387 Mr R. G. Casey, Minister to the United States, to Mr R. G. Menzies, Prime Minister
Cablegram 124 WASHINGTON, 15 June 1940, 9.31 p.m.
FOR THE PRIME MINISTER MOST SECRET PERSONAL
Reference my telegram 123. 
I had long conversation with Welles.  I discussed with him gist of Bruce's telegram of 14th June.  He agrees that it is probable that Hitler will propose terms of peace with France at early date. His expectation is that such terms would be relatively easy and that section of British people might thereupon start move for Britain to take initiative in attempt to come to some reasonable terms with Germany. He thinks that any terms Hitler offered would not be easy terms but would be such that they could not or at least should not be accepted.
He believes we should all be thinking now on tentative lines of reply to any peace proposals that Hitler might conceivably make jointly to France and Britain, and he agrees that it would be extremely useful if general lines of any such proposed reply or replies could be made available to the President  beforehand to be approved instead of getting President's subsequent endorsement of them.  On my enquiring what would happen to French fleet if France were to give in, he said that he hoped and believed French fleet would be put under command of British Admiralty before France gave in and so would not be a factor in any French peace negotiations. He said he believed this was absolutely essential and that he believed it would come about. He expressed great faith in Commander-in-Chief of French Navy. 
On my enquiring as to his estimate of American public opinion he said that it was still moving quite rapidly but that he believed it to be essential that Britain and France should continue to resist to the utmost, because otherwise the point might be reached by American public opinion when they might say to themselves that American assistance unfortunately would be too late and could do no good.
I asked whether any orders for French and for British large naval shells had been placed in this country, because it appeared to me essential that if worst came to worst French and/or British navies should have sources of ammunition supply outside their own countries. He telephoned United States Navy Office, who replied that they believed no such orders had been placed but they would check this positively.
I said if French were to crack, I believed it would save a great deal of time if gauge and converting fixtures for large French naval shells could be salvaged and brought to this country, and this would save much time in subsequent manufacturing appropriate shells here.
At this stage I said I had been exercising my imagination in attempt to put down briefly on paper something that might possibly be helpful as a statement to be made by President. He asked if he could see it and [I] then handed him copy of following statement- (begins) Until this moment United States has maintained policy of non belligerency. At the same time it has been impossible to hide the fact that the vast bulk of personal opinion in this country has been actively sympathetic with Allied cause. Whilst this is so bulk of public opinion in this country has believed vital American interests have not been affected-however they may have been menaced by threat of situations that might arise in the future. I believe the situation has now advanced beyond this point. I believe that the shadow of events to come has been thrown across this continent-and across continent of South America for which we are in a sense trustees. If we fail at this moment to express ourselves, we will be recreants to our trust. However we do not declare war-but we state in most categorical terms that vital interests of United States demand that naval bases from which North America and South America might be directly threatened do not pass into hands of any power or powers whose interest and intentions are clearly hostile to the Americans (ends).
He said this was very interesting and asked whether he might keep a copy to which I of course agreed.
I said I would not discuss Australia's position at this interview.
He said he appreciated that there was nothing that he could say in this connection at present but that 'we might have to discuss this together before very long'.