Reference your telegram of 18th March  and my telegram 213 of 2nd April. 
Japanese have undoubtedly been exercising pressure on Portuguese through Macao and Portuguese Ambassador  has within last few days been to see Halifax , Cadogan  and myself. 
He told me (a) that the Japanese Charge d'Affaires at Lisbon had recently told Governor of Macao  and the Portuguese Minister at Tokyo  verbally that if Portugal did not satisfy Japanese over Timor they would make trouble at Macao, (b) that Japanese were now endeavouring to drive Portuguese out of the island of Macao which they had always occupied and (c) that the Japanese Minister at Lisbon  instead of trying to get western concession in Timor was now demanding the cancellation of the eastern concession.
Monteiro agreed that the eastern concession was perfectly valid and I urged that his Government should resist the Japanese blackmail and counter it by threats of publication.
The Netherlands Minister  also came to see me to express his Government's deep concern at Japanese pressure re Timor.
Have at last got Cadman's  views on commercial aspects; they are that there is little possibility of finding any oil field of major importance in Timor though discovery of small quantities not ruled out, and that in view of the above he could not recommend any Company and should not make a cash payment of anything like the amount indicated in order to buy Wittouck  out. Am having a further discussion with him on Monday.
Had further meeting with Butler  and Foreign Office officials today. Butler said that after consideration he felt strongly that Dutch should be brought in. He feels it most desirable that we should not reject their spontaneous offer of co-operation vis-a- vis Japan, also, that if we can get a line-up of Commonwealth, United Kingdom, Portugal and the Netherlands it will be much easier to handle the Japanese in this matter. Put on this broad political basis he thinks that the United Kingdom would be prepared to consider in conjunction with the Commonwealth and Netherlands Government providing financial assistance to Oil Concessions for the purpose of buying Wittouck out-any such assistance being conditional on Oil Concessions finding a substantial portion of the amount required.
Arranged that I should ascertain your re-actions and should also find out from Dodson how much Oil Concessions would be prepared to put up.
Have seen Dodson who states that his company would be prepared to put up 10,000 and that Wittouck would probably accept between 30,000 and 40,000.
Please cable your views as soon as possible. Meanwhile regarding Japanese pressure on Macao the Foreign Office have undertaken to give the Portuguese Government fullest support in resisting Japanese efforts to induce them to cancel the eastern concession and instructions to this effect are being sent to the Ambassador at Lisbon.