Your secret telegram 110 of 20th February. [1] Ship Warrant
Scheme. Commonwealth Government quite appreciates that
possibilities of securing co-operation of Japanese shipowners for
this scheme should be fully tested.

The points made by Japanese Consul General [2] were forwarded to
you for information and general background. There is no
misconception of the nature of the scheme on the part of the
Commonwealth Government which appreciates full significance of
scheme. You will no doubt appreciate our desire however to be kept
fully informed of developments and any negotiations proceeding on
matter of such importance in the relationship between the Empire
and Japan and particularly as affecting Australia. The
Commonwealth Government also feel that it would be desirable to
obtain your opinion [as] to the ultimate results of the measures
adopted.

It was considered that the proposal contained in your Circular
D.74 [3] would not suit Australian conditions and would produce a
result much more severe than contemplated. Commonwealth Government
will co-operate on the lines indicated in your telegram 110. It is
pointed out, however, that no request has been made for bunkers by
Japanese vessels since the inauguration of Ship Warrant scheme.

Quite independently Commonwealth Government was considering
whether it would be wise to grant bunkers to Japanese ships unless
payment were made in dollars.

It is noted from your telegram that Commonwealth authorities
should use their own discretion in granting facilities other than
for bunkers. You may rest assured that no measure of priority will
be given in respect of these other facilities. Indeed our
objective broadly speaking will be in the reverse direction.