146 War Cabinet Submission by Senator G. McLeay, Minister for Trade and Customs

Agendum 219/1940 30 September 1940

SECRET

APPLICATION OF SHIP WARRANT SCHEME TO JAPAN

The United Kingdom Government has asked the Commonwealth Government to apply the ship warrant scheme to Japanese ships entering Australian ports. If we agree to the proposal it will require steps to be taken to delay the supplies of bunkers, stores and other facilities to Japanese ships for a period of twenty-four hours at the Australian port where the principal supplies are to be taken on board. The twenty-four hours' delay would be brought about administratively.

2. This procedure is an interim one adopted for the purpose of compelling Japanese shipping companies to agree not to take cargoes to European or Mediterranean ports unless an export permit has been granted by the Dominions or a British Consular Authorisation is granted in foreign countries. The ultimate procedure proposed to be adopted against Japanese shipping which had not agreed to comply with the United Kingdom blockade policy would be a denial of all port facilities to all ships owned by Japanese shipping companies which are not prepared to make agreements with the United Kingdom Government.

3. It was considered that the Japanese Government would regard any interference with Japanese shipping as a major question. Not only is the industry one of the most important in Japan but national prestige is also involved. The United Kingdom Government was asked the following questions [1]:-

(a) Were they confident that the interim procedure would assist them in negotiations with Japanese shipping companies? (b) If the question developed into a major political one had the United Kingdom Government determined their ultimate attitude? It was pointed out that if the procedure were abandoned in the face of strenuous opposition on the part of the Japanese Government loss of British prestige was inevitable and abandonment would most likely encourage or stimulate Japanese hostility in other directions.

(c) Whether any considerable tonnage of Japanese shipping is engaged or is likely to be engaged in carrying cargoes to European and Mediterranean ports.

(d) If no considerable tonnage is engaged is it worth while applying the proposed procedure to Japanese ships? (e) Result of negotiations with Japanese shipping companies to date and prospects of obtaining required undertakings.

(f) Views of other Dominions.

4. The New Zealand Government were evidently concerned and asked our views. [2] They advised the United Kingdom Government that the points raised in our telegram had general application to New Zealand and that full co-operation on their part should be contingent upon concerted action by the two Dominions. [3]

5. The United Kingdom Government replied as follows [4]:-

(a) Japanese aspect has been most carefully considered by them but they do not apprehend that adoption of suggested procedure would raise major political issue.

(b) Japanese ships might from the outset have been denied all port facilities but the interim procedure was evolved to meet the very points which the Commonwealth Government advanced.

(c) For the successful working of the scheme and its prestige as a world wide arrangement concerning British controlled facilities it is essential to apply it to Japan.

(d) It is considered that a delay of twenty-four hours which would be attributed to administrative reasons should not arouse justifiable opposition or protest and the Japanese could not in any case accuse the authorities of immediately withholding facilities.

(e) No considerable tonnage of Japanese ships is trading to European or Mediterranean ports but it is considered important to uphold the principle involved.

(f) One or two important Japanese shipping companies have already approached the Ministry of Shipping but it is not necessarily expected that all Japanese shipping interests will agree to give the necessary undertakings and it is not the present intention to force them to do so where no practical issue arises.

(g) The Government of India has agreed to bring this scheme into force. The views of the South African Government have not yet been received.

6. The United Kingdom Government brought the scheme into operation in the United Kingdom and colonies on 23rd August. On 17th September they advised that the Japanese Government have [sic] made a restrained protest in Tokyo and London regarding the treatment of Japanese ships. [5] The general attitude of the United Kingdom Government is that they are prepared to discuss any practicable alternative to the ship warrant scheme which will secure the same ends.

7. On 21st September New Zealand Government informed us [6] that United Kingdom Government should be supported and that a united front should be presented by all Dominions acting in concert with the United Kingdom and that if this were possible it would have the desired effect on the Japanese Government.

8. The issues raised have probably more significance for Australia than any other part of the Empire. The United Kingdom Government have avoided replying to our question as to what their attitude will be if Japan treats the question as a major political one. It is difficult to agree with the United Kingdom Government's opinion that the delays should not arouse justifiable opposition or protest and that the Japanese could not in any case accuse the authorities of immediately withholding facilities. Even if this United Kingdom viewpoint is agreed with there still remains at the background the question of withholding all port facilities from Japanese vessels.

9. The question, however, appears to have been decided by Japan herself. The alliance she has made with Germany and Italy will no doubt require her to use her best endeavours to supply these countries with materials of which they are short and these two countries will no doubt encourage her to use her shipping in such a way as will bring about impairment of the blockade policy or alternatively involve the British Navy in 'incidents' with Japanese shipping. In any case we can anticipate that Germany and Italy would expect Japan to test thoroughly the blockade policy and Japan may be encouraged in this action if there are any apparent weaknesses or differences in policy among the Dominions.

It is now more imperative than ever that the Empire should present a united front on this ship warrant scheme.

Recommendation 10. It is recommended that the United Kingdom Government be informed- (1) That the Commonwealth Government is agreeable to carry[ing] out the interim procedure insofar as Japan is concerned (we have already put this scheme into operation insofar as other ships to which it applies are concerned) [7] and that this would be applied at an early date.

(2) That before the ultimate procedure of denying all port facilities to Japanese shipping is brought into force the Commonwealth Government would desire a full exchange of views with the United Kingdom Government on the question. [8]

G. MCLEAY

1 See Document 76, note 3.

2 The N.Z.Govt's cable gram of 20 August has not been found.

3 See N.Z. Govt's unnumbered cablegram of 23 August (AA:A3195, 1940, [1.]7065).

4 See cablegram 310 of August on file AA:A816, 19/307/77 5 See cablegram D471 on file cited in note 4.

6 See unnumbered cablegram AA:A3195, 1940, 1.8133.

7 The Commonwealth Govt had informed the U.K. Govt of this decision in cablegram 482 dispatched on 18 September (AA:A3196, 1940, 0.6732). The decision to exclude Japan had been justified by the argument that: 'steps would be taken by Japanese ship owners to arrange for the provisioning of their vessels elsewhere, or, if this is not possible, for the Japanese Government to make vigorous protest. One incident at Australian port relating to delay to Japanese vessel due entirely to negligence of Japanese master brought forth strong representations from Japan, and the importance which Japan generally attaches to her shipping industry would bring about a position where the Japanese Government could not but help treat matter as one of major importance.' 8 This Agendum was discussed by War Cabinet on 2 October, but the question was deferred for further consideration. See AA:A2673, vol. 4, Minute 547.

[AA:A2671, 219/1940]