20 October 1937

With reference to the attached Circular Telegram B.114 [1], the
follow ing preliminary observations are made on the points raised
by the British Government on which consideration by the
Commonwealth Government is asked. [2]

The recommendation of the Advisory Committee of the League of
Nations which was adopted by the General Assembly was to invite
the signatories of the Nine-Power Treaty of Washington of February
1922 to consult with a view to settlement of the Sino-Japanese
dispute by agreement.

The basis of the consultation was conciliation. Should
conciliation fail the possibility of other means of effecting a
settlement was not overlooked, and the Advisory Committee
indicated that it might be desirable to make proposals through the
Advisory Committee to the General Assembly, whose session is not
closed but merely adjourned. It appears, therefore, that the
courses of action mentioned in the cablegram are not applicable at
this stage. There is no obligation on the part of the signatories
to impose sanctions or other form of pressure on one of the
parties. We would, or could, only agree to any such action by
virtue of a specific League obligation, following on collective
agreement and decision, supported by co-operation on the part of
those Powers who are signatories of the Nine-Power Treaty, such as
the United States and any members of the League.

Economic pressure of any kind could only be effective if it had
the full support of all League Members as well as the signatories
of the Nine-Power Treaty, and the fact that the League has
referred the dispute to the nine Powers does not absolve them from
further participation in any decision or action to effect a
settlement. At this stage, therefore, it seems that the
Commonwealth Government should not commit itself to any course of
action or to consider the settlement of the dispute on any basis
other than conciliation. It was, moreover, on this understanding
that the Commonwealth Government accepted the invitation to
participate in the Conference. Should conciliation fail further
measures will certainly have to be discussed and recommendations
made to Governments. If such recommendations take the form of
economic pressure against Japan, and the signatories as well as
League Members are prepared to guarantee mutual support, then on a
long-range view an Anglo-American combination against an aggressor
would be the best hope for the future peace of the world and
safety of Australia, and we would probably be unwise to refuse to
co-operate in such circumstances. This, however, does not call for
any decision though the possibility must be kept in mind.

Later advice has been received from the External Affairs Office in
London to the effect that the British and American Ambassadors at
Tokyo have stressed the desirability of Japan attending the
Conference on the 30th October. [3] The Japanese Government has
not yet made its decision, but the Minister for Foreign Affairs
has indicated that Japan generally was against accepting the
invitation and was opposed to any idea of a mediation by a number
of Powers. If the decision is reached that Japan will not be
represented this indicates that settlement by conciliation will be
hopeless, and that consideration must be given almost from the
outset of the Conference to other measures.

In view of all the circumstances, it is felt that only an interim
reply should be sent to the British Government and that the
gravity of the issues raised is such that the reply of the
Commonwealth Government is a matter for consideration by the whole
Cabinet.