AUSTRALIAN FOREIGN POLICY Continuing my Note of 25th-29th May , shortly after the closure of which I heard a Japanese Foreign Office reaction to the Commonwealth foreign policy statement of the Right Honourable the Prime Minister and the Honourable the Minister for External Affairs , I cabled you on the evening of 29th May as follows:
'My telegram 17th May  and others; learn that Japanese Foreign Office much appreciates statement as to Australian foreign policy'. 
This Japanese official appreciation was stated by the Foreign Office Spokesman, in a normal way, to a foreign Press correspondent last evening and may therefore be regarded as practically public whilst yet it has not been so promulgated within Japan in that way up to the present. I have not received anything of a personally stated nature from any particularly senior Japanese official source, but an official of the European- Asiatic Bureau who called to see me in a courtesy way mentioned that he and his colleagues were very pleased about it and I have no doubt that such is the case throughout the Foreign Office generally.
It may be appropriate to mention also, in this connection generally, that they indicate lively interest in the Commonwealth Government's statement of intention regarding the early establishment of a Legation in Tokyo, a move they have sought for the last ten years.
Any tardiness in reaction or hesitancy to openly acknowledge the Commonwealth Government's enunciation of its policy towards Japan is, as the days go on, more and more attachable to the extreme reserve being shown towards foreign affairs in the connection to which reference was made in my preceding Memorandum. In fact it is now learned, in rather a roundabout way but none the less circumstantially, that the so-called 'young Army element' whose mouthpieces in Europe are the Japanese Ambassadors to Rome  and Berlin , strongly desired outright military alliance with Italy and Germany and that this was only avoided by the Foreign Minister  threatening to resign if it were brought about. Thus there has been and continues to be an atmosphere of strain from within which any clear cut statement could only with difficulty-not to mention extreme danger to perhaps more than one Minister-emerge.
Other and more local events centering round Hong Kong and Amoy, as already described, have continued to develop and the Japanese Government which, it is reasonably clear, does not now wish to seriously quarrel with the British Empire or the United States, is in the position of meeting upon the one hand the more cautious ideas of the entities which would like to see as uncomplicated a solution as possible, and upon the other the 'All in' ideas of the group which thinks only of extended war as the Japanese means of further procedure even to involvement vis-a-vis European affairs.
This latter view is, further, quite openly favoured by some sections of the vernacular Press which advocates a straight out Japanese-German-Italian military alliance, an advocacy which is also echoed by certain industrial leaders who are consistently noted for their 'fire-eating' tendencies.
It is to be added, in relation to the Foreign Minister's reported stand as already mentioned, that his determination (so it is learned) led in turn to resignation threats by the interested Japanese Ambassadors whose withdrawal from their posts was only with difficulty prevented as a means of avoiding, presumably, a particularly serious crisis as between the military and civil elements. The situation therefore appears to be that the Japanese Foreign Office, which alone really sees the whole international picture, is in somewhat of a minority (yet a not unimportant one upon the present face of the matter) in a situation of this kind, but the financial aspect is now a little better understood by the Army and Navy than it used to be and so the Government proceeds in an atmosphere which carries clouds of considerable magnitude upon the Japanese horizon in every direction.
Later: 31st May:
In completion of the series of telegrams touching upon local reaction to the general subject matter of this and the preceding Note, I included in a telegram despatched to you this day, the following:
'My telegram 29th May; various Foreign Office officials personally mention their pleasure at projected Australian Legation.' ... 
The other portion of the message referred to a 'Japan Chronicle' sub-leader in appreciation of the Commonwealth Government's handling of the scrap and pig iron loading difficulty, principally at Port Kembla; and a copy of the article is attached for your information.
I may say that the mention, by Foreign Office officials, of their pleasure at the Commonwealth Government's statement concerning establishment of an Australian Legation (to which reference is made in the earlier portion of the present Memorandum) although personal in the sense that several of those whom I know very well spoke about it in conversation with me, their remarks may be taken as reflecting the official Japanese reaction to the idea.