Following for the Prime Minister from the Prime Minister.
Recent intelligence indicates that the Japanese are moving a considerable fleet to Singapore. The position is not yet entirely clear, but four battleships and one aircraft carrier are believed to have arrived and we have reason to think that the fleet at Singapore may be built up to seven battleships, two fleet carriers, with some cruisers and destroyers. The remainder of their fleet is likely to be stationed in the Pelews.
2. We have carefully studied this new development which has some interesting features. The Japanese must have appreciated that Truk, where normally they stationed half of their fleet, was becoming too exposed and they evidently withdrew from there before the recent American attack.  The choices with which they were then faced were either to concentrate the whole of their fleet in Japanese waters, or to move a portion of it to Singapore using the Pelews as an advanced base. They appear to have chosen the second alternative, their reasons being probably the following:-
(a) The concentration of the whole of their fleet in home waters would be bad for both naval and civilian morale and would surrender the initiative to the Allies.
(b) The Japanese are now extremely short of tankers and Singapore lies close to the source of their oil supplies in Sumatra.
(c) The Japanese fleet at Singapore is equally well placed for operations in the Pacific or in the Bay of Bengal. Singapore has the best docking and maintenance facilities outside Japan and is remote from air attack.
(d) The presence of a Japanese fleet in Singapore may be induced by reports that we are contemplating amphibious operations based on India.
3. The absence of the Japanese battle fleet from the Pacific gives the Americans a very clear field.
4. It is possible that the Japanese intend to raid our communications between Calcutta and Ceylon, or in other parts of the Indian Ocean. Nevertheless, it is not thought that any serious danger, either to India or to Western Australia, is likely to develop. Our battleship squadron in Ceylon is well posted. Our shore-based aircraft are strong. Japan has a total of only four fleet carriers and eight battleships at present fit for operations. She is threatened both from the Pacific and from the Bay of Bengal and she must keep her fleet intact for the later stages of the war. We, therefore, consider it unlikely that the new move indicates offensive intentions on the part of Japan.
This, of course, does not preclude the possibility of occasional offensive sorties.
5. We are taking a number of measures to strengthen our forces in the Indian Ocean area, particularly in torpedo-bombers and aircraft carriers. Our cruiser and submarine strength is also being augmented, and we are considering the provision of further battleships. Our naval authorities will be in touch with yours on these matters, but I felt that you should be told of the general position without further delay and should be made aware of our thoughts on the subject. It is, of course, most important that the enemy should not realise the extent of our knowledge, so I must ask you to regard all this as highly secret.