201 Mr S. M. Bruce, High Commissioner in London, to Mr R. G. Menzies, Prime Minister

Cablegram 296 LONDON, 1 May 1940, 10.20 p.m.

FOR THE PRIME MINISTER SECRET

Your telegram of 29th April. [1] Barley, wheat and flour sales to Japan. Ministry does not consider it likely that barley, wheat and flour would reach Germany via Siberia. While there is freight agreement between Germany and Russia respecting trans-Siberian railway, it is being used for less bulky but highly important war supplies such as rubber, cobalt, nickel etc. Negotiations probably commence in the near future to arrive at war trade agreement with Japan, which win have the effect of restricting goods reaching Germany via Vladivostok and Dairen. Barley, wheat and flour not of the same importance, hope of (sic) assisting [2] these negotiations difficulties have for some time been placed in the way of Japan receiving supplies, e.g., cotton and jute from India, rubber from Malaya, nickel from Canada. In view of great influence of Mitsui and Mitsubishi in Japanese commerce and economic life efforts have been and are being made to exert pressure upon them by restriction of business from the United Kingdom and Empire with the object of bringing home to them in their own business interests desirability of an Anglo-Japanese agreement. Both firms are blacklisted here. The British or French channels the Ministry of Economic Warfare had in mind were Bunge, Dreyfus, Faradays, possibly Perich. [3] Ministry fully alive to the importance of Japanese business to the Australian wheat and barley industries, but hope it may be possible for you without risk to sales to use for the time being other channels than Mitsui. For reasons concerning United States indicated in my telegram wool of 17th February [4], Ministry most desirous that special facilities as to terms should not be afforded to Japan.

BRUCE

1 Document 185.

2 In Bruce's file copy (on AA: M100, May 1940) this read 'but in hope assisting'.

3 In Bruce's file copy this read 'Bunge Dreyfus Jardines and possibly Gipperich'.

4 Document 65.

[AA: A981, TRADE 68, iv]