We have received your telegram of 5th December  Please convey following views to Secretary of State for Dominion Affairs - I have read with great interest the joint appreciation of the Far Eastern position by the British, French and Polish Ambassadors in Tokio, and also the summary of Lothian's report from America. 
I feel no doubt that it is most desirable that every effort should be made to offer Japan some way out of her Chinese position because any temporary collapse in Japan might have extremely dangerous results, and in any event joint action or even a complete understanding between Russia and Japan would be most serious.
Australian opinion is of course very sympathetic to China and we would not desire to put unfair or unreasonable pressure on Chiang Kai Shek , but at the same time we feel strongly that with a definite possibility of active co-operation between Germany and Russia, any Russo-Japanese Agreement would be full of actual menace to Australia and to British interests in both the Pacific and Indian Oceans.
I feel some difficulty in understanding Lothian's optimism about the Japanese restoring full sovereignty to China with face-saving arrangements for Japan, because this would involve a great humiliation-to avoid which I would have thought that Japan would move almost willingly into an arrangement with Russia in the belief that she could avoid subsequent Communist influences and Russian aggression.
Under these circumstances I attach the greatest importance to cooperation between Britain and America in order to persuade Japan to terminate the Chinese affair and win her away from Russia.
It is unnecessary to point out the difficulties of this because America may suspect our motives and American public opinion may prove an obstacle. But at the same time the realist view is undoubtedly to save Japan from a Russian alliance, and anything that can be done to make this clear to the United States and to make them feel that they and Great Britain have common motives and a common interest, and should therefore pursue a common policy, should in my opinion be done.
Rightly or wrongly, I have formed the impression that discussions with America have been rather too much on minor questions and too little upon the broad and positive policy to be pursued if the present complications are to be turned to our advantage and contribute to real peace in the Pacific.
If Great Britain and America could at once examine the Sino- Japanese problem with a view to formulating the interests which they held in common and which were being menaced, I feel sure that the basis for co-operation would at once appear.
Though I have stated these general views as plainly as possible I know that I do not need to emphasise the importance of avoiding in the approach to America any suggestion that she is being used to get the British out of trouble or that she is being asked to involve herself in foreign affairs to an extent which would be badly received by her people.