Today the Consul-General for Japan called on me and raised the
following questions:-

1. He stated that he had received instructions from his Government
asking whether the Commonwealth Government would have any
objection to Japan looking after Italian interests in Australia.

I said that this question was rather obscure at the moment as we
had only this morning received advice from the British Minister in
Brazil [1] that Italy wished the Argentine to look after those
interests. Mr. Akiyama however pointed out that the Italian
Embassy in Tokyo had made the approach to the Japanese Government
and there seemed to be little doubt that his country would be the
one asked to do it.

After conferring with you I informed him that the Commonwealth
Government would have no objection to Japan acting in this
capacity.

2. Mr. Akiyama then raised the question of the 'new order in
Eastern Asia' and asked when was Australia going to recognise that
order. I said that this was a difficult question, as the full
implications of it were not clearly understood. The first
announcement about this new order was in 1934 when Japan warned
other Powers not to interfere in Japanese policy in the Far East.

Various Prime Ministers and Ministers for Foreign Affairs and also
Ministers for War had given different interpretations of what this
new order meant.

Mr. Akiyama said that he specifically had in mind the new order as
from March 20th following on the inauguration of the Wang Ching
Wei Government in Nanking. I replied that as he was well aware the
Commonwealth Government had adopted an attitude of strict
impartiality in the dispute between Japan and China. We had not,
nor did we intend to interfere in any way in this dispute. I
reminded him that even he himself had admitted in the past that
the attitude of this Government had always been most correct and
appropriate in the circumstances.

Mr. Akiyama did not pursue the question further, beyond saying
that it seemed to Japan that we were still following too closely
the policy of the United Kingdom, and that we might take a more
independent attitude.

The conversation then led up to-
3. Closer Anglo-Japanese understanding. Mr. Akiyama was emphatic
that there was every reason why there should be close friendship
between the British Empire and Japan, and especially between
Australia and Japan, whose products were complementary. I gathered
that he was uneasy about the decision of the United States to
build two ocean fleets, and the appointment of Mr. Henry Stimson
as Minister for War. He said that Mr. Stimson had proved himself a
very bad friend to Japan, and the decision about the Navy was one
which seemed to be largely aimed at Japan. Mr. Akiyama said that
Japan had always regarded the abrogation of the Anglo-Japanese
alliance at the Washington Conference as a big mistake and he saw
no reason why a closer understanding between the Empire and Japan
should not in time develop into another alliance. Anyhow, he said,
Australia has made a very big step forward in the furtherance of
more friendly relations in the decision to appoint a Minister.

4. Appointment of Australian Minister
Mr. Akiyama expressed very grave concern at the premature
announcement in the press and over the radio about the decision of
the Commonwealth Government before the wishes of the Emperor or
the Japanese Government had been ascertained. I told him that the
decision was one which as he knew had been taken in principle some
time ago. The announcement to which he referred was not official
and it was due to one of those unfortunate things which from time
to time got out to the press and the radio without the sanction of
the Government. He promised to cable immediately his Government
and point out that this premature announcement was not to be
regarded as in any way discourteous to the Japanese Government as
in the meantime action was in train for the proper and formal
steps to be made to the Japanese Government.

5. Japanese-Australian trade
Mr. Akiyama thought that it was bad for our respective countries
at a time like this to curtail further Japanese importations into
Australia. He particularly mentioned the possibility of terrible
devastation and chaos in Europe and the fact that our exports to
the United Kingdom might be seriously affected in the future. As
he saw it, this would mean that if war could be kept out of the
Pacific arena altogether, and there was no reason why the war
should spread to the Pacific, Australia and Japan would have to
depend more and more on each other's resources. He even went so
far as to indicate that Japan might even be in the position to
supply munitions of war, even aeroplanes, which Australia might
want. In this respect he said he had submitted to Sir Frederick
Stewart [2] a list of supplies which Japan might supply to
Australia.

6. The question of communications between Australia and Japan was
then raised. Mr. Akiyama said that they had noted with pleasure
the first step towards improvement in communications by the
decision to establish wireless-telephone service. There did not
seem as yet to have been any advance in the Beam service. I
reminded him that he had promised to submit to me a memorandum on
this question along with a schedule of comparative charges
prejudicial to Japan. He replied that he had been in communication
with his Government on this question and he hoped shortly to
submit proposals to the Japanese Government.

I told him that without awaiting his memorandum I had again
discussed the matter with the Secretary of the Prime Minister's
Department [3] and had understood from him that the Government
were going to give further consideration to the Beam service and
that I hoped the reply would be favourable.

Mr. Akiyama was gratified with the stage that had been reached and
said that at the present time it was obvious that improved
communications between the two countries would be a great mutual
advantage.

W. R. H[ODGSON]