Mr. Bruce has communicated to us message contained in your
telegram to him No. 156 [1] relating to inclusion of Japanese
pearl divers in the proposed exchange.

2. We accept your decision not to agree to the return of these men
to Japan and we have noted the strong opinion in that sense
expressed by General MacArthur. We have deferred communicating
with the Japanese on the lines of the reply proposed in your
telegram since we wished to consider very carefully what should be
the next step in the event which we fear will be the case that
Japanese are not prepared to continue arrangements for exchange on
the basis now put forward. We have come to the conclusion that the
best plan would be to put forward a reply on lines proposed in
your telegram with which we are in general agreement and to which
we would therefore propose to give our express support in
forwarding it to the Japanese and then to await the Japanese
reaction.

3. There are, however, two points on which we should like to make
suggestions for your consideration in connection with the proposed
reply-
(1) As regards paragraph 4 of the proposed reply, if the purpose
of the threat to publish is to make the Japanese Government
hesitate to break off negotiations we fear that it may well have
the opposite effect. We think that on receipt of refusal to
release these seamen they will not necessarily refuse to continue
negotiations. We therefore suggest that the second sentence of
Part 4 be omitted (its omission will in no way restrict freedom of
the Australian Government to take any action they think fit in
this connection). Moreover, we think it is important that Japanese
Government should be told that we still wish to proceed on the
basis of an exchange of 1,600 persons on each side and we
therefore suggest that first sentence of paragraph 4 should
conclude as follows 'and will intimate its readiness to fill the
vacancies from selections among other Japanese nationals and to
proceed with arrangements already contemplated for exchange of
1,600 British and Allied nationals against corresponding number of
Japanese nationals'.

(2) In view of the possibility of publication of this
correspondence should negotiations break down we are most anxious
to ensure that reply to Japanese Government is such that it
affords them no opportunity of contending publicly with any
plausibility that arguments contained in it are legally unsound.

For these reasons we should like to offer the following comments
on paragraph 2 (1) and (2) and paragraph 4 of the draft reply. Our
difficulty is that although these pearl divers are undoubtedly
merchant seamen and can therefore in our view properly be treated
as prisoners of war, it is not clear that they were all actual
members of crews at the time that they were originally detained.

If too much stress is laid on contention that they were actual
members of crews there is some risk that Japanese Government will
reply with argument based on Art. 6 of Hague Convention XI [2] to
the effect that these men should not under that Article have been
taken prisoner at all because although they were persons of enemy
nationality and members of crew of a merchant ship at the time of
their capture they should have been repatriated after having
signed the undertaking provided for in that Article. Fixed policy
of the British Commonwealth is not to allow members of merchant
crews to sign this undertaking and there are good legal reasons
for this attitude as regards the German Government. Our case for
disregarding the Convention vis-a-vis the Japanese Government is
not so clear and we should much prefer not have to defend it. To
avoid this risk, therefore, we suggest for consideration of
Australian Government that second, third and fourth sentences of
paragraph (1) should be replaced by following sentences 'the
deciding factor is that in this case all these individuals
although resident in Australian territory at the outbreak of war
were seafaring persons who spent large proportion of their lives
in ships. A seaman remains a seaman even if he is temporarily
ashore and it is clear that these individuals are not covered by
any provision of Hague Convention No. XI. In particular it is
irrelevant for the Japanese Government to appeal to the spirit of
provision of Article 3 of this Convention. By no topographical
stretch can the provisions of Article 3 be made to apply to case
of Japanese seamen who earn their livelihood by serving in vessels
operating in or near Australian waters.'
Similarly in the last sentence of paragraph 2 we suggest words
they were members of crews' should be replaced by 'they were
seafaring persons'.

4. We should be glad to learn at an early date views of
Commonwealth Government upon these suggested amendments.