Dear Alfred [Rive]:

Mr. Bryan S. Lendrum, Assistant Secretary of the Office of the High Commissioner for New Zealand here, came in to see me this morning to discuss a number of questions relating to the Far East that had been raised in a memorandum attached to a letter of February 27th which A.D. Macintosh had sent to Andrew Sharp, Official Secretary here. I understand that Mr. MacKay has sent you a copy of Macintosh's letter.] In this letter I shall confine myself to what I told Mr. Len-drum concerning our present views on the Japanese Peace Treaty.

I said that officially there had been no change in the Canadian views with regard to the substance and procedure for the Japanese Peace Conference from those expressed by Mr. Claxton at the Canberra Conference last August. Mr. St. Laurent had made a statement in the House of Commons on December 19th regarding the procedural question in which he had reiterated that it was our view that the original United States proposals of July 1947 should be adhered to, namely, that the eleven states members of the Far Eastern Commission should meet together in a preliminary conference to draft the Treaty, voting to be a two-thirds majority.

The question posed in the memorandum read, "Do the Canadians regard the conclusion of the Peace Treaty as urgent and have they any opinions on how to overcome the procedural impasse." I said that it seemed to me that it made very little difference whether we regarded the conclusion of the Peace Treaty as urgent or not. Actually, we were not seriously affected one way or another. The only obstacles we felt at the present time were those restrictions on trade with Japan which would be largely remedied by the fixing of a rational exchange rate. I thought it was more important to consider what the factual situation was and, more particularly, what the intentions of the United States are. I thought that the Americans now felt that it had been fortunate that a Peace Conference had not been convened last fall as it would probably have worked towards a settlement generally similar to that envisaged in the various papers now before the Far Eastern Commission. The United States was now more concerned about the Soviet Union as a menace to world peace than Japan and was probably going to revise its own proposals for the reconstruction of the Japanese economy. Mr. Kennan's recent visit to Japan and the present Mission there of Mr. Draper, Under-Secretary in the War Department, would seem to indicate that the United States was going to review its policy with respect to Japan. The expectation was that they would give sufficient financial support to enable the Japanese economy to be rehabilitated by [953. Such an economic rehabilitation was a continuing one and the United States did not feel that it could slough off its responsibility by a Peace Treaty. Accordingly, they did not consider a Treaty an urgent matter now, I thought.

It seemed to me that if other interested countries wished to influence United States policy in respect to Japan they would have to do so in the Far Eastern Commission, This might involve a re-examination of all of the matters now before the Far Eastern Commission, particularly those relating to the levels of industry to be permitted Japan and reparations removals, I thought it would be useful if the various British Commonwealth Members on the Commission could get together and exchange views in order to anticipate United States tactics in the Far Eastern Commission. It seemed to me that the methods by which the United States proceeded to initiate and implement its new economic policies with respect to Japan would be important. I thought that the United States should he encouraged to bring its proposals to the Far Eastern Commission to have them examined and discussed there in the various committees. When these papers were considered at the Commission level and the Soviet Union decided to veto them, it might be understood that the United States could then go ahead and issue an interim directive to General MacArthur. If the United States was prepared to accept the views of two-thirds of the Members of the F.E.C. and did not issue interim directives contrary to the views of the majority, then ] thought that we should he well satisfied with this procedure as it was the one we were pulling for in the Japanese Peace Conference itself. However, it was also important that the United States should not try to short-cut this procedure. Otherwise interested countries like Canada and New Zealand would not have an opportunity to shape and influence their policies.

As regards the substance of the settlement with Japan, our views had not changed substantially from those expressed at the Canberra Conference. Our primary concern was security. Canada, as a North Pacific power, was perhaps more apprehensive concerning Soviet aggressive intentions than it was concerning possibilities of the revival of Japanese militarism.

Moreover, Canadian strategic views concerning the defence of the northern half of the Western Hemisphere are bound to be very strongly influenced by the United States. If the United States felt that it was desirable to build up the Japanese economy to a point where it would be better able to assist in resisting Soviet expansionism in Northeast Asia than we were hardly in a position to argue over this policy. In the final analysis it was the United States which held the preponderance of power in the North Pacific and on whom we would rely for protection whether the aggression came from the Soviet Union or a revived Japan.

As for our secondary interests in the substance of the Treaty I thought that they were probably connected with the revival of commerce in the Pacific. The Canadian businessmen who had gone to Japan encountered a great many difficulties and prospects of reviving Japanese trade to even its pre-war levels were not bright. Some improvement would result from the establishment of a rational exchange rate. However, even this would not act as an alt-powerful catalytic agent. I thought that it would be some years before commerce flourished again in the Pacific basin. Revival of Japanese trade with all countries would benefit Canada indirectly and it was from a general increase in commerce in the Pacific that we would profit rather than from a specific exchange of goods with any one country.

I told Mr. Lendrum in conclusion that I thought it would be useful for us to continue to have an exchange of views in Ottawa, Wellington and Tokyo on matters relating to the Japanese settlement, but that I thought that probably the most fruitful contacts could be made between our Embassy in Washington and the New Zealand Legation there. I knew that Mr. Collins and Col. [B]owles were on intimate terms and I was sure that they would continue to exchange views on all matters arising in the Far Eastern Commission which, I thought, would continue to be the principal arena for discussion on the Japanese settlement for sometime yet.

I am sending copies of this letter to Ralph Collins¹⁴ and Herbert Norman.

Yours sincerely, A.R. MENZIES

¹⁴Deuxième secrétaire, ambassade aux États-Unis; délégué suppléant. Commission pour l'Extrême-Orient. Second Secretary, Embassy in United States; Alternate Delegate, Far Eastern Commission.