208 Mr Torao Wakamatsu, Japanese Consul-General in Sydney, to Mr J. A. Lyons, Prime Minister

Letter SYDNEY, 24 May 1938

With reference to the decision of the Commonwealth Government to prohibit the export of all iron ore from Australia, which decision I conveyed to my Government upon the receipt of your letter of May 18th [1], I now have the honour to state, under instructions from my Government, that, in view of the traditional amicable relations between Australia and Japan, the Imperial Japanese Government deeply regret the above-mentioned decision of the Commonwealth Government, as, taking into consideration the actual conditions in relation to the Australian domestic demand and export trade in iron ore, and various aspects of the mining work at Yampi Sound, it can only be inferred that this drastic measure is aimed principally at Japan.

In regard to the Yampi Sound enterprise, I am instructed to communicate to you the view of the Imperial Government that this question is one of such gravity that it cannot be solved simply by reimbursement of the investments, and the Imperial Government cannot understand why the Commonwealth Government, despite their former assurances, have decided to adopt such a drastic measure without any domestic emergency having arisen to justify the subversion of the development work at Yampi Sound, in connection with which a huge amount of Japanese capital has been invested, with the approval of the Governments of Australia and Japan, in the hope of contributing to the mutual prosperity of the two nations.

It is the most earnest desire of my Government, therefore, that, in the interests of the maintenance of friendly relations between our two countries, and also in the light of the significance of freedom of trade, especially of free access to resources, the necessity for which has not only been recognised by most of the countries in the world, but which has also been earnestly urged by certain Powers as a practical means of achieving appeasement in the world, the Commonwealth Government will reconsider their decision, particularly as it does not appear that any thorough and practical investigation has yet been made which furnishes the peoples of both Australia and Japan with concrete evidence of the realities of the situation.

TORAO WAKAMATSU

1 Document 203.

[AA : A981, AUSTRALIA 90]