195 Sir Earle Page, Minister for Commerce, to Mr J. A. Lyons, Prime Minister

Cablegram unnumbered LONDON, 1 May 1938, 2.55 p.m.

PERSONAL MOST SECRET

Menzies [1] and Bruce [2] yesterday saw the Foreign Office who agreed that in the circumstances it might be unwise for Craigie [3] to make any preliminary or special announcement to the Japanese Government. They agreed that it would be sufficient if statement to be made by you were communicated to the British Government in time for them to convey it to Craigie so that he would be in a position unofficially to confirm to the Japanese Government that the prohibition is not discriminatory.

We have discussed among ourselves the question of compensation to the Yampi Company. Menzies feels strongly that in view of the failure of the Commonwealth Government to act over a substantial period and in view of the public statement made it may well be argued that the Commonwealth tacitly assented to operations and that the Yampi Company in consequence has some moral claim to compensation for actual leases. If you agree with this we think that it would do much to prevent any bad reaction in Japan if the statement you make on prohibition included a statement to the effect that as action taken for substantially national reasons the Government will be prepared to examine with any mining Company affected, the question of giving special consideration to that Company. Bruce agrees with this view. White [4] and I do not feel quite so strongly as Menzies but would be disposed to agree and think that if the question of compensation is to arise it is better for us to state our position graciously at the outset rather than be forced into it by subsequent agitation and perhaps argument with the Japanese Government.

PAGE

1 R. G. Menzies, Attorney-General.

2 S. M. Bruce, High Commissioner in London.

3 Sir Robert Craigie, U.K. Ambassador to Japan.

4 T. W. White, Minister for Trade and Customs.

[AA : A981, AUSTRALIA 90]