MENT IS THE PROPERTY OF HIS MAJESTY'S GOVERNMENT IN NEW ZEALAND.
D.C.C.   (Supply) 2.
FINAL EDITION. °W —
22nd April, 1939.
DEFENCE CONFERENCE,  1939.
It is requested that special care may be taken to ensure
the secrecy of this document.
REPORT OF COMMITTEE ON SUPPLY.
(FINAL EDITION)
Committee; MEW ZEALAND
Hon. D.G. Sullivan - Chairman
L.J.  Schmitt Esq..
J.R. Middle ton Esq.
Colonel O.H. Mead, D.S.O.
Wing-Commander A. de T. Novill, R.N.Z.A.F.
Coriander A.B. Fanshawe, R.N.
Dr. A.R.F. Mackay
UNITED KINGDOM
Captain Y/.D. McN. Graham, R.A.
N.E. Costar Esq.
AUSTRALIA
Commander J.CD. Esdaile,R.A.N.
H.G. Nicholls Esq. - Secretary.
1. The Committee has discussed the Agenda as set out in
Paper D.C.k and has pleasure in submitting herewith its obsor
vations and recommendations.
Introduction.
2. Any figures for reserves must be based on arbitrary
assumptions.     Those made in the case of Singapore serve as a
useful guide.     These figures are set out in C.I.D. Paper No.
U60 (C) which was sent to the Prime Ministers of the Common-
wealth of Australia and Dominion of Now Zealand on the 2Uth
March, 1938.
A "period before re-provisioning11 has been calculated
for Singapore, amounting to 90 days.
In the case of Australia and New Zealand some addilrio
period should be added to allow for the greater distances
involved.
2
It is for the consideration of the Conference whether
this scale of reserves should not be still further increased
owing to the possible shortage of shipping available in time of
war to bring raw materials and general munitions to Australia
and New Zealand,     Raw materials are essential for the maintenance
of domestic industries.
3. The New   Zealand representatives stated that the
Dominion is, to a very large extent, lacking in supplies of
certain commodities essential for war, which can only be obtained
outside the country.     The acquirement of these essential stocks
is a matter of urgency, and the Committee recommends that all
necessary steps to achieve this object be taken without delay by
the New Zealand Government.
Exchange of information rc Supply Investigations.
U. The methods used in Australia and New Zealand to
ascertain the quantities of stores and equipment suitable for
service purposes and the existing and potential facilities for
local manufacture of munitions and technical equipment were
discussed generally.     It was agreed that a mutual exchange of
information would be of considerable advantage to the various
units of the Empire.   Information about these subjects, methods
and results, has not up to the present been adequately
circulated.
5, Sources of supply other than those at present being
utilized by the Empire may become of supreme importance in
3.
time of war and considerable trade to mutual advantage'may
develop in an emergency; e.g. phosphates from French possessions
in the Pacific.     Information concerning any such sources should
be exchanged in time of peace because additional trade may result
owing to the fact that commodities normally manufactured locally
may have to be imported for reserves.
6.        The following recommendations regarding methods of
exchanging information relating to potential sources of supply
are submitted:-
(a) Appointment .of liaison officers at Defence Department,
Melbourne and V/ar Office, London.     (The New Zealand
Air Department already has a liaison officer at the
Air Ministry and his services have proved invaluable.
Recent visits to the Defence Department at Melbourne
of officers from New Zealand have been of considerable
advantage.)
(b) Exchange of all reports dealing with supply questions.
(c) Exchange of progress reports on investigations in hand.
Although the reports under (b) and (c) may deal entirely
with local resources for local requirements, it is considered
that such information would often reveal points worthy of con-
sideration in other parts of the British Commonwealth,
Exchange of Information re Wartime Requirements.
