66 Minute 2(Pm) Of Prime Minister's Committee Of Cabinet
Submission No. 30-Australian Policy Towards Japan
Broadly the discussion was directed to fundamental policy and the
detailed list of matters outstanding on page 4 of the submission
were only referred to as incidental to the discussion of policy
principles. However, for the sake of completeness, this minute
contains a reference to the views expressed on individual matters.
Generally the view was reluctantly adopted that, overall,
Australia should adopt a more liberal policy towards Japan because
(i) the very real danger over the next few years of Japan becoming
aligned with Communist China; and
(ii) the need for Australia to join with other nations
particularly the United Kingdom and the United States in taking
measures to avoid that result.
In the discussion, the points set out hereunder were mentioned as
relevant to avoiding Japanese alignment with Communist China:
(1) Japan was a nation of great vitality, with a high, fast rising
population and a national antipathy to migrating.
(2) All countries had to take some measures to assist Japan in
(3) Japan needed to develop her external trade; and in default of
developing her external trade with non-communist countries, she
would be forced to trade with Communist China for the purposes,
firstly, of disposing of her cheap manufactures and, secondly,
obtaining the raw materials she needed. In this way she could
become completely dependent on Communist China.
(4) Politically Australia's interest was not served by a situation
where Japan was completely dependent on Communist China.
(5) There was a parallel between the position of Germany after
1918 and Japan today; the isolation imposed upon Germany in 1920
had contributed to the rise of Hitler; and there was a danger of
cause and effect operating in the next few years to put a
Communist government in power in Japan.
(6) In the long-term defence view there was more than a
possibility of bringing Japan into close association with the
Western Powers and that was a desirable object. In this connection
it was pertinent to recall that:-
(a) the history of Japan's alliance with the United Kingdom prior
to 1922 showed a stability in her international relations;
(b) any gestures towards Japan by Australia at the present time
would have a significant psychological effect on the Japanese
people and would influence them towards association with the
(7) In liberalising her policy in the near future, Australia would
be likely to receive considerable co-operation from Japan which
would not be so forthcoming in a few years' time.
(8) A Japan developing her relations internationally with other
countries, particularly in South East Asia, would, by her
commercial and other behaviour, create attitudes in those
countries towards Japan which attitudes would help to stabilise
Japan's power by holding it in balance between tendencies to go
communist on the one hand and tendencies to become nationalistic
on the other hand.
(1) If Japan's earnings of overseas currency did not increase she
would be forced to withdraw, in whole or in part, from her
position as a purchaser of Australian wool thereby weakening
demand which, in the auction system, could have a considerable
effect upon the Australian economy.
(2) The pattern of trade and all other factors pointed to the
impossibility of Australia's trade with Japan ever being in
balance but the important thing was to allow her to develop trade
with other countries by which she could earn credits to apply to
her deficit in trade with Australia.
(3) Trade was an essential factor in achieving the political
results which are set out earlier in this minute.
(4) In discussing trade with Japan, Australia should write into
the arrangements the protection to Australian industry which
Canada has provided for Canadian industries in her trading
arrangements with Japan: New Zealand has done much the same. This
point should be considered in relation to point (8) in the
(1) The handling of public relations was very important in any
change of policy.
(2) It was desirable to settle as many outstanding matters as soon
(3) These should be settled in accordance with a deliberate order
so as to achieve the maximum support of the public. For example,
the request for a party to visit Japanese graves in New Guinea was
a specific problem on which substantial public opinion would
support a decision to allow the party to enter. The RSL might well
support the decision and they might be approached before any
formal government announcement was made.
Japanese War Graves Party:
The general feeling was that permission should be granted and the
Administrator of Papua and New Guinea  should be consulted.
(1) The general feeling favoured Japan's admission to the plan as
a donor nation even though her primary object might be to promote
(2) The trade which Japan would develop in South East Asia through
her membership of the Colombo Plan would, when her costs come
down, deprive Australia of an incipient trade which was just
starting to develop in such items, for example, as Diesel
Locomotives and Tractors. But this loss in Australian exports was
far outweighed by the necessity of ensuring that Japan was a
strong bidder for our wool.
It was noted that the Class 'B' and 'C' war criminals were of
interest to the Japanese public and that Australia was the only
country which had not granted parole or some measure of clemency
to those Japanese War Criminals for whom it is responsible.
Compensation for Former Prisoners of War of the Japanese:
It would help the public relation aspect if Japan would settle the
question of Article 16 assets to enable distribution to former
Australian prisoners of war. 
Pearl Fisheries Dispute:
It was noted that the delay by Australia in furnishing comments on
the Japanese draft special agreement has left a bad impression
with the Japanese.
Inclusion of Japan in S.E.A.T.O:
The Minister reported that Mr Dulles had accepted the Australian
proposition that Australia could not undertake to guarantee
countries in the North Pacific area against aggression.
On the other hand, in accordance with the views set out in the
first section of this minute, there would be some merit in tying
Japan into a tight military alliance.
Japanese Activity in New Guinea:
The general feeling was that this was most reprehensible and could
not be tolerated.
[AA : A4906/XMI, VOLUME 1]