20 Commonwealth Government to Lord Cranborne, U.K. Secretary of State for Dominion Affairs

Cablegram 479 [1] CANBERRA, [28 July 1941] [2]

MOST IMMEDIATE Your M. 174. [3] For our guidance we would appreciate advice as to your policy on import and export transactions to be permitted with respect to- (a) immediate difficulties arising out of transactions commenced before freezing order [4];

(b) future transactions.

It is clear that United States Government contemplate continuance of some measure of trade on individual transaction basis of consideration.

We are not sure to what extent the policy you have set out in your telegrams 418 and 419 (1940) subsequently amended, Z.311 and Z.312

joint Empire and United States action to freeze Japanese funds.

We do not know what policy you have in mind but if basis of policy is to permit export of goods to Japan equivalent in value to our vital needs of imports from Japan under war conditions, then our exports to Japan would be almost negligible as our imports from Japan for vital and essential needs would be comparatively small.

It appears necessary that Empire policy at least should be based on general principles. In addition it would be advisable for the Empire policy to be co-related in some form to United States policy.

Our immediate problem is that we have one Japanese ship which was scheduled to load zinc concentrates today and another scheduled to load wool tomorrow. In view of your request that export licences for strategic minerals and metals should be suspended and also having regard to the fact that payment for these zinc concentrates had not been made, we are informing the Japanese exporters that the zinc concentrates cannot at this stage be loaded.

We propose to prevent loading of wool tomorrow pending receipt of your advices, as payment could only be made out of frozen funds.

A further point which also arises is whether despite agreement between Governor-General of French Indo-China and Commander-in- Chief, China Station [7], we should continue to make supplies available to Indo-China on basis agreed upon.

Would appreciate your earliest possible reply especially regarding shipment of zinc concentrates and wool. [8]

[AA : A3196, 1941, 0.10720]

1 Repeated to the N.Z. [Acting] Prime Minister as no. 281.

2 Inserted from Prime Minister's Dept outward cablegram register (AA : A3643, 2).

3 Dispatched 22 July. On file AA : A981, Far East 20A, ii. It outlined broadly U.K. and U.S. proposals to freeze Japanese assets and to restrict: trade with Japan in the event of a Japanese southward move.

4 Japanese assets in the United States, the United Kingdom and the Dominions had been frozen on 26 July (27 July Australian time). As Japanese balances in Australia were already subject to exchange control regulations, the freezing of assets was merely an administrative procedure (see Document 63).

5 Cablegrams 418 and 419 (dispatched 16 December 1940), Z311 (dispatched 19 October 1940) and Z312 (dispatched 20 October 1940) are on file AA : A981, Trade 68, iv. Cablegrams Z311 and Z312 are summarised in Documents on Australian Foreign Policy 1937-49, vol.

IV, Document 186.

6 ibid., Document 386.

7 An agreement between Vice-Admiral Jean Decoux and Vice-Admiral Sir Geoffrey Layton, signed in January 1941, allowed limited trade between the Vichy regime in Indo-China and British territories but proscribed re-export of British goods by Indo-China without the permission of the British Consul-General at Haiphong. See file AA : A1608, L41/1/7, i.

8 Cranborne advised on as July that licences for zinc concentrate, a strategic material, should be refused. The U.K. Govt had no objection to the granting of licences for wool but suggested that Japan first be required to repay existing credits from the available frozen funds. See cablegram 519 on file AA : A1608, A41/1/1, xxiii.

[5], D.182 [6] (1941) as subsequently amplified, is affected by