7-        Apart from the obvious advantages of knowing each other's
wartime requirements of munitions and equipment, it is most
advisable that information should be available as to requirements
of raw materials and food supplies and the form in which they are
desired.     For example, it is understood that the United Kingdom
may need quantities of tinned meat far exceeding peacetime
requirements.     New Zealand would no doubt be willing to supply
and so relieve the problem of cool storage for moat, but unless
adequate stocks of tin plate were either in New Zealand or made
available, the output would be seriously restricted.     The New
Zealand Government has purchased a reserve stock of tin plate
sufficient for one year's peace-time output of tinned meat.
(12,000 cases = 9,U00,000 16-oz. tins).   This reserve would tin
only a small proportion of the possible output in the first
year of war.
4.
8. The requirements of the Imperial Government in time
. of war may call for a considerable adjustment in the quantities
of various classes of meat normally shipped.     It may be found
that a proportion of the refrigerated space utilised for lamb
shipments under normal circumstances, could in time of war be
better utilised for other classes of meat.     Correspondence is
being exchanged with the United Kingdom about this matter.
9. It would be advantageous to know whether the United
Kingdom would require in time of war the total wool clip of
the Dominions as an increased demand from other countries may
be anticipated.     So far no indication has been given of the
United Kingdom requirements in this connection.
10. So far as the supplies for Fiji are concerned, the
Committee would stress the importance of the peacetime exchange
of information regarding wartime requirements.     It is under-
stood that certain plans have been discussed by the Fijian
authorities regarding supply in war and the co-operation of
Australia and New Zealand will be greatly facilitated if re-
quirements arc made known in peace time.
11. From the foregoing it will be realised there is much
to be gained by the free exchange in time of peace of informa-
tion regarding probable v/artime requirements. Although
naturally exact information is neither expected nor sought, an
estimate will considerably assist in planning wartime arrange-
ments.
The extent to which tiic productive resources of Great
Brit-air, are able to fulfil requisitions from Australia
and New Zealand, after providing for United Kingdom
requirements.
12. The United Kingdom would, after the outbreak of war, do
everything in its power to supply requirements.     In the early
days of a war, however, it v/ould not be possible at present to
supply the majority of items covered by the term "general
munitions".
5.
13.       No war potential has been so.t up in the United Kingdom
to meet the war requirements of Australian and New Zealand
Forces.
11*.       If the Australian and New Zealand Governments wish to
ensure that their munition requirements are met in war from
the United Kingdom, without long delays, it would be necessary
in peace to "form a definite estimate of what these requirements
are likely to be.     In addition it might be necessary for the
Governments of Australia and New Zealand, in co-operation with
the United Kingdom Government, to place the necessary education-
al orders in peace.     "Dormant" orders for requirements after
the outbreak of war should be placed without delay.
15. Nothing can be done in the United Kingdom without
definite concrete demands, so that the sooner firm orders can
be placed for immediate requirements the sooner will the
material needed be received.     In any case the time lag must
now be considerable.
16. With regard to immediate and wartime requirements, any
arrangements it might be found possible to make for the supply
of munitions or other equipment from the United States of
America would obviously ease the situation.
17. In Canada, South Africa and India, armament industries
are being built up, but it would be unwise for Australia or
New Zealand to rely on these sources during the critical period.
The capacity for production and the types of equipment available
in Canada, South Africa and India arc strictly limited, but
these sources should not be disregarded as potential sources
of supply.     In any event, firm demands would have to be
placed without delay.
The extent to which the productive resources of
Australia, after fulfilling local requirements, may
bo able to fulfil requisitions made by New Zealand.
18. The capacity of Government factories and civil industry
at present being organised in Australia is based on war require-
ments for Australia only.     Therefore to supply New Zealand's
6.
war needs fror.i Australia, it would be necessary to create
additional production capacity.     The actual provision of such
additional capacity docs no* in itself present any difficulty,
but it would take approximately two years.
19. It is impracticable for Australia to arrive at any
decision on the question of supplying New Zealand war require-
ments until the desires of the New Zealand Government arc known.
