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216 Mr Torao Wakamatsu, Japanese Consul-General in Sydney, to Mr J. A. Lyons, Prime Minister

Letter SYDNEY, 14 June 1938

With reference to your letter of June 1st [1], replying to my
representations of May 24th [2], and in which you informed me that
the Commonwealth Government could see no justifiable reason for
altering its decision to prohibit the export of iron ore from
Australia, I have the honour to state, under instructions from the
Imperial Government, to whom I conveyed the details of your
letter, that the principle, as set forth in your letter, of the
conservation by a State of its natural resources does not
necessarily directly justify such a drastic measure as will lead
to the compulsory forfeiture of the vested interests of foreign
nationals, and that it is the right of any Government, should the
legitimate interests of its subjects become jeopardised by any
unreasonable cause, to do its utmost to safeguard such interests.

I am also instructed to present to you the further views of my
Government on this question of the embargo on iron ore exports, as
follows:-There is no room for doubt that, as you stated in the
House of Representatives on May 19th [3], and as Dr Woolnough also
implied in his Report [4], a practical, critical, and complete
survey of Australia's iron ore resources has yet to be made, to
clarify and stabilize the whole question. In the absence of such a
survey as that mentioned above, such a drastic and far-reaching
measure against foreign interests as is now contemplated by the
Commonwealth Government cannot be justified.

Secondly, no fresh evidence as to the extent of Australia's iron
ore resources has appeared, to justify the sharp change of policy
on the part of the Commonwealth since August last year, when your
Government reiterated its affirmation of the adequacy of
Australia's iron ore deposits, and its assurances that it had no
intention of interfering with the developmental work at Yampi
Sound. Therefore, it is evident that no emergency has arisen
necessitating such a drastic measure.

Thirdly, in view of the fact that the Commonwealth Government is
taking into consideration only the quantities of iron ore which
can be developed economically, and also that no embargo on the
exportation of pig iron or steel is contemplated, it is evident
that nothing vital in this connection has occurred to disturb the
basic conditions of the national life of Australia. It can
reasonably be inferred that the only result of the contemplated
measure will be the accumulation of monopolistic profits by iron
and steel industries in Australia. Such a measure as will
encourage the augmentation of particular industrial profits at the
vital sacrifice of legitimately vested foreign interests, can in
no wise be justified.

Fourthly, the iron ore deposits which are capable of economic
development, are not absolutely limited, as their capability in
that respect will increase according to both the improvement of
productive technique and the growing demand. The development of
the Yampi Sound deposits, which Dr Woolnough reported to your
Government to be one of the two main economical sources of iron
ore in Australia, had been entirely neglected as an uneconomical
enterprise, until the Japanese industrialists invested their
capital in the work.

In view of the above-mentioned facts, the Imperial Japanese
Government can see neither any justifiable reason why the
exportation of such a reasonable amount of iron ore, out of the
enormous total deposits, as is necessary to enable the enterprise
at Yampi Sound to carry on economically, will have a vital effect
upon the national requirements of Australia, nor any absolute and
urgent necessity for depriving the Japanese investors of the
fruits of their strenuous preparatory work, the completion of
which is now in sight.

Furthermore, I have the honour to state that, besides the security
of the development work at Yampi Sound, the question about which
the Japanese Government is no less seriously concerned, is the
undesirable disturbance which it is not improbable the
contemplated embargo may cause to the traditional amicable
relations between Australia and Japan, for the promotion of which
the Japanese Government has often expressed its sincere desire,
the Commonwealth Government reciprocating this sentiment; for, the
measure cannot but be judged, from its practical results, to be
particularly disturbing to Japan, despite your abstract assurance
to the contrary. It is a matter of great regret to the Imperial
Government that, without any well-established evidence of absolute
and urgent national necessity, the Commonwealth Government is
about to take such an inequitable measure, which is obviously
contrary to the general current of world opinion, which, in view
of the immeasurable harmfulness of economic nationalism, is urging
the remedying of the mal-distribution of natural resources among
nations by such peaceful means as freer access to raw materials
and freer markets for exports.

I have the honour to state, therefore, that the Japanese
Government cannot but most earnestly request the Commonwealth
Government to abandon the contemplated absolute and far-reaching
embargo on iron ore, the imposition of which, judging from what
has appeared in the press, does not seem to meet with the approval
of persons of impartial views.


1 Document 213. It was in fact sent on 2 June.

2 Document 208.

3 See Document 202.

4 Attachment to Document 203.

[AA : A981, AUSTRALIA 90]
Last Updated: 11 September 2013
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