6 Lord Cranborne, U.K. Secretary of State for Dominion Affairs, to Mr R. G. Menzies, Prime Minister

Circular cablegram M149 LONDON, 12 July 1941, 11.17 p.m.

IMPORTANT MOST SECRET

Following for the Prime Minister. My circular M.1[3]6 of 5th July

[1], my circular M. 140 of 9th July. [2]

JAPAN

In conversation with H.M. Ambassador [3] on 8th July, the United

States Under Secretary of State [4] 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 [5] reporting that Matsuoka [6]

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 [7] 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

notice.

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

follows:

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) [8] 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. [9]

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

considered.

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

July.

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]