If New Zealand intends to rely on Australia for both peace and
war requirements, it will be necessary for Australia to have
detailed information of such requirements, and for the two
countries to decide the manner in which any scheme for the
provision of the necessary additional production capacity is
to be financed.
20. With regard to immediate requirements, the present
Australian production capacity is fully occupied with her own
needs, but some improvement can be expected about the middle of
19^+0, if the annexes now being established are utilised for
peacetime production.     It v/ill be necessary for Australia to
know the details of New Zealand's immediate requirements before
any decision can be reached as to what extent it is practicable
to meet them, having regard to the position in Australia.
21. Any arrangements which could be made between the Common-
wealth of Australia and Dominion of New Zealand for mutual
assistance in regard to their respective requirements would be
of great value to the United Kingdom.
Methods of co-ordination resources of Australia and
ITew Zealand for the vur-orc of -
(a)    Reducing Shipping Demands on the United Kingdom.
22. In order to make the maximum use of available supplies in
the Southern Pacific and to reduce demands on shipping, it is
essential to ensure a complete exchange of information on the
individual resources of the Dominions and the British possessions
in this zone.     Any reduction which can be effected will be
dependent upon the capacity of each Dominion to produce cither
7.
raw material or fabricated articles required by the other
Dominion. This necessitates the constant' interchange of
information in time of peace regarding such production.
(b)   Formulating a policy.for the manufacture of
munitions and equipment.
23.       The United Kingdom delegation expresses the view that
the better provision that it may be found possible to make for
the manufacture of equipment of all kinds in Australia and New
Zealand, the more easily will their wartime problems be solved.
The New Zealand members pointed out that if any armament produc-
tion capacity were to be inaugurated in New Zealand its creation
must depend upon the provision of basic industries, such as an
iron and steel industry.     It is considered that the capacity
of the Dominion of New Zealand for the manufacture of equipment
should be fully explored;   the munitions output of the Common-
wealth of Australia should be utilized as far as possible for
the supply of equipment which it is not practicable to produce
in the Dominion.     At the same time a survey of the industrial
capacity of the Dominion of New Zealand should indicate the
possibility of manufacturing certain items of equipment under
conditions of war emergency which it may not be reasonably
economical to produce in time of peace.     This necessitates the
preparation of plans, the maintenance of drawings and technical
data, and the placing of Educational Orders.
(c)   Developing the u3e of Substitutes.
2k.       It is considered that the possibilities of developing the
use of substitutes will be confined almost entirely to raw
materials;   it is therefore suggested that investigation and
exchange of information might be undertaken by the appropriate
Departments in Australia and New Zealand.
25.      A certain amount of improvisation appears possible in
the provision of the requirements for the Armed Services. The
degree to which this can be extended is dependent upon detailed
8.
information in regard to those munitions which could be
exchanged between the Armed Services of Australia and Now
Zealand.
( d)    Adopting Uniform Standards of Equipment, etc.
26.       Subject to the necessity for purchases, made in neutral
countries, to fulfil immediate requirements, the policy of
maintaining uniform standards of equipment is strongly support-
ed.     This can be achieved only by consultation, prior to
manufacture, regarding articles of equipment required for use
by both Australia and New Zealand, and agreement in respect
of type and specifications of such articles.
The -practicability of establishing Imperial Reserves
of 5f:ui.ont in the Dominions to :.:>;et the requirements
of reinforcements despatched to the South Pacific.
27-       Neither reserves of equipment nor the capacity for
manufacturing munitions are at present available to make the
establishment of Imperial reserves of equipment in the South
Pacific a practical proposition.
28. Imperial reserves of equipment arc held in Singapore
for the use of Naval, Military and Air forces stationed there
in time of war.     Co-operation with Australian and New Zealand
forces in the matter of the provision of equipment is of great
importance and any action which can bo taken by the Governments
of Australia and Nov/ Zealand to assist the movement of United
Kingdom or Dominion Naval, Air and Land forces in the South
Pacific v/ould bo highly desirable.
