376 Lord Caldecote, U.K. Secretary of State for Dominion Affairs, to Sir Geoffrey Whiskard, U.K. High Commissioner in Australia

Circular cablegram [Z106] [1] LONDON, [13 June 1940, 10.30 p.m.]

Please give the following message to the Prime Minister [3] for his most secret and personal information:

With reference to my telegram Circular Z105. [4] We have recently reviewed the situation which might arise if the French resistance were to collapse and we were compelled to fight on without diem.

You will appreciate the vital importance of maintaining absolute secrecy on this subject. Moreover, at this stage any review as a whole of the situation can only be provisional.

2. The review is framed on the basis that we continue to fight with or without United States assistance, but we estimate that without the full economic and financial assistance of the whole American Continent our chances of defeating Germany would be remote.

3. In the situation envisaged the first problem would be to ensure the security of the United Kingdom against a concentrated German attack. This attack might take the following forms- a. Breaking the public morale by unrestricted air attack;

b. Starvation of the country by attacks on shipping and ports;

c. Occupation by invasion.

4. We must expect severe air bombardment, considerable dislocation of industry and communications and heavy casualties. The chances of Germany achieving success depend mainly on our ability to maintain in being our air force, their sources of supply, and the fleet and its bases. It will be of extreme importance to obtain quantities of aircraft and destroyers from America and to keep our sea routes open.

5. We estimate that we would be able to maintain a proportion of our sea borne trade but we would have to restrict imports even more drastically than at present and we should probably have to depend mainly upon west coast ports. Some measure of evacuation of women and children to the Empire and to the United States of America would be necessary.

6. Provided we can prevent the enemy gaining a high degree of air superiority, we think we should be able to prevent large scale invasion of the United Kingdom. Our shortage of destroyers, however, causes us grave anxiety. We consider the enemy would attempt invasion, assisted by large scale air home raids.

There is no shortage of manpower but a threat to certain items of important equipment. [5]

7. We should endeavour to hold our position overseas but French collapse might mean the loss of control in the Western Mediterranean though we should continue to control the Western approach to the Mediterranean. We intend to hold Egypt and to this end we will retain a Capital ship fleet based at Alexandria as long as possible. This fleet will also exercise a stabilising influence on Turkey and the Middle East.

8. In the unlikely event of Japan, in spite of the restraining influence of the U.S.A., taking the opportunity to alter the status quo, we should be faced with a naval situation in which, without the assistance of France, we should not have sufficient forces to meet the combined German and Italian invasion in European Waters and the Japanese fleet in the Far East. In the circumstances envisaged it is most unlikely that we could send adequate reinforcements to the Far East. We would therefore have to rely on the U.S.A. to safeguard our interests there.

9. Our ability still to defeat Germany and Italy would depend mainly on our being able to control at the source Europe's essential overseas supplies, though it would still be necessary to retain certain key strategical positions from which we could exercise virtually a blockade of Europe.

Despite immediate gains from conquest, Germany would still be very short of food, natural fibres, tin, rubber, nickel and cobalt.

Above all, she would still have insufficient oil.

Given full Pan/American cooperation, we should control all deficiency commodities at the source and by die winter of 1940/41 many European industrial areas, including parts of Germany, would experience widespread shortages; a large part of the industrial plant of Europe would then be at a standstill. By the same period the shortage of oil would force Germany to weaken her military control in Europe. By the summer of 1941 it would be difficult for Germany to maintain her military forces.

Air attacks on Germany's oil centres would contribute to her defeat and reduce her air offensive, but until additional resources from the Dominions and America could be made available in Great Britain, these attacks would be on a limited and probably diminishing scale.

By this economic pressure, by a combination of air attack on economic objectives in Germany and its resultant effect on German morale and by creating a widespread revolt in her conquered territories it would still be possible for the ultimate defeat of Germany to be achieved by the British Empire, provided the U.K.

could withstand the form of attack outlined in para. 3 above, which we believe it could, and that we have full economic and financial support of the Americas.

10. We are examining separately the more direct consequences of possible French withdrawal from the war and the steps which might be taken to deal with the various aspects of such a situation, and we hope to telegraph to you further as to this very shortly.

We also hope to telegraph to you a more detailed review of the economic factors involved, which is in preparation. [6]

1 & 2 The number and time of dispatch have been taken from the Dominions Office copy in PRO: DO 114/113.

3 R. G. Menzies.

4 Document 373.

5 In the Dominions Office copy this sentence read: 'There is no shortage of manpower to meet this threat but certain items of important equipment are deficient.' 6 See Document 410 and also cablegram Z111 of 15 June 1940 on file AA: CP290/6, 60.

[AA: A981, WAR 45, iv]