SYDNEY, 29 July 1941
AGENDUM No. 102/1941 -REVIEW OF INTERNATIONAL SITUATION The Prime Minister  traversed the review by the Department of External Affairs dated 2th July and a general discussion arose on the section relating to the Far East, in view of Japan's recent move into Indo-China.
2. The Prime Minister referred to the main features of his discussions in London with the United Kingdom Government on Japanese relations in which he had suggested the drawing of a chalk line to indicate the limit of Japan's southern advance and the exertion of every endeavour to secure the fullest degree of American support to the limit of warlike operations.  3. The Prime Minister added that the Commonwealth Government appreciated the difficulty, for constitutional reasons, in securing a guarantee of armed support from the United States. The Americans objected to taking [a] decision now which might govern their future course of action and involve them in war. It had been strongly emphasized to the United Kingdom Government that, in notifying the United States of the economic measures being taken by the British Empire, it should be intimated that the possible consequences of such action, both for ourselves and for the Netherlands East Indies, [were] realized and we assumed that the United States Government also realized them. From the discussion that would arise on this basis an indication of the United States' attitude should certainly be given, and its nature would, in all probability, constitute the satisfactory understanding which the Commonwealth Government felt to be essential. If the Americans' step by step method led them to the inevitability of war, they would not baulk at war if, in their own judgment, it was unavoidable. 
4. Dr. Evatt  enquired as to the extent of the sanctions being imposed and the Prime Minister conveyed that they were being worked out in consultation with the United States. Mr. Beasley  asked if the Commonwealth Government had received further knowledge of the Far Eastern situation and the course of action from the United Kingdom Government. The Prime Minister replied that such was not the case.
5. Mr. Forde  thought that the course of policy being followed by the United States would enable them to 'walk out' of the resulting situation when they wanted to, but the Minister for the Arrays considered that, having regard to constitutional and political considerations in America, the method being followed by the Administration was the one which they thought best for ensuring the solidarity of public opinion behind their decision, and for presenting to public opinion a fait accompli, which by other means it might be difficult to attain.
6. The Attorney-General  referred to the varieties of opinion which were to be obtained in America, according to the geographical distribution of the population, each group of which had its own particular outlook.
7. Mr. Beasley said that if the Commonwealth Government was receiving all the information that the United Kingdom Government was obtaining, nothing more could be done. The Prime Minister replied that such was the position.
8. Dr. Evatt enquired as to the extent to which the import and export licences would go. The Prime Minister explained that they were being worked out, the view of the Government being that we should move together with the United Kingdom and the U.S.A.
9. Mr. Beasley enquired what advices were being received from the Australian Minister at Tokyo , but the Prime Minister said that little information was coming to hand, as the position with the Japanese Government was being handled by the British Ambassador  and full advice was being received from him through the Dominions Office.
10. Mr. Makin  asked whether steps had been taken to increase the strength of the British Fleet in the Far East. The Prime Minister referred to the result of the Staff Conversations between the British and American naval authorities regarding the re- disposition of forces in the event of war with Japan.  The Minister for the Army was of the view that pressure should be exerted for the movement of capital ships to the Far East. The Prime Minister said that the plans provided that immediately on the commencement of hostilities with Japan a capital ship and aircraft carrier would be moved into the Indian Ocean.
11. Dr. Evatt feared that there was danger of the same situation arising in connection with economic sanctions as had occurred with Italy. He had a doubt about the wisdom of indefinite curtailment which appeared to be indicated by American policy, as this savoured of a pinpricking policy.
12. The Prime Minister said that this aspect had been the subject of representations to the United Kingdom Government, who agreed with the correctness of avoiding such a policy, but it was important to ensure that they did not employ such methods. In his opinion, economic embargoes should have three objectives:-
(i) All-embracing and crippling in their effect;
(ii) Of sufficient extent to prevent supplies filtering through to Germany;
(iii) Of sufficient extent to prevent Japan building up stocks of important war materials.
There was no doubt that in the past the policy of the Ministry of Economic Warfare had been uncertain, as exemplified in the case of export of wool to Japan, which had been restricted below her own essential requirements.
13. The Minister for the Army said that in the decisions taken regarding economic sanctions there was urgent need for crystallizing details. It appeared that, after Japan's occupation of Indo-China, her next objective would be Thailand and the Burma Road. It was evident she was acting in concert with Germany. As to the steps to be taken, he observed:-
(i) That we did not wish to add to our enemies at this stage of our struggle with Germany and Italy;
(ii) That we have not the military capacity to do so.