29. Any equipment provided for a force intended to protect
Fiji or elsewhere must necessarily reduce the mobilisation
stocks available in Australia or New Zealand.
30. If it is decided that forces should be prepared in
Australia or New Zealand for the defence of Imperial interests
in Fiji or other Pacific territories a clear statement as to
the size and composition of such forces should be made at an
early date in order to permit of the preparation in the
United Kingdom or elsewhere of the necessary equipment for
the maintenance of such a force.
The Possibility of securing equipment, munitions, etc.,
in completed state from neutral countries - chiefly the
United States of America.
31-       Any arrangements which it might be found possible to
make for the supply of munitions or other equipment from the
United States of America would obviously ease the situation
in regard to immediate requirements.     The difficulty at present
caused by the Neutrality Act should be appreciated, as also
should be the effect on the standardization of Imperial equip-
ment.     Considerable assistance can be given by the United
Kingdom and Australian Governments as to the possibilities of
purchase in the United States and this advice would be given
gladly by both Governments.
Methods of securing supplies of raw materials
and non-military stores from neutral countries.
32.      This would appear to concern all portions of the British
Commonwealth and envisages the employment of an organisation to
avoid competition in buying for Empire, and, may be, Allied,
requirements from neutral countries.     This may mean two buying
organisations, one in the United States of America and one in
London, the latter to deal with purchases from neutral countries
in Europe.     It would appear that in peace, preparations for
such a scheme could be made by the various Dominions listing
those commodities, the supply of which in war may be interrupted
or, if normally obtained from enemy countries, stopped altogether.
33-       This proposal would entail a survey by each Dominion of
importations from potential enemy countries, and where local or
Empire supplies could not be substituted, requirements should be
submitted to the suggested central organisation.     Having ascer-
tained the available supplies from neutral countries, the suggested
organisation would indicate the quantities allocated to each
Dominion.     While this may appear a formidable task, if, as is
suggested, the preparatory work were undertaken in peace tine,
10.
it would considerably facilitate supply in war and obviate
confusion and uneconomic competition between members of the
British Commonwealth,     (it is understood that there is
already a buying organisation in the United Kingdom which
might be extended to cover the requirements of the Dominions.)
Methods of Securing supplies of raw materials
and non-military stores within the Empire.
3k.        It is presumed that the Dominions in making supply
preparations for war can rely on the normal peacetime supplies
from Empire sources to Empire markets being continued in war,
subject of course, to dislocation of shipping.     Should any
part of the Empire have cause to consider shutting off such
supplies in war the earliest advice should be given.     It is
desirable that proposals by any unit of the Empire for a
change of source of supply on the outbreak of war from parts
of the Empire to neutral countries or the extensive use of
substitutes (such as margarine for butter) should be fully
discussed with the Dominions concerned.
35.       In order to overcome any serious dislocation of
shipping, very heavy capital outlay on increased cool and
other storage facilities will be necessary tut if there were
any doubt as to the necessity for the continuation of supplies,
there would be some diffidence in making preparations to ensure
the export in war of produce to Dominions and the United King-
dom.
36*       It would also appear essential for the Dominions to be
kept informed regarding the proposals of the Admiralty for the
requisitioning of shipping insofar as these proposals may
affect each part of the Commonwealth.     The requisitioning of
ships in the Australia-New Zealand trade and the New Zealand
inter-Island Ferry Service — because they are registered out-
side the Dominion — would have an important bearing on the
shipping facilities of New Zealand in time of war, and the
11.
fullest information would appear to be desirable to enable
the necessary allocation of ships to be made.
Comment on the Economic Aspect.
37.       It cannot be too strongly stressed that the mainten-
ance of overseas trade is vital to Australia and New Zealand
and egually important to the United Kingdom.     Any prolonged
interruption of shipping must have serious repercussions and
would, in particular, materially reduce New Zealand1s
defensive powers.