RELATIONS WITH JAPAN
(Sir John Latham was present for the discussion of this subject).
As Sir John Latham's departure for Japan had been delayed for consultations with the new Government, Sir John attended the War Council for a discussion on matters relating to Japan.
The following is a summary of the subjects discussed:-
(A) The desirability of the Minister's departure to fulfil the purpose of his appointment In view of the Minister's departure having been deferred, it was agreed that there was no doubt about the desirability of his proceeding to Tokyo.
Agreement was also expressed with the purpose of his appointment, which was summarised as follows:-
(i) The Australian Government should have its own source of information to enable it to express its views to the United Kingdom Government on questions in which it is vitally interested.
(ii) The Australian Minister would be in direct touch with the British Ambassador, and the latter would be in a position, before tendering advice to the United Kingdom Government, to weigh considerations of the Australian viewpoint which would otherwise not come to his notice.
(iii) The Australian Minister would be the medium for negotiations on matters which are susceptible of direct discussion between Australia and Japan.
The appointment of an Australian Minister was not an act of separation to enable Japan to drive a wedge between the United Kingdom and Australian Governments on questions of Japanese relations. When the United Kingdom Government was consulted on the appointment of a Minister, it had not sought to place any restrictions on Australian representation. We could do as we liked but should choose to do only that which is wise.
(B) Subjects mentioned by Sir John Latham Sir John Latham then traversed a number of subjects on which he expressed views, raised questions, or made suggestions for the Government's consideration. The following is a list of the main headings of his discourse:-
(1) Japan is anxious to be on the winning side in this war, and she views Germany as the winner. She sees the possible break-up of three empires, British, French and Dutch, and is anxious to gain her share of the spoils insofar as her New Asia policy is concerned.
(2) There are in Japan many with liberal and democratic leanings who are friendly to Britain, but they have been submerged by the extremists.
(3) Japan has a strong dislike of the U.S.A.
(4) The appointment of the Minister is considered by some circles in Japan as an opportunity of dividing Australia from the United Kingdom and obtaining benefits from Australia.
(5) The Minister, as the servant of the Australian Government, is primarily concerned with Australian interests, but they are bound up with those of the United Kingdom. He should not be or even appear to be in the pocket of the Ambassador of the United Kingdom Government.
(6) Australian prestige is higher in Japan than that of the United Kingdom, and it offers the opportunity of helpful influences being brought to bear.
(7) It is important that Government decisions on matters relating to Japan should be communicated in advance to the Minister, and that preliminary consultations should be carried out with him where necessary.
(8) What is the attitude of the Australian people towards Chiang Kai Shek?  The answer given to the Minister was that the Australian Government desires to see a free and prosperous China.
Insofar as Australian public opinion is concerned, it is sympathetic to the Chinese.
(9) The Minister proposed to state the aim of Australian Policy in relation to Japan as one of friendship on the basis of mutual respect. If important issues should arise, his aim would be to temporise and gain time to allow for the development of the growing strength of our defences.
(10) Trade.-The Minister considered Japan's aim to be the gaining of the British market in Australia for textiles. The Japanese- Australian trade balance is in favour of Japan. It was important that a bargaining point on trade relations with Japan should be provided, but the Minister's consultations with Departments had failed to reveal one.
(11) Immigration.-The Minister foresaw no difficulty in defending the White Australia Policy, as the Japanese exclude Chinese and Koreans from Japan. He suggested that the defence of the White Australia Policy should be based on economic arguments relating to the standard of living, and not those of race and colour.
(12) Shipping.-The need for improvement of British shipping between Japan and Australia was mentioned by the Minister, who stated that it would take him 38 days to travel to Japan by a British ship, whereas the journey could be made in 14 days by a Japanese ship.
(13) Timor Oil Concessions.-The Minister urged the importance of sending Australians to Portuguese Timor to exploit the oil concessions, in order to prevent Japanese penetration in this direction and to support the resistance being offered by the Portuguese to the demands of the Japanese for concessions.
(14) New Caledonia.-The Minister referred to the importance of purchasing nickel matte produced by New Caledonia, and was informed of the action being taken to acquire the output in excess of the normal quota taken by Japan.
(15) Mandated Islands.-The proximity of the nearest Japanese mandated island to Rabaul was mentioned by the Minister, who urged the preparation of aerodromes at the latter centre.
(16) Scrap Iron.-The Director-General of Munitions  had advised the Minister that the class of scrap iron bought by Japan is not used here, and prohibition of export was difficult to justify.
Reference was made by members of the Council to the growing public opinion, which would no doubt be expressed through Parliament, against trading with Japan in raw materials which might be employed against us in the form of munitions.
The Prime Minister  directed that cablegrams recently received from the United Kingdom Government regarding the attitude of the U.S.A. on trade with Japan in scrap iron should be submitted for consideration.
(17) Iron Ore.-The relation of iron ore to scrap iron was mentioned, but it was observed that, according to the Woolnough report , there are not sufficient reserves for future Australian requirements. It was stated that it will probably become necessary to compensate the Japanese interests for their exclusion from Yampi Sound, but no claims have so far been preferred.
(18) Coal.-The Japanese shortage of coal was referred to by the Minister and the possibility of establishing a market was raised.
It was pointed out that at present sufficient coal is not being produced for Australian requirements.
(19) Aircraft.-The Minister suggested that an order for about 500,000 worth of aircraft might be placed with Japan, as there was a possibility that such a transaction might put Japanese interests in opposition to Germany. It was decided that the proposal should be examined and enquiries made as to the types of aircraft offering from Japan.
(20) Radio-telephone Service.-In view of the restriction of the use of the service to the French and English languages the Minister considered that conversations should be allowed in Japanese, failing which it would be preferable to cancel the service. The Prime Minister observed that there were security aspects to the matter, and the question is being examined.
(21) Relation of vested interests to Foreign Policy.-Mr. Beasley  referred to the influence of vested interests on Foreign Policy, and it was agreed that these could not override humanitarian considerations.
(22) Arrival of Japanese Minister in Australia.-The Minister emphasised the importance of the Japanese Minister being given a fine reception on his arrival, in view of the particular susceptibility of the Japanese to favourable reactions to such treatment.
(23) General.-The War Council expressed general agreement with the views of Sir John Latham and confidence that he would discharge his high responsibilities with great distinction. The Prime Minister added that it was fitting that such a discussion should take place at the first sitting of the National Council, as the results indicated general approval by a body that was representative of the whole of the Australian people.