by mutual agreement, located in or
outside Australia, heretofore or hereafter declared to the office
of the Foreign Liquidation Commissioner, United States Department
of State, as surplus to the requirements of any Department or
Agency of the Government of the United States, of a total value
aggregating [$]6,500,000 computed at prices to be mutually agreed.

There shall be included in the property covered by this paragraph
(i) All property so declared as surplus included in sales or
agreements to sell heretofore entered into between the two
Governments, and (ii) all such property included in sales or
agreements to sell to any firms or individuals in Australia or in
Australian territories, heretofore or hereafter made by the
Government of the United States in respect of which import
licences have been or may hereafter be issued by the Commonwealth
of Australia and the contract value of the property included in
such sales or agreements to sell shall be taken into consideration
in computing the total value of surplus property transferred
hereunder. This agreement shall govern in any case in which the
terms hereof are in conflict with the terms of any of the
agreements described in paragraphs (i) and (ii) above.

(b) The amounts paid and to be paid to the Government of the
United States for the property included in the sales and
agreements to sell described in paragraphs 8(a)(i) and 8(a)(ii) of
this agreement shall, when paid, be treated as payments by the
Commonwealth of Australia in partial discharge of the obligation
of the Commonwealth of Australia assumed in Section 3 of this
agreement to make payments to the Government of the United States.

(c) The Commonwealth of Australia agrees that it will not cause,
and will use its best endeavours to prevent, the exportation to
the United States, its territories or possessions, of any of the
property covered by paragraph (a) above in the same, or
substantially the same form, if such property was originally
produced in the United States and is readily identifiable as such,
and agrees that it will not resell any of such property to any
person, firm or Government for the purpose of export to the United
States, its territories or possessions contrary to any statute or
regulation of the Government of the United States as notified by
the Government of the United States.

9. Both Governments, when they dispose of articles acquired
pursuant to Sections 4, 5 and 8 of this agreement will use their
best endeavours to avoid discrimination against the legitimate
interests of the manufacturers or producers of such articles or
their agents or distributors in each country.

10. This agreement shall take effect on the date of signature.

Signed at Washington, in duplicate, this Fifth Day of June, 1946.

(Provision for signatures.)

ANNEXE Aircraft.

NUMBER TYPE
109 C47 (Dakota)
11 PBY (Catalina)
41 PB2B(Catalina)
Spares. 164 engines for Dakota C47 aircraft.

127 Dakota propellers,
Spare parts of 382 Dakota engines,
Airframe spares for 48 Dakota aircraft.

136 Catalina engines,
68 Catalina propellers and spare parts for
272 Catalina engines, airframes spares for
21 Catalina aircraft.

United States Lend Lease content of 29 PB2B aircraft obtained from
Canada.

[matter omitted] [3]

7. In accordance with the terms of our telephone conversation
would appreciate your earliest views and direction and if you
approve will sign the agreement immediately. The present
arrangement is, that if you agree, signing should take place as
soon as possible. [4]

EVATT