F.E.C.122.

509. [1]

At this morning's meeting, we pressed issue to vote as instructed
in your telegram under reference. Result of voting on Australian
resolution 'that issuance of directive be postponed until matter
fully investigated and decided by F.E.C.' is as follows:

For: Australia, China, India, New Zealand, Philippines, U.S.S.R.

Abstentions: Canada, Netherlands, United Kingdom (Dening told us
last night that he had protested vigorously to State Department
about proposed directive. He had also spoken to Thai Finance
Minister and urged a very early settlement of outstanding claims
against Thailand).

Against: United States.

France did not participate in vote. Resolution was thus lost on
United States veto.

2. Following is summary of progress of meeting:

(a) New Zealand, China, Philippines and India made statements in
support of our position.

(b) United States made statement repeating its previous arguments
that Thailand and France were legally entitled to earmark gold and
stating that this matter was not one of policy, but rather of
implementation by S.C.A.P. under a supplementary directive issued
by the United States in accordance with Section I of paragraph III
of the terms of reference of F.E.C. United States also gave
answers to questions posed by Australia at last F.E.C. Meeting.

(See F.E.C. Document 343/1 sent under cover of P/L No. 493/49 of
13th September which included statement that gold for Thailand was
in respect of purchases of rice, tin and rubber.)
(c) We then made statement pointing out that this was a matter of
principle which should, pending a Peace Treaty, be decided by the
F.E.C., that F.E.C. should decide whether any countries should be
given preferential treatment in the distribution of assets in
Japan and that Thailand has not settled outstanding debts. We
noted in passing that whilst we had doubts about the legality of
French Government's tide to gold, it might be that F.E.C. would,
after mature consideration, decide that gold should be released to
France. In this event, Australian Government would be willing to
give due consideration to claims of France. We also referred to
possibility that gold might be in payment for services performed
by Australian and other allied prisoners of war in Thailand, and
moreover, that the property of Australian commercial interests in
Thailand, for instance, tin belonging to Australian mining
companies, might fall within the category of services for which
Thailand may be given payment. In conclusion, we asked for vote on
substantive questions [of whether or not] [2] directive be
reviewed to S. C.A.P., recess followed and it was clear that there
was no support for this motion, but that certain of our colleagues
would support a motion to postpone issuance of directive. We
therefore fell back on your second proposal.

(d) U.S.S.R. took line that vote at today's meeting was not
essential and apparently accused the United States of hastening
vote for political reasons. We then pointed out that we had asked
for vote today.

3. United States representative, in reply to Indian question
stated that the United States proposed to issue directive and
intended at time of issuance to release statement to press, giving
background (presumably) explaining United States position. We
suspect that story of today's meeting will be leaked and have
already been approached by press, but have given no comment.

Should we maintain this attitude to press when United States
issues its press release? [3]

4. Other questions were discussed at meeting which will be
reported in later telegram.