I have just been speaking to Casey  direct telephone. From this and other advices it is clear that Washington talks will almost certainly break down as a direct result of Chinese intervention apparently designed for the very purpose of preventing any agreement. If this becomes general impression it is obvious that the reaction may be unfavourable to China herself It has always been aim of this country that China should be safeguarded in any agreement at least against accentuation of Japanese armed attacks.
In negotiations for temporary modus vivendi that has been made reasonably clear. Of course we understand that Chinese objective may be to precipitate general Pacific war in hope that Japanese pressure will be diverted elsewhere. But it is possible that the only result of her present intervention in preventing agreement may be that she will have to face accentuated Japanese attack without being assured of armed support of United States. Further, in absence of that support it may be physically impossible for other countries to give her assistance she deserves. Of course if United States were to become engaged in armed resistance to aggression position might be transformed.
In these circumstances suggest you point out Chinese authorities (1) possible danger to China herself from her very strong intervention, (2) desirability of her obtaining from United States some assurance of armed support in event accentuation Japanese attacks. Intervention for the latter purpose would be far more valuable than her intervention for the purpose of terminating preliminary conversations at a period when it is essential that we should gain further time.
I would sum up our position in words of Prime Minister  to me this morning: 'China does not want to be treated as a pawn in this game. But neither does Australia'.
I am sending last two cables of Casey.  Also simultaneous wires from here to Bruce and Casey.