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