My immediately preceding telegram. The Prime Minister's message to
Bruce of the 5th February [1] suggests that the withholding of
Australian crossbred wool from Japan is a special ground for
criticism of United Kingdom authorities.

The position is as follows. On the 14th September, as a result of
a meeting here the previous day, Bruce reported to the Prime
Minister personally that we should be reluctant to agree to any
substantial part of the Australian crossbred dip being supplied to
Japan. [2] At that date, it will be appreciated that the United
Kingdom had not even acquired the Australian clip. At a time,
therefore, when there was no commitment on our part even to
purchase the Australian clip, it was foreshadowed that we might be
unable to committ ourselves to any sale of crossbred wool to
Japan. From that day to this, we have given no undertaking to do
so, although for a time it was thought possible for a certain
quantity of the highest grades of crossbred to be disposed of The
alarming shortage of crossbred in this country made it necessary
in December further to limit, and in January entirely to stop, any
further sales of crossbred to neutrals. We do not desire to
interfere with the January and February sales to neutrals, which
have been arranged by the Central Wool Committee, but after
February we are quite unable to allow any crossbred to be
released.

The general crossbred position was fully discussed at a meeting of
the Central Priority Organization under Ministerial Chairmanship
on the 24th January, when the total amounts available were
examined in relation to detailed estimates of the requirements of
ourselves, the Dominions, France, etc., and results of this
examination showed a serious shortage of crossbred to meet these
requirements. Requirements have, therefore, to be largely scaled
down; even then it is necessary to purchase substantial quantities
of crossbred in South America in the immediate future at high
prices and in difficult currencies. Canada is also left short of
crossbred to the amount of about 10 million lbs. (clean weight).

We feel no doubt that once they are seized of these facts, the
Commonwealth authorities and interests concerned will realise that
it would be impossible for us to entertain the suggestion that
Australian crossbred should be made available to Japan. It is true
that in spite of the difficulties a comparatively small total
quantity of crossbred stocks was set aside for certain neutral
countries in Europe from whom, however, corresponding concessions
are secured of vital interest in the prosecution of the war.

Australia has been allocated, in accordance with her requirements,
three million lbs. (clean weight) of New Zealand crossbred, in
addition to some fourteen million lbs. (clean weight) of
Australian crossbred retained for domestic consumption.