8 Prime Minister's Department to Mr S. M. Bruce, High Commissioner in the United Kingdom

Cablegram 3769 [1],

MOST SECRET & IMMEDIATE

CANBERRA, 16 July 1941

Following for the Secretary of State for Dominion Affairs. [2]

Reference your M.151. [3]

We have given careful consideration to your views but we are not

convinced that your proposed course of action is correct.

In paragraph (2) you refer to denunciation as something which

would 'afford unmistakable evidence of our reactions' and again

that 'the psychological effects on Japan would be great'.

At the same time, in paragraph (3), you appear to accept the

Canadian view that denunciation should not be represented as a

reprisal and that it should be based on commercial grounds. We

cannot reconcile these two things.

We think that the denunciation would plainly be regarded by all

parties as a reprisal and as a pretty ineffective one. We see no

value in economic measures against Japan which are merely

pinpricks and do not exercise a material influence upon Japanese

economy, and through it Japanese policy. That is why we suggested

that if economic action was envisaged as reprisal it should take

the form of severe restrictions on imports from Japan by all

countries. Such action would, on our latest information, fit in

very well with what the U.S.A. proposes to do in the same event.

If and when Japan makes anticipated move into Indo-China, whether

such move be with or without the concurrence of Vichy, then

following steps would in our opinion be appropriate:-

(a) Immediate denunciation of Treaty [4] without attempt at

justification on commercial grounds;

(b) The denunciation to be followed as quickly as possible by

intensified import and export restrictions or complete economic

embargo subject in either case to the United States being prepared

to act concurrently with us.

We would of course be most happy to consider any further argument

you might care to advance but frankly we are not convinced by

those adduced in the cable under reply.

1 Repeated to the N.Z. Acting Prime Minister on 17 July as no.

263.

2 Lord Cranborne.

3 Document 7. A further circular cablegram from Cranborne (M156 of

15 July on file AA : A981, Far East 20B, i) had urged a 'most

immediate reply' from the Commonwealth Govt on the course of

action recommended in circular cablegram M151.

4 The 1911 Anglo-Japanese Treaty of Commerce and Navigation.

[AA : A3196, 1941, 0.9889]