17 Lord Caldecote, U.K. Secretary of State for Dominion Affairs, to Commonwealth Government
Circular cablegram D318 LONDON, 7 July 1940, 10.45 p.m.
My No. 234 of 1st July. 
His Majesty's Ambassador at Tokyo  has expressed the view that a reply to Japan regarding the closing of the Burma Road on the lines suggested would be regarded by the Japanese Government and the Japanese people as tantamount to a refusal of their demands and that in view of the importance attached in Japan to the stoppage of traffic by this road, and the present anti-British tempo in Japan, there would be serious risk that a reply on these lines would lead to a state of war with Japan. He has been informed by friendly Japanese sources that a refusal to close the Burma Road would at once lead to a state of war between Japan and the British Empire, which while not necessarily involving immediate fighting would almost certainly involve attacks on our trade.
The War Cabinet have considered the matter further in the light of these communications. We feel that in the present circumstances it is most desirable to avoid any course likely to lead to war with Japan. At the same time, it is necessary to consider the effect which acceptance of the Japanese demands would have upon the attitude of the United States, and also that of Russia at a time when there seems to be a possibility of our relations with that country improving. In this connection it will be recollected that the President of the United States  had indicated that he would dislike an agreement with Japan based on the idea of appeasement and would prefer a yielding under protest to force majeure. In the circumstances, Sir Robert Craigie is being instructed to return to the Japanese Government a reply as regards Hong Kong and the Burma Road as described in my immediately following telegram. Since this is now so drafted as to leave open the way for future discussion, it is not proposed that he should return any reply as regards the withdrawal of the garrisons from China except at his discretion to point out that arrangements have been made by the local commanders to avoid incidents.
Sir Robert Craigie is being instructed to point out that our reply is friendly and leaves the way open for examination of the whole question and any counter suggestion from the Japanese. He is being informed that we feel obliged at this stage to seek every means both of avoiding the final issue being raised and of testing out its reality but that we rely on him to prevent the issue moving to forcible action by Japan without an opportunity being afforded us to make a further reply.
His Majesty's Ambassador has also been authorized to say, if he thinks fit, that our reluctance to comply with the Japanese request does not mean that we are not willing to meet the Japanese on questions which in our view are far more vital to their welfare. It must have been apparent to the Japanese Government, that, during the course of recent discussions between His Majesty's Government in the United Kingdom and the Japanese Government on economic questions, there has been evidence on the part of His Majesty's Government of a desire to understand Japan's economic problems and to make, as far as possible, provision for them. His Majesty's Government are both willing and anxious to assure to Japan supplies of raw materials which Japan needs and which the British Empire can supply, and they would urge that the pace of negotiations now in progress should be accelerated in order that our trade relations may be placed on a more satisfactory footing.