No doubt you will have read Cable No. 706 which Mighell sent to
Chifley either late on Friday or first thing Saturday morning. [1]
I drafted it on Friday afternoon in a hurry from notes I took at
the meeting. I believe it covered every important aspect dealt
with by Cripps. You will also have received the telegram setting
out my personal comments. I had prepared a few comments on
atmosphere, to be included in 706 but Mighell reserved this for a
personal air mail note to the Prime Minister.

The meeting of the High Commissioners took place at the C.R.O.

Australia was represented by Mighell due to Beasley's absence in
Geneva. The Canadian High Commissioner was also temporarily absent
in Ottawa and LePan [2] represented Canada. South Africa, Eire,
New Zealand, Southern Rhodesia, India and Pakistan were also
present. The High Commissioners or other deputies sit at the
centre table and advisers form a second ring round them. Noel-
Baker, Secretary of State, took the chair with Cripps beside him.

Cripps was supported by Sir Henry Wilson Smith [3] and Grant. [4]

Baker immediately handed the meeting over to 'Austerity' Cripps
who is austere in both manner and the number of words he uses.

While he is reasonably fluent I gathered the impression he was
taking particular care in the choice of his words. He spoke for
more than half an hour, answered a few questions and then dashed
away. Noel-Baker then took over for a further ten minutes but the
subject was obviously outside his field and the meeting collapsed.

Peter Heydon and others said after the meeting that it was one of
the best meetings of High Commissioners they had attended. If it
was I am most disappointed. The whole atmosphere was comparable to
meetings of S.A.S.C. [5], in other words Commonwealth Governments
apparently accept whatever the United Kingdom tells them, ask a
few not too relevant questions and then the meeting dissolves. The
United Kingdom is frightened of treading on Dominion corns and
each Commonwealth Government would seem over-conscious of its own
status or just plain uninterested in anything outside relations
between itself and the United Kingdom.

There was a tenseness about the atmosphere which was by no means
due to Cripps's manner. As Mighell said to me afterwards, it was
not an atmosphere which encouraged you to ask questions.

Norman Robertson, High Commissioner for Canada, had had a private
chat with Cripps before he returned home and Mighell suggested
that if Australia wished to unearth what the United Kingdom was
thinking, he should do likewise. I pointed out that such a
discussion would probably touch pretty closely on policy matters
which, in view of Chifley's instructions, might prove
embarrassing. I shall, however, be having another yarn with Grant
this week and may perhaps obtain some hints as to what is in the
United Kingdom's mind.

Australia has been requested 'to examine as a matter of urgency'
the possibility of 'intensifying measures to secure significant
dollar economies'.

One useful bit of information would be to know-
(a) What restrictions other Commonwealth Governments have imposed
up to date.

(b) Their reaction to the latest request.

I may be able to obtain some light on (a) but of course (b) is
outside my field.

Cuts have already been forced upon India and Pakistan by the
United Kingdom Mission. The net use of United States dollars by
these two Dominions during each of the first and second halves of
1947 was $96 million. In the first half of 1948 they have been
limited to $52 million for both United States and Canadian (say a
cut of more than 50%-mainly foodstuffs, but they are obtaining
rice from Burma instead of the Philippines and also grain from
Australia).

In the Sterling Area as a whole (excluding UK and South Africa)
net use of both United States and Canadian dollars was about $700
million in 1947 (I am guessing South Africa's deficit with Canada
at $70 million-it was $330 million with the United States).

According to the United Kingdom 'Memorandum on 1948 Dollar
Position' the rest of the Sterling Area (excluding South Africa)
dollar deficit in 1948 is estimated at $300 million, or a cut of
about 60%. This of course may not be achieved.

The Bank of England estimates Australia's net use of United States
dollars (excluding newly-mined gold) at $153 million in 1947. If
we add to this $50 million for our Canadian deficit it gives a
total of just over $200 million. My estimate of our deficit with
the dollar area in the calendar year 1948 is between $100 and $110
million. Are we playing the game with the Sterling Area?
There is one way of obtaining an indication and that is to examine
the nature of the dollar restrictions imposed by other members of
the Sterling Area and to make our own assessment of their relative
severity in relation to the essential requirements of their
economies. For some time I have been thinking it would be
worthwhile for someone to turn over the papers of the most
authoritative daily in Ottawa, Dublin, Wellington and Salisbury
from September, 1947 onwards, to compile a record of announced
decisions to impose dollar restrictions. I had hoped to avoid the
necessity for this laborious task but I now commend it for your
consideration.

Britain is certainly facing a crisis and it will be a long term
crisis. There are however, one or two salient points to remember.

Pending a decision about Marshall Aid the United Kingdom Cabinet
has decided not to cut any dollar imports that would reduce
employment in this country. Cripps stated, however, that any
reduction in the import of raw materials from North America below
their existing level, would result in unemployment. Shortly
afterwards he stated that supplies of metals to consumers were
being cut by the equivalent of 5% of dollar imports.

Another point, the United Kingdom requests urgent action (i.e. to
maintain reserves during the period before Marshall Aid is
received). Any immediate action taken by Australia will not be
effective for at least three months when Marshall Aid is likely to
be on the way. To my mind the United Kingdom would have done
better to emphasise the urgency of the long term problem.

One suggestion. No-one can say this country is starving,
nevertheless it is very true that they are undernourished, I can
speak from my own experience. Last weekend and the early part of
the week the maximum temperature seldom rose for long above
freezing point. I shivered the whole time because I had no
resistance and my efficiency dropped at least 50%. Other people in
Australia House commented, without being asked 'I cannot work in
this weather'. People over here are filling up on bread (limited,
but ample) and potatoes (and Cripps issued a warning that lack of
potato supplies might cause a reduction in the ration). Everything
we can do to increase the supply to this country of foodstuffs
with the correct nutritional value is worth dollars. Meats, fats
and sugar are badly needed. The scheme of meat rationing we have
in Australia was known to be relatively ineffectual and open to
the greatest abuse before it was introduced but it was believed it
would save enough meat in the circumstances. We might consider
introducing at once a system of consumer registration for meat to
operate within a radius of five miles of all towns with a
population in excess of say 2,000 or 5,000 and police it
effectively.

Nutritional requirements in Australia would probably prevent us
cutting our butter ration which is administered with reasonable
efficiency, because the ingredients of margarine are in world
short supply. Sugar rationing might be reintroduced and the ration
fixed at 3/4 lb. per head per week. As a sop, tea rationing might
be abandoned if subsides can stand it. Tea consumption habits have
changed during the past six years and there might be little
increase in total consumption. Fruit and root vegetables are sadly
lacking from the diet here but I have some doubt as to how many
people would buy the fruit if it were available unless prices were
reduced. Meat and sugar are what the people want.