Our aim should be to get the U.S.A. 'on side' in the same manner as the Netherlands East Indies.
14. Mr. Makin pointed out that the appointment of a Commander-in- Chief of the Philippines indicated that the U.S.A. realized the possibility of having to resort to force.
15. Mr. Forde again observed that we were being borne along by the tide of events without any undertaking as to what the U.S.A. would do, and the Prime Minister observed that the U.S.A. have always stopped short of any such undertaking.
16. Mr. Beasley raised the question of whether we should continue to send more troops out of Australia, and enquired whether our naval forces should be left in the Mediterranean.
17. The Prime Minister referred to Cablegram No.430 of 10th July to the Dominions Office , bringing to the notice of the United Kingdom Government the understanding that, on the threat of war in the Far East, R.A.N. ships in the Mediterranean and Indian Ocean would be so disposed as to enable them quickly to return to Australian waters. An interim reply had been received from the United Kingdom Government, saying that this matter was receiving consideration, and a reminder is to be sent.  The Prime Minister also referred to the Anglo-American Staff Talks, which provided for a re-disposition of naval forces by the transfer of American capital ships from the Pacific to the Atlantic, to enable British capital ships to be based on Singapore.
18. Mr. Makin considered that we should act as though the United States were not prepared to participate in warlike operations. The Prime Minister pointed out that the Royal Navy was fully engaged in the Battle of the Atlantic and the Mediterranean, and if Japan, only by threat, could cause a subtraction from the forces in this region, this would be a great help to the Axis Powers, by the diversion of British naval strength.
19. Mr. Forde observed that, with the U.S.A. out of the struggle, we could not keep an enemy out of Australia.
20. The Minister for the Army, in referring to Mr. Forde's comment and the earlier one by Mr. Beasley regarding the despatch of further forces abroad, made the following observations:-
(i) 8th Division, A.I.F. One brigade is at Darwin. The focal point in the Far East is the security of Malaya. Japan's policy is to persuade us against the need for sending additional troops to Malaya. A brigade of the 8th Division was already there and a further one was about to go.
(ii) Home Defence. 35,000 Home Defence Forces had been called up for full-time duty, including detachments at places such as Thursday Island and Rabaul. The new training programme for the Militia had been announced, but he did not consider that full mobilisation was desirable.
(iii) The A.I.F. in the Middle East. Reinforcements only are being sent to the Middle East to maintain the strength of the forces already there.
21. Mr. Beasley said that it had been reported in the press that the Germans transferred their forces from Libya. He enquired whether there had been any easing of the situation at Tobruk, or whether there was anything more that ought to be done. The Prime Minister read cablegram No. 85257 of 25th July from the Commander- in-Chief, Middle East , reporting that the situation in the Western Desert was all quiet and the indications were that the enemy was not repeating any offensive action at present. The Minister for the Army added that the position was such that there was no possibility of getting our troops out of the Middle East because of any lessening of the threat in this region.
22. Mr. Beasley stated that a large number of troops [were] being retained in the United Kingdom and the invasion threat was not so grave in view of the Russian conflict. In the disposition of Australian troops Australia should be considered first. Such a policy would involve the replacement of Australians in the Middle East and, in view of the influence of the Russian position, a re- orientation of the focal point of the struggle appeared to be taking place.
23. The Attorney-General said the danger in the Middle East was greater some time ago than now. Nevertheless, the Middle East was the gateway for a German advance into Egypt and Asia, and had to be held. In any further southward movement by Japan, she had in the first place to capture or neutralise Singapore.
24. Mr. Forde observed that Singapore was like an empty garage, and considered the position to be very grave now that Japan had started to move south. He enquired whether the Government had considered the request of the Leader of the Opposition  for the assembly of Parliament to review the position and the industrial situation. It would then be possible for the Government to take members into its confidence.
25. The Minister for the Army enquired what more could be done by Parliament, and what purpose its assembly would serve.
26. Mr. Beasley said that a stalemate position had arisen in the Middle East, and Britain was 'sitting tight' on a large number of men. The Minister for the Army replied that it was essential to build up in the Middle East for Germany's renewed effort after the Russian campaign, and we should not take any forces away from this region. He thought that a new appreciation should be sought from the G.O.C., A.I.F. , as to the position in the Middle East now that Syria had been occupied and the Russo-German conflict had arisen.