1 Mr R.G. Casey, Treasurer, to Mr J.A. Lyons, Prime Minister

Letter CANBERRA, 3 January 1939

CONFIDENTIAL

[On 21 December 1938 A.C.V. Melbourne, Professor of History at the University of Queensland, wrote to the Prime Minister, J.A. Lyons, to urge that Australia should improve her relations with Japan. Professor Melbourne argued that Japan was aware of the weakness of the United Kingdom position in the Far East and that continued British support for China (the question of granting further credits had been under discussion) might precipitate an Anglo-Japanese war of which Australia would have to bear the brunt with little help from the United Kingdom. British hostility was driving Japan into the arms of Germany and it was possible that Japan might be encouraged to adopt German methods, for example in demanding that Australia permit Japanese immigration. Professor Melbourne suggested that in view of the possible consequences all members of the British Commonwealth should take part in the formulation of British policy on China. He also suggested that the Australian Government should appoint Ministers to Washington and Tokyo and that it should work for an effective alliance between the British Commonwealth and the United States or at least an agreement between Australia and the United States covering the Pacific area.

In a second letter dated 28 December 1938 Professor Melbourne elaborated his theme that passive acquiescence in British policy might involve Australia in an unnecessary war with Japan, despite the fact that most Japanese were not hostile to Australia. Lyons distributed copies of both letters (which are on file AA: A 1608, B41/1/6) to all his Ministers, and to the Secretary of the Department of External Affairs, Lt Col W.R. Hodgson. Copies were also forwarded to the External Affairs Officer in London, A.T. Stirling, on 13 January 1939 together with a covering note from Hodgson suggesting that the attention of the Foreign Office be drawn to them. On 24 January 1939 Hodgson sent a cablegram (no. 4) to Stirling emphasising that Melbourne's views were in no way those of the Commonwealth Government and that they were contrary to those of the Minister for External Affairs, W. M. Hughes. Hodgson suggested that the letters should only be shown informally and at Stirling's discretion (see file AA: A981, China 4, xii). No record of any Foreign Office reaction has been found.]

With reference to Professor Melbourne's letter to you of 21st December.

His argument comes to this-

(1) that Britain should do all possible to bring about an Anglo-

Japanese understanding, if not an agreement.

My reply to this is that Britain is well aware of the advantages of this (both to U.K. and to us) and it has been a prominent part of Britain's foreign policy for a number of years-as the Foreign Office despatches have made clear. However it takes two to make an agreement-and the Japanese have asked too high a price.

(2) that Britain and the Dominions most concerned should let Japan have her own way in every direction-to the extent, even, of our demanding that Britain should not lend money or make credits available to China.

Melbourne's letter reads to me like an attempt to teach one's grandmother to suck eggs. A little knowledge of the Far East seems to be a dangerous thing. With a good deal of what he says, one must agree-but only, I think, with such things as are common knowledge.

[matter omitted]

I agree that one of several possible nightmares is that Japan should make some early demand on us in connection with our migration policy. This has been on my mind-and I expect on yours-for some time. It would be advantageous to Japan to have an unsatisfied demand on us, if and when she wanted to take advantage of trouble in the West in which Britain was heavily engaged.

I think it would be a good plan to consider seriously the establishment of an Australian Minister at Washington and at Tokyo. So far as Washington is concerned, this might, with advantage, be discussed with Bruce [1] on arrival.

As a matter of interest to the Foreign Office I would suggest that a copy of Melbourne's letter be air mailed to the Australian External Affairs officer in London with instructions to make it available informally to the Foreign Office, not as expressing our views, but as a possible matter of interest to them.

I think it would be a good plan to ask Britain to keep us informed as fully and as rapidly as possible of affairs in Japan and in the Far East.

Apart from the above, I would suggest no more than a civil reply to Melbourne.

So far as the last page of Melbourne's letter is concerned, in which he suggests an Anglo-American 'alliance'-well-that's all very well-hasn't everyone concerned had the same idea for years. We know that, although an 'understanding' might conceivably be possible, anything approaching an 'alliance' is quite impossible. And-besides-we know that U.S.A. is in the forefront of the movement in respect of credits to China-a point that conflicts with his earlier thesis-that we should knuckle down to Japan at every point.

R. G. CASEY

1 S.M. Bruce, High Commissioner in London, then en route to Australia for consultation.

[AA:A1608,B41/1/6]