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"That in our opinion County Durham should again be considered as a suitable place to which business should be transferred because of the available labour supply, and that the present line of demarcation as to vulnerability should be reviewed.

The Industrial Capacity Committee considered the position further on 10th February. They felt that due weight must be given to risks of invasion and to other strategical conditions, but that, on the other hand, the present stage of development of war industry makes it most desirable that the full use should be mr.de of labour and industrial capacity wherever possible, and that

strict inborpretation of paragraph 4 of the report set out an C.0.S. (40) 336 would certainly restrict the use of

bour and capacity in such places as County Durham and Scotland ton extent which is undesirable from the point of view of developing war production.

The Committee, therefore, wish me to suggest that Production Departments should be free to use reasonable discretion in the location of War Production, bearing in mind, as general advice, the considerations set out in 0.0.S. (40) 686, either as they stand, or as they may be modified by the Chiefs of Staff Committee after a further review of the position.

I should be glad if you would see that this letter receives the consideration of the Chiefs of Staff Committee.

(Signed) H. MACMILLAN.

Great George Street, S.W.1.,

14TH FEBRUARY, 1941.

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