190 Mr S. M. Bruce, High Commissioner in London, to Mr J. A. Lyons, Prime Minister
Cablegram unnumbered LONDON, 19 April 1938, 6.00 p.m.
URGENT PERSONAL MOST SECRET
Yampi Sound. Have discussed the matter with the Secretary of State for Foreign Affiirs  who feels that Japan would keenly resent their exclusion from this source of supply and would almost certainly attribute to political motive any action taken in that direction by the Commonwealth Government. He accordingly suggests that in explaining the reasons for the contemplation of the measure the Commonwealth Government would be well advised to emphasise that the conservation of its natural resources by any Sovereign State is a policy that is very generally acknowledged as reasonable, and one the force of which the Japanese Government will fully appreciate. It will be within the knowledge of the Japanese Government that the Raw Materials Committee at Geneva  recognise that every country has the right to put its natural resources first and foremost to the service of its national industry. Lord Halifax also suggests that the Commonwealth Government should when making the announcement with regard to the imposition of the embargo make it clear that Japanese investors in the Yampi Sound enterprise will be adequately compensated [for] heavy expenses already incurred by the Company. He hopes that when the lines of the communication to the Japanese Consul-General  are finally determined H.M. Ambassador at Tokyo  will be apprised of their sense and instructed to make a similar communication to the Japanese Government.