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

Cablegram 592 [1] CANBERRA, 11 September 1941

SECRET

Your circular M.259 [2] and previous related telegrams. [3] The Commonwealth Government note that the measures adopted by the United Kingdom Government are being kept abreast of the steps taken in the United States and this accords with our views on the general policy towards Japan as outlined in our telegram No. 467 of 23rd July. [4] As regards Australian trade with Japan under freezing orders, no new machinery measures were necessary to bring Australia into line with the United Kingdom and the United States as the existing Exchange Control Regulations required commercial transactions with Japan to be conducted on a sterling or dollar basis.

Para. 4, M.259. [5] All exports from Australia are subject to licence. Outstanding export licences for Japan and Japanese territories were revoked on 28th July and the issue of fresh licences for exports to those destinations suspended except under special authorisation. Only one shipment of goods has been imported since date of publication of freezing orders. Further reference to this is contained in our telegram No. 526 of 12th August and your reply No. 570 of 13th August. [6] Outward charge consisted of 8534 bales wool paid for in sterling before 26th July and 3236 bales valued at 74,620 Australian currency. Value of latter quantity, together with expenses of servicing the vessel, was set off against the value of the imported cargo on a Clearing Account basis.

As to future imports the Japanese Legation has been informed that unless the Commonwealth Government are notified before any further goods are shipped from Japan to Australia we would be bound to regard the goods as prohibited imports.

Para. 6, M.223 . [7] Imports from Japan are now under examination to determine the nature and extent of essential Australian requirements from Japan. Goods which might be permitted export to Japan in payment for any authorised essential imports will it is expected be confined to wheat, flour, and other foodstuffs, and such quantities of wool as are released from time to time in consultation with United Kingdom Government or your Wool Control Committee. The value of these exports would be limited to the available funds from proceeds of permitted imports from Japan.

1 Repeated to the N.Z. [Acting] Prime Minister as no. 354.

2 Dispatched 23 August. On file AA:A1608, A41/1/1, xxiv.

3 See the file cited in note 2.

4 Document 14 5 Paragraph 4 requested that, in view of the strict policy being pursued by both the U.S. and U.K. authorities, Dominion Govts should consider revocation of existing export licences.

6 AA:A3196, 1941, 0.11694 and AA:A3195, 1941, 1.14948 7 Dispatched 8 August. On the file cited in note 2. Paragraph 6 emphasised that the principle governing admission of imports to the British Empire should be 'the narrowest possible interpretation of essentiality' and requested information from the Dominion Govts 'as to the nature and estimated volume of imports from Japan' in accordance with this principle.

On 11 September the U.K. Govt sought the Commonwealth Govt's reply to the above query and commented that from replies received so far, 'in general we hope that throughout the Empire imports will be confined to exceptional items directly related to the war effort and that the initiative in arranging barter deals in respect of such imports will so far as possible be left to the Japanese'. See cablegram 622 On file AA:A1608, G59/1/3, ii.

[AA:A981, FAR EAST 20A, ii]