79 Mr R. G. Casey, Minister to the United States, to Department of External Affairs

Cablegram 848 WASHINGTON, 11 October 1941, 8.35 p.m.

SECRET

1. I had interview with President [1] today.

2. He spoke at length on changeable attitude on the part of the United States army and navy regarding the Philippines (see my telegrams 328 [2] and 642 [3]) which have been and are still being substantially reinforced with bombing and fighting aircraft and tanks. From believing Philippines could not be held in the event of war with Japan, army and navy now believe that they could be held at least for a considerable time and indeed that United States air strength would represent formidable deterrent to Japanese movement southward towards Singapore or Netherlands East Indies. He threw out the suggestion (he said that he had not discussed it with the army or navy) that Australia might consider [practicability of plans] [4] for Australian air squadrons operating from North Borneo in the event of war with Japan in order to co-operate with the United States air forces based on the Philippines.

3. In reply to my enquiry about American-Japanese discussions he said that in spite of the straightforward talking at the discussion between the Secretary of State [5] and the Japanese Ambassador [6] here at Secretary of State's apartments, he (President) thought that the prospect of anything (save gain in time) maturing was not hopeful. Japanese wanted to fob them off with general vague undertakings including evacuation of Japanese troops from defined areas. Japanese Premier [7] wanted to have meeting with President but he (President) had stipulated that exploratory conversations must first reach a stage showing promise of successful conclusion, and this stage did not seem possible to reach. [8] President said he realised that the Chinese were fearful of arrangement being reached which would be inimical to China but that they need have no such fear.

4. In reply to my query regarding long range economic aims (points four and five of Churchill-Roosevelt Atlantic declaration) President said he wanted to reach situation of 'non- discrimination' in trade between United States and British countries. He realised this meant the end of Ottawa Agreements but he believed that the target he was aiming at meant a great deal more for world and for British countries than limited pre-war bilateralism on the Ottawa model. [9] (I am on the track of further explanatory information on the above from American and British sources here which I will telegraph or air-mail shortly.) President went on to expose his views on objectives in respect to basic commodities, wheat, meat etc. by means of Governments holding surplus stocks ('ever normal granary') and so ensuring reasonable supplies and reasonable prices to producers and consumers.

1 Franklin D. Roosevelt.

2 Documents on Australian Foreign Policy 1937-49, vol. IV, Document 445.

3 Document 47.

4 Corrected from the Washington copy on file AA:A3300, 99.

5 Cordell Hull.

6 Admiral Kichisaburo Nomura.

7 Prince Fumimaro Konoye.

8 In cablegram 838 of 9 October (on file AA:A981, Japan 178) Casey had reported that Sumner Welles, U.S. Under-Secretary of State, felt 'rather more hopeful regarding discussions with the Japanese', although he admitted that Japanese policy would 'probably be more determined by result of German-Russian struggle than anything else'.

9 The Commonwealth Economic Conference held at Ottawa in 1932 to discuss ways to counter the effects of the Depression had resulted in a series of bilateral trade agreements between the United Kingdom and the Dominions for a limited amount of Imperial preference.

[AA:A981, JAPAN 178]