Your telegram 19th July Wool for Japan. [1] We are anxious to co-
operate as fully as possible with United Kingdom regarding
exchange control, and are continuing our contacts with them on
that subject.

We are, however, very strongly averse from involving the wool
export to Japan in the general exchange question, and must urge
United Kingdom Government to agree to treat them separately.

The hold up of Australian wool may lead Japan to look elsewhere
for supplies to an increasing extent. Other supplies of wool are
available. If we lose Japan as a customer for wool, in addition to
facing other post-war difficulties of that commodity, the wool
purchase scheme, while relieving Australia of anxiety during the
war, may produce serious long term disadvantages.

We recognise that United Kingdom Government have purchased our
wool, and that it is theirs to dispose of [2], but we ask them to
recognise the importance to us of having as many outlets as
possible during the war. The European outlets are closed. The only
possible markets of any size remaining are Japan and United
States. We must try to keep both of them.

It should be kept in mind that wool exports to Japan are an
important source of income to the sterling area. The loss of this
income would increase the balance in favour of Japan, which would
be the subject of any payments agreement. Even from United Kingdom
point of view there seems no more reason to hold up wool than to
prohibit other exports to Japan during the negotiations. From our
point of view it may be seriously damaging.

For above reasons we wish you urgently to repeat representations
for renewal of wool shipments to Japan.