Iron Ore. Foreign Office has handed me an aide-memoire expressing the hope amelioration of embargo and in verbal amplification conveyed suggestion that the Commonwealth Prime Minister's earlier statement  that survey would be continued implied conservation might not be found so immediately necessary and they therefore asked that the export of 1,000,000 tons annually be meanwhile permitted in which event they could better understand an ultimate prohibition which they felt sure would prove unnecessary. They also said that this particular project was regarded as important by Japanese military authorities. They then admitted that the project itself was purely inter company and that Japan did not claim that it was inter Governmental and further that the company expenditure has also included construction of blast furnaces in Japan itself (for which there is use in any case).
I based my own verbal rejoinders upon contents of the Prime Minister's letter to the Consul-General early this month  (text cabled through London to the Embassy) and recent cables regarding ore consumption discouraging pursuit of their intermediate scheme which must obviously create an impossible situation as I have been informed that even then they would seek at least twenty-five million tons which would nullify the Commonwealth's precautions as they well know.
Another example of their dictatorial outlook is illustrated by their even trying to tell me that so long as ore export is prohibited so also should the export of iron manufactures be concurrently forbidden, a piece of reasoning which could hardly be accepted.
I did not inform them of Baron Ito's  remarks.
I am not writing any local reply.