No. 125 Addressed to the Secretary of State for Dominion Affairs.

[1] Repeated to Prime Minister, Commonwealth of Australia.

'His Majesty's Government in New Zealand have now had an
opportunity of considering Circulars D.123 and 124 of the 13th and
14th of April [2] in connection with which they wish to offer the
following observations-
(1) They have consistently held the view, and they still hold it,
that it is both morally wrong and politically unwise to endeavour
to treat with aggressor nations on the same terms as with those of
good international standing, and for this reason they have
deprecated any undue regard being paid to the susceptibilities of
Japan.

(2) While they are convinced that the League and international
reprobation of Japanese aggression against China has taken a form
which is entirely inadequate to the situation, they are
nevertheless impressed by the fact that, at the moment, the main
enemy is Germany, and there is little to be said for any course of
action at this juncture which might conceivably add another enemy
to the Allied cause or otherwise disturb the status quo in the
Pacific unless such a step is clearly warranted as a necessary
measure in the war against Germany,
(3) They gravely doubt whether, having regard to the facts of the
case, the advantages to be gained by preventing a trickle of
supplies to Germany through Russia from Japanese or other sources
would outweigh the disadvantages that might result in the Pacific,
and to the Allied cause in general, from the contemplated
preventative measures which, rightly or wrongly, might be
construed as inimical to Japanese or Russian interests or
prestige. On the whole, while endeavouring to take the most
realistic view of the situation, they are inclined on this aspect
to feel that the advantages to be gained by the steps proposed are
inadequate to the risks to be run.

(4) They agree generally therefore with the views expressed by His
Majesty's Government in the Commonwealth of Australia in the two
telegrams which they have had an opportunity of perusing, dated
17th April, 1940. [3]

(5) On the other hand, they would wish His Majesty's Government in
the United Kingdom to know that they would deprecate any attempt
to make a bargain with Japan. They feel that such a bargain must
have the effect in some degree firstly of strengthening Japan's
position in her attack on China and secondly of alienating neutral
sympathy, particularly in the United States of America. In
particular, the course now proposed would appear to be in some
degree incompatible with the American proposal set out in your
Most Secret telegram No. 30 of 3rd February 1940 [4], to the
encouragement of which His Majesty's Government in New Zealand
attach great importance.

(6) Finally, His Majesty's Government in New Zealand see little
prospect of success in the proposed negotiations with China which
is under deep obligations to Russia, and the Netherlands, which is
unlikely to take any steps which might antagonise Germany or
Japan.'
His Majesty's Government in New Zealand greatly appreciate the
opportunity of perusing your two telegrams to the Secretary of
State for Dominion Affairs of April 17th, with reference to the
Pacific, and have today despatched the above to the Secretary of
State.