Your 185 [1] and 202. [2] Japanese exchange. Australian Government
has now reconsidered question, but regrets that it must adhere to
its previous decision not to include the 331 merchant seamen in
the exchange, for security reasons.

2. The Security and Naval and Military Intelligence Services have
confirmed their previous view that these men should in no
circumstances be released at present because of:

(a) their specialised knowledge, not only of coastline of
Australia, but of northern waters in South-West Pacific theatre;

(b) their value in salvaging operations. [3]

3. In this connection we have noted the Admiralty comments
contained in your Cable No. 202, but would point out that our
request for high priority for persons whose services are required
for the war effort was intended as a guide in the selection of
individual British repatriatees. Moreover, this principle could
not have been communicated to the Japanese Government. In any
event we feel that this particular question is not so much one of
'utility for war effort' as of 'being of vital use for enemy's
military operations'.

4. In view of the importance of the question, the views of General
MacArthur were sought [4], and the following opinion has now been
received from him.

'I have just received and given most careful consideration to your
letter of October 21st and its enclosures. [5] The situation is a
typical example of the conflicting claims of local as compared to
general interests. There can be no question of the soundness of
the views expressed by your Military and Naval Advisers. They have
actually materially understated the danger involved. The special
knowledge the prisoners possess of the waters in which we are now
fighting-waters of which our own knowledge is limited-might well
lead to the enemy's marked benefit. This special situation must be
weighed against the general reasons set forth in opposition by the
Dominions Office. In such questions it is always my general policy
to yield local to general interests, unless fraught with too dire
consequences. In this case, it is my considered opinion that the
danger involved is too acute to warrant such an attitude and I
recommend that the Australian Government not yield in the matter,
the military necessities in the case outweighing all other
considerations.'
5. Please arrange therefore for a Note in the following terms to
be transmitted to the Swiss Government for presentation to the
Japanese Government in reply to the latter's Note (see Cable No.

308 from the Dominions Office [6]).

BEGINS-
The Japanese Government alleges that the refusal of the Australian
Government to repatriate the Japanese subjects in question is
based 'on the new and undue grounds of their being seamen'. The
Australian Government cannot accept this description of the reason
for its refusal to agree to the repatriation of these persons.

2.(a) The attitude of the Australian Government in this matter is
not 'new' in that the policy of treating enemy merchant seamen as
prisoners of war is a joint British Commonwealth policy, covers
seamen of all enemy nationalities and was operative in Australia
long before the current exchange negotiations with Japan had been
set on foot. Moreover, action was taken in June of this year to
acquaint the Protecting Power with this fact, for transmission to
the Japanese Government, well before the Japanese Government's
list of nominees for repatriation had been received. [7]

(b) Similarly, the Australian Government rejects the Japanese
contention that the definition of these individuals as merchant
seamen is an 'undue' definition.

(i) In the opinion of the Australian Government, the accidental
fact that an individual was resident in Australian territory or
territory under Australian control before the outbreak of war has
no bearing whatever on the question whether or not he is a
merchant seaman. The deciding fact is that these individuals were
members of the crews of Japanese vessels which do not come within
the restrictive categories as set out in Article III of the Hague
Convention, No. II, 1907. It is irrelevant for the Japanese
Government to appeal to the spirit of the provisions of Article
III of this Convention. By no possible stretch can the provisions
of Article III be made to apply to the case of Japanese vessels
operating in or near Australian territorial waters.

(ii) The Japanese Government also appears to maintain that the
fact that these individuals were interned at the commencement of
the war invalidates their definition as merchant seamen. The
Australian Government can see no substance in this argument. It is
true that had these Japanese subjects actually been in internment
when war broke out, the case might have been different. In point
of fact, however, they were members of crews of Japanese vessels
at the outbreak of war and the fact that they were then detained
does not in any way affect their status as merchant seamen. [8]

3. The Commonwealth Government has consistently understood that
from the point of view of the British Commonwealth, the exchange
at present under negotiation was based upon humanitarian
considerations and designed to secure the release of internees,
especially aged and infirm persons and women and children. Even if
the Japanese subjects in question had not come within the category
of prisoners of war and thereby been ipso facto excluded from
exchange, the Australian Government would have noted it as strange
that, as an examination of the lists supplied by the Japanese
Government reveals, almost all of the persons in question asked
for are of military age and of immediate and direct value in
Japanese military operations.

4. For the sake of the humanitarian purpose of the exchange, the
Australian Government earnestly hopes that the Japanese Government
will recognise the force of the above considerations and will
intimate its readiness to proceed with the arrangements on the
lines already agreed to. However, should the threat of the
Japanese Government to break off the negotiations unfortunately be
realised, the Australian Government would feel impelled to publish
for world opinion the full circumstances in which the breakdown
took place.