Yampi Sound. Have discussed the matter with the Secretary of State
for Foreign Affiirs [1] who feels that Japan would keenly resent
their exclusion from this source of supply and would almost
certainly attribute to political motive any action taken in that
direction by the Commonwealth Government. He accordingly suggests
that in explaining the reasons for the contemplation of the
measure the Commonwealth Government would be well advised to
emphasise that the conservation of its natural resources by any
Sovereign State is a policy that is very generally acknowledged as
reasonable, and one the force of which the Japanese Government
will fully appreciate. It will be within the knowledge of the
Japanese Government that the Raw Materials Committee at Geneva [2]
recognise that every country has the right to put its natural
resources first and foremost to the service of its national
industry. Lord Halifax also suggests that the Commonwealth
Government should when making the announcement with regard to the
imposition of the embargo make it clear that Japanese investors in
the Yampi Sound enterprise will be adequately compensated [for]
heavy expenses already incurred by the Company. He hopes that when
the lines of the communication to the Japanese Consul-General [3]
are finally determined H.M. Ambassador at Tokyo [4] will be
apprised of their sense and instructed to make a similar
communication to the Japanese Government. [5]

BRUCE