Foreign Relations of the United States: Diplomatic Papers, 1942, General; the British Commonwealth; the Far East, Volume I

811.24/1633

Memorandum of Conversation, by Mr. Theodore C. Achilles of the Division of European Affairs

[ Washington ,] July 14, 1942.

Participants:	The Australian Minister and Mr. Brigden;
	The New Zealand Minister and Mr. Cox;49
	Sir Frederick Phillips and Mr. Bewley, British Treasury;
	Mr. F. W. Ecker, O. L. L. A.;50
	Mr. Acheson;
	Mr. Achilles.

The British, Australian and New Zealand representatives came in at their request to discuss reciprocal lend-lease and to present revisions, based on instructions from London and Canberra, of the draft British and Australian notes.

Sir Frederick said that the revised British draft contained only minor amendments which he thought were principally of a drafting nature. He said that London attached great importance to the exchange of notes from the point of view of publicity.

Sir Owen Dixon said that the revised Australian draft had been prepared as the result of conferences between the Prime Minister, Treasurer, and Attorney General. He said that his Government attached considerable importance to provision for the protection of the Australian foreign exchange position but believed that this should be dealt with separately from the exchange of notes on reciprocal lend-lease. He said his Government did not like paragraph 7 of the American draft, providing that aid would be provided on the same terms to the forces of such of the other United Nations as might enter into similar arrangements.

Sir Frederick said that London also suggested the omission of this paragraph as it would conflict with United Kingdom’s existing arrangements with Canada and the U.S.S.R.

Sir Owen said that Canberra also wished to omit paragraph 4 (d) (covering territory neither Australian nor American) and to qualify paragraph 3 (financing).

Mr. Nash said that his Government had obtained assurances from London that it would be released from such contracts to supply commodities to the United Kingdom as might prevent New Zealand from extending reciprocal aid to American forces. His Government was still seeking a triangular Anglo-American-New Zealand Lend-Lease arrangement. As he would be leaving for London at the begining of next week his Government wished signature on the New Zealand exchange of notes to await the outcome of his talks in London. He said that his instructions contained five principal points:

1. That New Zealand would continue to supply anything desired by our forces in New Zealand from New Zealand production after civilian needs had been met;

2. Anything provided to our forces outside New Zealand in the South Pacific (Ghormley⁵¹ command) would be sold to us;

3. Articles imported by New Zealand from any source, including Australia, would be sold to us;

4. Articles made available to our forces in Australia or other areas in the South West Pacific (MacArthur⁵² command) would be made available against a “tentative United States liability for dollars”;

5. All facilities already built by New Zealand outside New Zealand and turned over to our forces would be made available on reciprocal lend-lease.

He said his Government also wished the question of the application to New Zealand of the Agreement of February 23 left in abeyance pending his talks in London.

Sir Frederick said that wheat might represent a special case. The Canadian Government had given the United Kingdom a billion dollars, much of which had been used for the purchase of Canadian wheat. If this wheat were given to American forces he thought the Canadian Government might raise a question. Mr. Acheson did not think so.

Mr. Brigden raised the question as to articles, parts of which were imported, citing the case of trucks where the chassis were bought in Canada for dollars and the bodies put on in Australia. He said his Government would like reimbursement in dollars for such components that had been paid for in dollars. Mr. Acheson thought that bridge might be crossed when we came to it. He suggested that this exchange be kept as simple as possible and that such components might later be replaced under direct lend-lease or other measures taken to help the Australian exchange position.

Sir Owen said that reciprocal lend-lease might curtail Australian exports, although the effect in this respect would probably be small due to the shortage of shipping.

Mr. Nash also feared that a reduction in New Zealand exports would result in a shortage of sterling. He said that New Zealand at present had better sterling position than at any time since 1937. Its imports from the United Kingdom in 1941 being 50 million pounds and its exports to the United Kingdom 68 million pounds.

Sir Owen inquired as to the status of the Curtin–MacArthur–Wasserman Agreement on Lend-Lease procedure.⁵³

Mr. Nash said that New Zealand would like to conclude a similar procedural arrangement. He referred to the fact that he had recently signed a check for $522,000 to close a United Kingdom contract for ammunition for New Zealand which would now probably be substantially used by American troops. He hoped and understood that no more such contracts were outstanding. Sir Frederick understood that this was the case.

The question of exchange of notes with South Africa was raised and it was agreed that such an exchange should be left in abeyance pending consummation of the British, Australian and New Zealand exchange.

49. Oscar Cox, General Counsel of the Lend-Lease Administration.
50. Office of Lend-Lease Administration.
51. Adm. Robert L. Ghormley, in charge of U.S. Navy in Solomons area.
52. Gen. Douglas MacArthur, Commander in Chief of Southwest Pacific Area.
53. Procedure for requisitioning finished munitions and war materials for all United Nations forces in Australia agreed to by Australian Prime Minister Curtin, General MacArthur, and Mr. W. S. Wasserman, Chief of U.S. Lend-Lease Mission to Australia.