368 Australian Government to Shaw, Wrigley and Reibelt

Cablegram 26 CANBERRA, 23 January 1948, 4 p.m.

SECRET

1. Please see our separate telegram of to-day's date [1] regarding suggested basis for commencement of trade with Japan.

2. Adoption of this proposal would enable SCAP to finance the purchase of at least 50,000 bales of raw wool per year. We are concerned at the possibility of SCAP regarding the proposal as unattractive because of the relatively small amount involved and feel you should be aware that greater quantities can be exported.

The limit placed at the present time has been due to our inability to envisage a greater flow of imports of essential goods from Japan chiefly because of the requirement of payment in dollars for cotton textiles and yarns.

3. If SCAP would be prepared to sell cotton textiles and yarns to us for sterling our purchases could be increased by approximately 3 million over the year and this would enable SCAP to more than double his purchases of Australian wool.

4. We omitted any suggestion of a request to SCAP that cotton textiles and yarns should be made available for sterling in our proposal as we felt that it might unnecessarily delay its consideration. If you feel that there is any possibility that SCAP would agree to the inclusion of cotton goods in the balanced trade arrangement, you could make it clear at once that there would be no objection on our side.

5. Other commodities which we would consider licensing from Japan would be sulphur, caustic soda, caustic potash and soda ash if any are yet available for export. [2]

1 Document 367.

2 Wrigley conveyed the proposal to MacArthur in a memorandum dated 5 Februay 1948. It included the matter mentioned in paragraph 3 above. On file AA:A5103/1, 8/4/3, ii.

[AA:A1838/278, 479/2/8]