I must say that I feel somewhat disturbed at the views which appeared to predominate at the British Commonwealth Conference.
There seemed to be a strong feeling that nothing could be done except to demilitarise her and that the democratisation of Japan was desirable, but the Allies could not impose it upon her and that it was rather futile to try.
In my opinion, if these views prevail, a position of instability will develop in the Pacific which will be very disappointing to the Australian people. Japan will be free to resume her superiority in East Asia and will then be available to move with all her economic and strategic power into the orbit of the highest bidder. In saying this, I do not mean in any way to criticise your own position, either as Chairman of the British Commonwealth Conference or as leader of the Australian Delegation. In the first role, you were bound to seek the opinions of the other members, and did so, if I may say so, most successfully. On the other hand, you pressed the views put in the Agenda Notes. These represented the maximum views of the Preparatory Committee with some modifications made by yourself at the last moment, and were quite satisfactory. Indeed, they were prepared in order to allow ample room for compromise. It is the lack of response on important points by the various other Delegations which alarms me-their attitude which seems to me to be defeatist-that nothing can be done by tutelage or pressure to change Japanese policy, and that the best we can do is to get out and leave them to their own devices. This, of course, is not stated in so many terms. At any rate, as a student of politics of considerable experience, it is the conclusion I feel bound to draw, although formal statements to the contrary may be found scattered over the notes of the Conference.
My attitude is not based on any view that a harsh peace should be imposed upon Japan or that a long military occupation is desirable, or that control can radically change the habits and objectives of the Japanese people. It is inspired by the view that, unless certain changes are achieved and certain changes made in Japan's policy, and unless stability is achieved in the Pacific, we shall have fought the war in vain, and in a few years' time we may have to face similar dangers in an aggravated form.
In these circumstances, I contend that we should not yield to the first signs of Japanese resistance and accept a non possumus attitude on behalf of our Allies, but that we should use our ingenuity in seeking out ways of securing our main objectives. I am sure that Australian public opinion will demand no less. I believe that we can get much support in the public opinion of other countries-we may fail but we can only satisfy our own people and show that we have made the attempt.
There are, as it appears to me, two obvious defects in the attitude disclosed at the Conference:-
1. No attempt is made and no plan formulated to deal with the position of Russia as constituted by the Yalta Agreement. A Peace Treaty is not a mere contract with the defeated enemy but an arrangement between all the combatants to produce a stable situation. An unstable international situation may make any Peace Treaty meaningless.
2. Japan must be changed from an autocratic aggressive State to a real democracy of a modern type, with an economy which favours the democratic elements. A Peace Treaty, which does not provide for this, will be of little value.
Let me consider these in detail:-
1. Stability in the Far East I put my views as to the effect of the Yalta Agreement in a long memorandum which I gave to Mr. Jamieson. Major Plimsoll has seen it.  I also put the position briefly in a note which you took with you to Japan.  I gather from what you said at the Conference that you were fully seized with the situation and with the fact that the superior strategic situation of Russia dominates all considerations relevant to the Peace. Situated as she is, Russia could nullify any disposition we might attempt to make in the Peace Treaty as soon as the Treaty Powers lost their control of Japan. I say that these circumstances should colour the whole of our attitude to the terms of the peace and to the question of control. We must do something about it-we cannot ignore it. The easy Peace which we might otherwise be disposed to give may be impossible now. This is not a new situation in peace negotiations.
After the Napoleonic Wars, nine-tenths of Castlereagh's efforts were directed towards obtaining a workable Europe with a 'just equilibrium' and, after World War I, most of the efforts made at Paris were directed to the same end. in this case, we are rendering far more acute the superiority of Russia in the area by the complete demilitarisation of Japan, preventing her from becoming a factor in the equilibrium of the area. I say that we cannot be satisfied with any arrangement which does not contain some provision for redressing this balance.
