Your report of 23rd June and telegrams 2300 and 2316 on Sterling
Balances. [1]

1. I agree that Rowe-Dutton proposals are not acceptable even as
basis for discussion. Australian Government appreciates United
kingdom difficulties and is prepared to be reasonable but cannot
agree to being pushed around.

2. As I told Dalton if United Kingdom unable to concede agreement
satisfactory to us they must act unilaterally.

3. Any arrangement agreed to by Australia must have sufficient
flexibility to preserve Australia's independence in control of its
balance of payments and trade policy. We would, of course, be
reasonable and take account of U.K. position.

4. Your outline proposals provide a satisfactory basis for
negotiation on foregoing principles.

5. Immediately following telegram gives detailed comments from
Treasury and Bank.