Following for the Prime Minister. My circular M.16 of 5th July
, my circular M. 140 of 9th July. 
In conversation with H.M. Ambassador  on 8th July, the United
States Under Secretary of State  indicated that he agreed as to
the probability of a Japanese move to secure bases in Indo-China
foreshadowed in my circular M.136.
2. On 10th July, Mr. Welles showed Lord Halifax a message from the
United States Ambassador at Tokyo  reporting that Matsuoka 
had disclaimed to him intention of attacking Russia, anyhow in the
near future. The United States Government had, however, received
information from Chungking source to the effect that on 6th July,
in return for German and Italian recognition of Japanese sphere of
interests in East Asia, Japan had undertaken to move south
immediately to commandeer bases in Indo-China and Thailand. There
would be later an attack on Siberia with special mention of
Vladivostock. This agreement had been approved by the Japanese
Imperial Council on 8th July.
The United States Government had further report from the Chinese
Ambassador at Berlin  that the Japanese move against Siberia
would be practically simultaneous with the southward move.
3. The United States Government had also information:
(a) that the Japanese Missions in Mexico and Central America had
been authorised to finance subversive activities there;
(b) that the Japanese Missions in North and South America had been
ordered to be prepared to destroy confidential files at a moment's
4. Mr. Welles said that the United States Government would
announce shortly that the Panama Canal was closed for repairs.
Japanese ships therefore which had been ordered to make homeward
journeys between 14th July and 22nd July would be unable to do so.
Any British ships with material for Great Britain would of course
be allowed passage though this would not be announced.
5. Mr. Welles confirmed the definition of United States policy as
Until Japanese commit an overt act, the United States would make
no further communication of minatory kind. As soon as they did so,
the United States would impose embargo on all principal materials
wanted by the Japanese such as metals, cotton, lubricants (but
not)  necessarily on foodstuffs.
6. The United States would regard as overt acts any acquisition of
bases in Indo-China even if done in agreement with the Indo-
Chinese authorities since this would clearly in effect be under
German duress. The United States would judge acquisition of bases
in Thailand according to circumstances.
7. The United States would apply the same economic action in the
event of any overt action against Russia but not if the Japanese
merely denounced the Russian pact. 
8. In reply to an enquiry as to what the United States would do if
the Japanese gave warning of their intention to interrupt supplies
en route to Vladivostock, Mr. Welles said that the Japanese
Government would hardly impose a blockade against Vladivostock
without declaring war on Russia in which case the first step of
economic pressure would be applied. The next step would then be
1 On file AA : A981, Indo-China 7, i. The original incorrectly
referred to this cablegram as M126.
2 On file AA : A1608, A41/1/6, v.
3 Lord Halifax.
4 Sumner Welles, who was then Acting Secretary of State.
5 J. C. Grew.
6 Japanese Foreign Minister.
7 Zhen lie (Chen Chieh) had been recalled from Berlin on 1 July in
anticipation of China's severance of diplomatic relations with
Germany the following day, but he did not actually depart until 10
8 Apparently mutilated in transmission.
9 The Treaty of Neutrality between Japan and the U.S.S.R., signed
in Moscow on 13 April.
[AA : A981, FAR EAST 20B, i]