847.24/763c: Telegram

The Secretary of State to the Minister in Australia (Johnson)

387. In an aide-mémoire addressed to the Australian Minister on October 6 this Government proposed that the Government of Australia extend the reciprocal aid program to include raw materials and foodstuffs imported into the United States from Australia.38 The Australian Legation on November 5 replied in part as follows:

“The provision of reciprocal aid under the present arrangements, in conjunction with the requirements of the Australian forces and other essential commitments, is imposing such a heavy strain on Australia’s very limited resources that Australia is already faced with a serious manpower shortage which will be intensified as the Allied forces based on Australia grow and the demands under the present reciprocal lend lease agreement increase.

“After a full examination of present and prospective commitments, the Government of the Commonwealth of Australia feels that these commitments are so great and its manpower position so acute that Australia has reached the practical limits of the contribution it can make by way of reciprocal aid. The Commonwealth Government is therefore unable to agree to an extension of reciprocal lend lease along the lines proposed by the United States Government, which would commit the Commonwealth Government in principle to the provision of reciprocal aid in a new field involving an unspecified number of commodities.

“It is however recognised that circumstances may arise in which the United States Government would desire to submit a special request for a particular commodity and in such circumstances the Commonwealth Government will be prepared to consider at the time and in the light of then existing conditions the question of the supply of such commodity by way of reciprocal lend lease.”

Since the receipt of the Australian reply certain informal discussions have been held between the Australian Minister and Lauchlin [Page 202] Currie, Deputy Administrator of FEA.39 In response to a request from Sir Owen Dixon for additional information with respect to the scope of the proposed program and the contemplated procedure, Currie prepared a memorandum with Exhibits A, B, C, and D, which was handed to Sir Owen Dixon by Assistant Secretary Acheson on December 13.40 It was agreed between ourselves and Sir Owen that these documents would be merely for his own information and that we would instruct our Legation at Canberra to take the matter up further with the Australian authorities. There is quoted below the text of the memorandum in question on the basis of which please ask the Australian authorities to reconsider their reply.

For your strictly confidential information we believe that it might be most desirable for you to discuss this matter with the Prime Minister41 and with Treasurer Chifley.

Following is the text of the memorandum:

“In answer to the suggestion of the United States Government that the Australian Government extend the reciprocal aid program to include the furnishing, without payment by the United States, of those materials which are now being purchased in Australia or from Australian sources by agencies of the United States Government, the Australian aide-mémoire of November 5 indicates that the Australian Government feels that it is impossible to accede to this suggestion because existing commitments impose ‘such a heavy strain on Australia’s very limited resources that Australia is already faced with a serious manpower shortage which will be intensified as the Allied Forces based in Australia grow and the demands under the present reciprocal lend-lease agreement increase.’

“The fact that the Australian position is rested so largely on the manpower shortage suggests that the United States proposal may not have been fully understood by the Australian Government. The raw materials which would fall within the scope of the proposal are already being produced in Australia and are already being delivered to the United States pursuant to existing purchase contracts. Accordingly, the proposal involves no additional drain on Australian manpower, and in fact requires no modification whatever of existing production schedules. The only effect of the proposal would be that the Australian Government would defray the costs which are now being met through dollar expenditures made by the United States. It is clear, moreover, that acceptance of the United States proposal would not involve an unlimited commitment by the Australian Government to furnish an indefinite list of commodities or indefinite amounts. Not only does the proposal relate only to materials which form part of the United States Government purchase program, but separate requests would be presented by the United States with respect to each commodity desired; and as to each the Australian Government [Page 203] would have full discretion to grant or to decline to grant it as reciprocal aid.

“A provisional list of Australian contracts which it is hoped may be transferred to a reciprocal aid basis is attached as Exhibit A.

“A procedure is now being worked out with the British Raw Materials and Food Missions with respect to materials to be furnished by the United Kingdom, the British Colonies, and Southern Rhodesia.42 This procedure is being established in conformity with a memorandum submitted by Mr. Archer of the British Raw Materials Mission on November 5, as modified in a letter from Mr. Currie to Colonel Llewellin43 dated November 9, and Mr. Brand’s44 reply thereto of November 12. Copies of these papers are attached as Exhibits B, C, and D.45 I understand that copies of these documents have already been furnished either to the Legation or to Australia War Supplies Procurement by the United Kingdom representatives. I believe these documents will contain answers to most of the questions that you have raised.

“It will be noted that the memorandum of November 5 refers to Australia and to the other Dominions. Admittedly, the United Kingdom representatives have no authority to deal on behalf of Australia. It is hoped, however, that the procedure now being worked out with respect to the United Kingdom and the Colonies might prove acceptable to the Dominions so that a uniform policy might be applicable to all British Commonwealth areas. I suggest that it would be very advisable if the Australian representatives were to discuss the procedures which are now under negotiation with Mr. Archer, Mr. Field, and others in the British Raw Materials Mission.

“If the Australian Government should come to the conclusion that it may wish to furnish commodities on a reciprocal aid basis, it is hoped Australia will follow the course which we hope to adopt with respect to current contracts for materials from the United Kingdom areas. This contemplates an arrangement for disturbing these contracts as little as possible, and for the supplying government’s making such payments under the contract as it may be willing to assume.

“It will be noted that the British agreement contemplates that with respect to government-to-government purchases (which account for the greater part of the United States procurement programs in these areas) the arrangements go into effect as of July 1, 1943, although payment made with respect to goods delivered since that date will not be refunded. It is hoped that agreement will soon be reached to the effect that acceptable contracts for procurement by United States Government agencies from private sources will be taken over as of November 11, 1943. It is hoped that the effective date for the programs in Australia would conform to the arrangements made with the United Kingdom.

“It is suggested that the Australian Government may wish to reconsider the view expressed in its memorandum of November 5 in [Page 204] the light of the facts above set forth, and that it may come to the conclusion that it may be in a position to furnish some or all of the foregoing commodities on a reciprocal aid basis.”

Exhibit A lists our tentative public procurement program from Australia for 1944 as follows:

Beryl 250 ST. $25,000
Lead ore, concentrates & dross 20,000 ST. 1,500,000
Scrap metals 20,000 LT. 400,000
Tantalite 50 ST. 135,000
Zinc 59,000 ST. 5,547,000
Tallow & Fatty Acids 7,000 LT. 700,000
Cadmium 120,000 lbs. 50,000
Osmiridium 100 troy oz. 9,800
Benzol 1,170,000

Remaining documents are being forwarded by air mail.

For your confidential information Lord Halifax46 in a recent conversation with officers of the Department and of FEA has confirmed our previous understanding that in cases where Dominions find it financially impossible to meet total programs requested by the United States, the British Government would consider providing assistance to them.47

  1. The aide-mémoire handed to Sir Owen Dixon, Australian Minister, on October 6 indicated the deep appreciation of the United States Government for the aid thus far granted to U.S. forces in the Southwest Pacific by Australia.
  2. Foreign Economic Administration.
  3. The text of the memorandum and the substance of Exhibit A are contained in this telegram; Exhibits B, C, and D not printed (847.24/767).
  4. John Curtin.
  5. For correspondence relating to acquisition of raw materials as reciprocal aid from the United Kingdom, Southern Rhodesia, and British Colonies, see Foreign Relations, 1943, vol. iii, pp. 48 ff.
  6. Col. John J. Llewellin, Chairman, British Supply Council, Washington.
  7. Robert H. Brand, British Supply Council, Washington.
  8. None printed.
  9. British Ambassador.
  10. See memorandum by Mr. Theodore C. Achilles, September 16, 1943, Foreign Relations, 1943, vol. iii, p. 84.