Following telegrams received from Latham [1], forwarded for your
information:-

'No. 168.

Have heard wireless report of proposed appointment of Australian
Minister to Chungking.

If this is done it is sure to produce strong anti-Australian
reaction here. Accordingly I suggest announcement of appointment
if made should include statement that all countries recognise
existence of Chungking Government as a fact, that Chinese Consuls
are already in Australia and that new appointment therefore does
not change existing position and policy, but does reciprocate
desire of friendly Government for common recognition of closer
relations between our countries.

I feel bound to say, however, that viewed solely from Japanese-
Australian point of view such an appointment will not help our
relations. I presume British Government has been consulted.'

'No. 171.

My telegram 168.

Changes reported in my telegram 170 [2] appear to be a good reason
for moving very cautiously at present. The new appointments appear
to be in our favour, but they will almost certainly stir up
radical and pro-Axis elements to increased activity. I do not
advocate any attempt at "entanglement", but I do deprecate any
unnecessary action which may be used as an excuse to aggravate the
situation so as to strengthen the remaining Axis supporters.

Therefore I believe there are good reasons for postponing any
action with regard to representation at Chungking until situation
here has developed further.'

FADDEN