Please communicate following to British Government. Begins.
Commonwealth Government has followed with the closest attention and interest the question of Anglo-Japanese relations as indicated in various Foreign Office Memoranda and especially those conversations on the Japanese Ambassador's memorandum of last November.  The Commonwealth Government feels the promotion of better relations and a closer understanding between Great Britain and Japan would be highly desirable from the point of view of Australia. The recent agreement against Communism between Germany and Japan, the attitude of Japan towards Naval disarmament and other international agreements, and the campaign for the Southward advance policy have created a feeling of perturbation in this country which a definite understanding with Japan, perhaps in general terms on the idea of the recent Anglo-Italian pact, would go a long way to dispel.
The fact that the overtures were initiated by Japan and conversations continued after the German agreement was concluded seem to indicate that Japan is anxious to arrive at some definite understanding.
Should the present political situation in Japan not jeopardise this favourable atmosphere, the Commonwealth Government hopes that His Majesty's Government in the United Kingdom will lose no opportunity of pursuing the matter to a mutually satisfactory conclusion. Ends.
1 In July 1936 the new Japanese Ambassador to Britain, Shigeru Yoshida, raised the question of improving Anglo-Japanese relations, and later formalised proposals in a memorandum handed by him to the Chancellor of the Exchequer, Neville Chamberlain, on 6 November 1936. Japan proposed mutual recognition of all existing treaties on China, an 'open door' policy, and a program of reconstruction. The other major suggestion was that trade questions be settled 'on a basis of good will and mutual understanding of each other's difficulties'.
Notwithstanding the signing of the Anti-Comintern Pact by Japan and Germany on 25 November 1936, Anglo-Japanese discussions proceeded on the basis of the Japanese proposals, to which Britain replied in an aide-memoire on 18 January 1937.
[AA : A981, JAPAN 148]