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

Cablegram unnumbered 2 June 1938,

My telegram 25th May. [1]

Following is text of reply sent today to Consul-General for Japan.

[2] Begins:-

I have the honour to acknowledge the receipt of your letter of 24th May [3], on the subject of the export of iron ore from Australia, and to inform you that the representations which you now make on behalf of your Government have been very carefully considered, but the Commonwealth Government regrets that it is unable to see any fresh grounds which would justify a variation of the decision to prohibit the export of iron ore from Australia.

Expert opinion clearly shows that a serious position faces the iron and steel industry of Australia in the future, and this would be gravely accentuated if the export of iron ore were permitted.

It is felt that the right of a Government to decide what are its own national requirements of essential raw materials, and to determine how these can best be met, will readily be admitted. The decision to prohibit exports of iron ore was made in pursuance of this well recognised principle.

A policy of conservation of its natural resources by any sovereign state to meet the requirements of its own industries is very generally acknowledged as reasonable, and one, the force of which I feel sure that your Government and other Governments affected will fully appreciate. It is the paramount duty of every country to secure its natural resources first and foremost for the service of its national industry. This applies particularly to an irreplaceable commodity like iron ore which is vital to the industrial life of a nation.

Your Government will be aware that large quantities of iron and steel are required for the development of a country like Australia which is, after only 150 years of occupation, still quite definitely in the developmental stage. As an example of this, during the past five years the local consumption of iron ore has increased very considerably, and indications are that the momentum will be greatly increased, involving the consumption of far greater quantities of ore within the next few years.

Many illustrations of the results of lack of conservation of essential and irreplaceable raw materials are to be found. At one time Italy had ample quantities of accessible iron ore within her territories but, in consequence of its unrestricted exploitation, she finds herself today in a position of having insufficient iron to meet her own requirements. Sweden with her vast reserves of iron has applied export restrictions.

With reference to the first paragraph of your letter in which you say that your Government infers that the decision of the Commonwealth Government is aimed principally at Japan, your Government will note from my letter of 18th May [4] that it was intended that the export embargo was to be general. This means not only that foreign countries will be denied access to our resources of iron ore, but that Great Britain and the rest of the British Empire will be similarly affected. The United States of America purchases substantial quantities of iron ore from Australia, and no further exports will be permitted after 1st July. It will be apparent, therefore, that the measure is entirely non- discriminatory in character, even to the extent of operating against other members of the British Commonwealth of Nations.

Moreover, your Government will no doubt be aware, from the debate in Parliament [5] and from various press statements, that Australian interests, especially those in the States of South Australia and Western Australia, will be prejudicially affected by the prohibition.

I give your Government a very definite assurance that it was in no way intended by the Commonwealth Government that the prohibition should be discriminatory against Japan.

The Commonwealth Government sincerely trusts that, in the light of the foregoing, your Government will appreciate the fact that the action taken has been solely in the interests of Australian industry.

I may add that to the extent to which any individual Japanese interests are affected by the decision an offer of compensation has been made and is repeated. Ends.

1 Not printed; see Document 210, note 1.

2 Torao Wakamatsu.

3 Document 208.

4 Document 203.

5 Commonwealth Parliamentary Debates, vol. 155, pp. 1259-76.

[AA : A981, AUSTRALIA 90]