ALLIED COUNCIL FOP, JAPAN
I have been directed by the Secretary, Department of External Affairs, Wellington, to inform you of our Department's concern at the progressive deterioration in the affairs of the Allied Council, to which Mr. Shaw draws particular attention in his Ministerial Despatch 1/1948 (6/1947) of 13th January. 
The Secretary further states that 'although from the first it was evident that the Council would be able to play only a very minor role in Japanese affairs, it fulfils, even under present conditions, an important function which cannot be performed by any other control agency. The restrictive interpretation placed by the United States Government on the terms of reference of the Far Eastern Commission has meant that many of the most important measures adopted in Japan fall within the category of implementation. Even in the case of matters on which F.E.C. might be expected to make a decision, such as the dissolution of the Zaibatsu, the course of events will largely be determined by the way in which policy is implemented by SCAR This necessarily increases the importance of maintaining in Japan a channel for independent Allied advice and criticism which, if presented in a helpful manner, should stimulate SCAP's administration and assist in the effective implementation of Allied policy.
That SCAP should have developed in so marked a degree a defensive attitude towards the policies he has sponsored and towards the actions of the Japanese Government, merely confirms our impression that responsible advice from outside his headquarters is desirable and on occasion necessary. In this connection the course which both Mr. Macmahon Ball  and Mr. Shaw have endeavoured to follow in the Council has been to our mind highly commendable. They have both been generously appreciative of SCAP's achievements while expressing honest differences of opinion on particular issues. It has nevertheless often seemed to us that the Americans would be satisfied with no less than the complete subservience of the Council, that anything short of a complete acquiescence in SCAP's policy would be interpreted as an unfriendly act. Obviously, if the Council were once reduced to this invidious position (and from the first there has been a sustained campaign to discredit it), it could only be a matter of time before it became so utterly useless that no one would care to resuscitate it. Such a development would be much regretted here and we would therefore request you to assure the Australian Department of External Affairs of our interest in the proceedings of the Council and to express our hope that the Council will continue to exercise in fact, as well as in form, the functions for which it was established.
We have at the moment no specific suggestion as to subjects which might be referred to the Council for discussion. We are enclosing, however, two memoranda from Mr. Pomles , dated 26th November, 1947, and 14th January, 1948, on anti-democratic organisations in Japan, in which the Australian Department of External Affairs may be interested.' I am enclosing the two memoranda referred to in the last paragraph of the Secretary's communication.