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? [1] 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 [2] 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 [3] 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 [4], 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
[5] 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.