287 Mr S.M. Bruce, High Commissioner in London, to Mr R.G. Menzies, Prime Minister

Cablegram 551 LONDON, 12 October 1939, 6.01 p.m.

FOR PRIME MINISTER SECRET

Japanese purchases. British Foreign Office attitude is that there is no objection to such sales provided that re-export either directly or indirectly to Germany is safeguarded. They feel, however, that long-term contracts should not be entered into or large quantities made immediately available. Policy should be to keep in hand weapon of being able to refuse to supply commodities vitally necessary to Japan as an inducement to Japan to remain on good behaviour. The first point is necessary and the second would appear intelligent. Subject to the first point in my view you should deal with all questions arising in accordance with your own judgment in respect of all commodities in Australia's control.

With regard to wool, the United Kingdom Government are prepared to agree to points one, two and five in your telegram of 5th October.

[1] With regard to point three, the first part of the answer is:

yes. With regard to the second part I have no doubt that arrangements can be made without formal provision in the contract.

With regard to point four, guarantees considered desirable but form guarantees should take should be the subject of consultation.

Have not yet received reply from the United Kingdom Government as to the amount of crossbred they are prepared to make available for Japan. Am pressing for full one hundred thousand bales.

BRUCE

1 Document 265.

[AA: A1608, L37/1/5]