In reply to your telegram of 14th November [1] do not think this
would conflict in any way. Will confirm tomorrow. [2] In
connection with this you will be interested in the following:

(a) 'It is understood from a reliable but very secret source that
Mitsui Trading Company has been endeavouring without success to
purchase wheat on credit terms from the United States and that,
although Japanese negotiations for the purchase of wheat in the
Argentine are likely to be more successful, considerations of
shipping necessitate that the amount taken from the latter source
should be kept down to a minimum.

Apparently the Company's agent in Sydney informed the Japanese
Government that 200,000 tons of wheat could be obtained from
Australia on two years' credit terms but later that terms were
half payment in cash and half at one year's credit. At first the
Japanese thought of taking only 100,000 tons on one year's credit
terms, but they now desire to obtain 200,000 tons and Mitsui
Trading Company agent in Sydney has been instructed to endeavour
to obtain one and one half year's credit. He has been advised that
the Japanese Government will on no account agree to any suggestion
for the deposit of bonds with Australian banks or for a Government
guarantee. Negotiations must be on the basis of a guarantee by the
Yokohama Specie Bank only.

A desire is expressed for arrangement of a system of "barter" or
extra exports" of Japanese goods or for a "clearing system" for
imports of wheat, the latter to be combined, if possible, with
wool purchases, although it is not considered essential to press
this now.'
(b) 'It has been learnt from a reliable but entirely secret source
that the Japanese Government do not agree to half payment in cash
for certain wheat purchases which they had proposed to make in
Australia. If the Commonwealth Government insist on some cash
payment, the Japanese Government will endeavour to have the amount
of cash reduced and terms for the remainder extended. The
suggestion now to be made is that one quarter should be payable in
cash, and arrangements made for two years' credit to be extended
in respect of the remaining three quarters.'

BRUCE