September 2021 marked 90 years since the Manchurian crisis, when the Imperial Japanese Army attacked and proceeded to occupy the Chinese province of Manchuria. This action precipitated the establishment of the puppet state of Manchukuo and the Second Sino-Japanese War. The anniversary was marked by historical reflections and commentary on the contemporary legacy of the crisis.

What went undocumented was Australia’s somewhat unusual response to the crisis and the effect it had on the nation’s burgeoning foreign policy. My recently published book proposes that the crisis confirmed Australia’s persistent fear that the League of Nations was an ineffectual tool for managing peace in the Asia–Pacific region. This realisation was the genesis of a distinct Australian policy, driven towards a more assertive presence in regional affairs.

In the wake of the Manchurian crisis, the League condemned Japan as an international aggressor, adopting a policy of non-recognition of Manchukuo and recommending economic sanctions in a bid to discourage further hostility. Despite Australia’s longstanding fear of Japanese expansion and potential designs on the Australian continent, Canberra was reluctant to adopt punitive action.

What may at first appear a decision driven by disinterest in international affairs is in fact an early example of Australian diplomacy and a careful assessment of the national interest.

An examination of the intersection of trade and security interests helps clarify Australia’s response.

The Manchurian crisis occurred against the backdrop of the Great Depression and Australia’s need to diversify its export markets. Japan, with its cheap and large labour force and growing industrialisation, presented an immense opportunity. In fact, Japan’s appetite for Australian wool positioned it as Australia’s second-largest trading partner by 1930–31. This trade was vital to Australia’s recovery from the Depression and the nation did not wish to see the league of Nations take action that might threaten the relationship.

Security considerations were also at play. The 1932 Chiefs of Staff Committee annual review branded British defence planning as inappropriate—particularly in the Asia–Pacific, where the situation was described as ‘about as bad as it could be’. While British defence planning was overhauled, the Australian government was cautioned that the ongoing Depression precluded greater British defence commitments in the region. Australia was left facing uncertain security assurances in an ever more unstable region.

Against this fraught economic and security backdrop, seeking to maintain peace in the Asia–Pacific was the most practicable course of action. Of course, as a small nation with limited influence on the international stage, Australia had to work with the available tools of diplomacy.

At the League of Nations, Australia delayed action and sought to bring the British onside in rejecting the League’s recommendations. Prime Minister Joseph Lyons and External Affairs Minister John Latham avoided public statements on the matter. In London, Australian High Commissioner Stanley Melbourne Bruce unsuccessfully lobbied the British not to adopt a position of non-recognition of Manchukuo, cautioning that it would be regarded by the Japanese as an act of hostility. Australia eventually adopted a position of non-alignment.

Even as the Manchurian crisis unfolded and a rift emerged in the interwar global order, Australia continued to explore avenues for economic and diplomatic engagement with Japan.

In 1934, Latham led Australia’s first diplomatic mission outside of the British Empire—the Australian Eastern Mission. Although Latham visited other East and Southeast Asian nations, Japan was the true focus of his attention.

The mission saw long discussions about the Australia–Japan trade relationship, and in his report back, Latham enthusiastically supported the appointment of a trade commissioner in Tokyo. This appointment would have a dual role as an advocate for Australian trade interests and a quasi-diplomat who could build a rapport with the media, government and public in what Latham described as a ‘persistent and tactful … propaganda’. Latham’s recommendation was adopted and Lieutenant-Colonel Eric Longfield Lloyd was duly appointed Australia’s first trade commissioner in Tokyo, arriving in October 1935.

In no small part, Australia’s latent security concerns and the situation in Manchuria also shaped the agenda of the mission. Latham met with Japanese Foreign Minister Koki Hirota. The two men discussed membership of the League of Nations, Japan having announced its intention to withdraw in protest of non-recognition of Manchukuo. Latham was unable to convince Hirota that Japan should remain in the League, and in his report following the mission he observed that ‘so far as one can judge there is not the slightest probability that Manchukuo will cease to exist’.

Latham offered a possible solution, recommending that consideration be given to ‘some formula which would enable both Japan and the League to “save face” and get rid of what threatens to be a permanent source of poison in the relations between Japan and other countries. It is most improbable that any conceivable formula would satisfy any of the Chinese factions, but that could not be helped.’

The details of this formula were vague. What’s clear is that Latham judged the measured accommodation of Japan to be a priority in Australia’s approach to regional affairs.

Latham’s position no doubt informed Lyons’s efforts at the 1935 British Empire leaders’ meeting. In a plea to stabilise relations with Japan, Lyons proposed a Pacific security pact. This proposal included recognition of Manchukuo. Lyons stressed his fear that Japan might turn its attention south—and towards Australia—if it wasn’t allowed to expand in its immediate region. Much to Lyons’s dismay, Manchuria was deemed a matter for the League of Nations and the pact was quickly set aside. Lyons would again raise the possibility of a Pacific security pact at the 1937 Imperial Conference, where it was again set aside.

The Manchurian crisis and Australia’s activities thereafter represent the origins of a distinctly Australian regional foreign policy and early experimentation with the tools of diplomacy. Certainly, these efforts were narrow in their effectiveness, though this was not unsurprising given the nation’s limited influence on the international stage. Nevertheless, they set a course for a more assertive Australian voice in regional affairs and the nation’s generally conciliatory approach to Japan in the lead-up to World War II.

These developments also speak to Australia’s early appreciation of the relationship between trade, security and diplomacy, something that remains an enduring feature of Australia’s foreign affairs conduct.