190 Mr S. M. Bruce, High Commissioner in London, to Mr J. A. Lyons, Prime Minister

Cablegram unnumbered LONDON, 19 April 1938, 6.00 p.m.

URGENT PERSONAL MOST SECRET

Yampi Sound. Have discussed the matter with the Secretary of State for Foreign Affiirs [1] who feels that Japan would keenly resent their exclusion from this source of supply and would almost certainly attribute to political motive any action taken in that direction by the Commonwealth Government. He accordingly suggests that in explaining the reasons for the contemplation of the measure the Commonwealth Government would be well advised to emphasise that the conservation of its natural resources by any Sovereign State is a policy that is very generally acknowledged as reasonable, and one the force of which the Japanese Government will fully appreciate. It will be within the knowledge of the Japanese Government that the Raw Materials Committee at Geneva [2] recognise that every country has the right to put its natural resources first and foremost to the service of its national industry. Lord Halifax also suggests that the Commonwealth Government should when making the announcement with regard to the imposition of the embargo make it clear that Japanese investors in the Yampi Sound enterprise will be adequately compensated [for] heavy expenses already incurred by the Company. He hopes that when the lines of the communication to the Japanese Consul-General [3] are finally determined H.M. Ambassador at Tokyo [4] will be apprised of their sense and instructed to make a similar communication to the Japanese Government. [5]

BRUCE

1 Viscount Halifax.

2 A committee of experts appointed by the Council of the League of Nations on 25 January 1937; their report was presented on 8 September 1937 3 Torao Wakamatsu.

4 Sir Robert Craigie.

5 This cablegram was repeated to Sir Earle Page (Minister for Commerce, en route to London) on at April 1938 with the following addition: 'Glad of most urgent advice whether you wish comment or modify in any way the terms of your telegram of 13/4/38' (Document 186).

[AA : A1608, C47/1/4, iii]