Diplomatic history shows many devices for dealing with a situation of this kind. There were the guarantees of Switzerland and Belgium and the universal guarantee of territorial integrity in the Covenant of the League and in the Charter of the United Nations.
What I have suggested is the prolongation of the present occupation until the situation becomes more clear. I am not wedded to this proposal. Other arrangements may be suggested. An American guarantee might be sufficient, but military authorities ought to be asked to say whether American bases in the nearby islands would be sufficient to enable them to stand up against Russian attack from continental bases. Another suggestion worth considering is that of Mr. Gerald Packer  at the Advisory Committee (see notes of 12th September, p.69). Mr. Packer believes that Japan requires sixteen raw materials for her economy and that these could be controlled by the Allies and that this control would be proof against any action by Russia. But, for this purpose, some machinery would be necessary.
Under the circumstances, I strongly urge that the question be raised with the United States and that, if no other method be suggested, we ask for a prolonged occupation or control of Japan.
It does not appear to me to be sensible tactics to assume that the United States is going out of occupation and that we must accept it. If all the British Commonwealth members make up their minds that nothing can be done, then we give up the claim in advance. We may have to give it up, but we shall not lose any prestige by it.
We shall have plenty of backers and will also prove to the Australian people that we are not responsible for what happens. I may say that I had a conversation with Dening  after the Conference. He had the same views as I had about the effect of the Yalta Agreement and said that he believed the British would put it up to the United States and ask what they intended to do about it.
He seems to believe that the Americans have not thought the matter out.
2. Constructive Democracy in Japan On the second question, the British Commonwealth Conference was delightfully vague, and it seemed to me did not distinguish between the control that was necessary to enforce punitive measures and the control or tutelage necessary to secure democratic reforms. I would willingly give up all the punitive measures. I do not think that we will gain anything from reparations or the purge, and education will follow and not lead the prevailing pattern of the community. But, if the same financial and economic structure of the community is retained as existed before, economic feudalism will produce the same structure of autocracy and aggression.
Now, the method of progress so far has been to allow the Japanese Government and Parliament to carry out certain advances to democracy, but the advance is merely political and constitutional democracy does not change the economic structure; it may reinforce the old classes unless the classes who are in an unfavourable economic position are given some assistance and tutelage. If they are and they find their feet and a new economic balance is set up, forces will be unleashed which cannot be held back. Such reforms will help the masses in Japan and would be eagerly supported if they understood them.
In the Agenda Notes which you presented to the British Commonwealth Conference, there is a long series of proposals based on suggestions of the Preparatory Committee, and which I gather secured your approval. There are only two points I wish to make about them:-
(a) they will not be achieved unless they are pressed by the occupying Power and the old Japanese leaders realise that we are determined about them. This will mean a period of control, though occupation may not be necessary for this;
(b) the list is long and elaborate and the suggestions involve complicated and difficult measures.
I do not under-rate the difficulty, but merely put to you the consequences of doing nothing. If the landlord system and the Zaibatsu remain, can we expect a changed Japan? Will we have won the war? If we think the list too elaborate, cut it down-choose a number of key measures, e.g., trade unions, land reforms with credit provisions, central bank control over private banks, encouragement of co-operatives and dissolution of the Zaibatsu.
None of these is really difficult, except the last. I went into this very carefully, and, in the Draft Treaty, there is quite a complicated solution by which the concerns are split up. I was gratified to find, however, that it bears a strong resemblance to the scheme which the Japanese Prime Minister is at present introducing into the Diet (see attached note from Shortwave Broadcast). What I suggest is not easy, but it is necessary, and it can only be achieved by determined and skilful policy.
Generally, on the whole question, I would draw your attention to two matters. The first is an article in the New York Times from its Tokyo correspondent about 4th to 7th September commenting on the British Commonwealth Conference, in which it said, according to a cabled report, that many Japanese believed that occupation was useful as a protection for Japan. The second is the adverse reaction from China which appears to regard American policy as an attempt to treat Japan as a favoured protege.