218 Sir Frederick Stewart, Minister for External Affairs, to Mr R. G. Casey, Minister to the United States

Cablegram 238 9 December 1940,

MOST SECRET PERSONAL FOR THE MINISTER

Repeated to Tokyo No. 1.

My immediately following telegram [1] summarizes representations made here by Japanese Consul-General [2] December 4. These, and form in which they were made, seem of considerable importance and have raised question in my mind whether the present policy being pursued towards Japan is not calculated to lead to awkward consequences for Australia, without being a substantial deterrent to Japan.

In reply to approach from the United Kingdom Government [3] on lines of communication to British Ambassador, Washington [4], which was subject of Ambassador's telegram of 24th October [5], the Commonwealth Government has intimated that it is prepared to collaborate with the Governments of the United Kingdom, other Dominions, Allied Powers and the United States in the development of future economic policy towards Japan. The Commonwealth Government is also in agreement with interim measures proposed to be put into force throughout the Empire to prevent Japan accumulating stocks of war materials, on the assumption that all other Governments of the British Commonwealth also agree in principle to application of proposed measures, and the control exercised by other British countries and their supply of commodities in which Australia has hitherto had an export trade with Japan conforms to the general plan as outlined by the United Kingdom Government. Our reply also stated that Commonwealth Government considered it of utmost importance that United States should at once adopt measures identical with interim measures proposed. [6]

I feel strongly, however, that in taking unilateral steps to conform to this general course of action without agreement in principle by other parties and prior to contemplated staff conversations, Australia in particular may be in danger of falling between two stools. As matters have gone, the application of piecemeal measures against Japan, especially by the United States, vide aviation oil embargo, appears to have had the effect of driving Japan more deeply into policy of southward expansion. For this reason I am thoroughly in agreement with view of Cordell Hull [7] referred to in third paragraph of your telegram No. 411 [8] that present time is not one for policy of pin pricks, which, as we see it mainly cause extreme irritation without prejudicing Japan's strength, and produce a mental reaction that Japan can no longer be placed in a position where she can be dominated economically at the whim of a powerful neighbour. It can only be hoped that actions of United States Government will conform with this principle. I must admit to feeling some doubt whether consequences of tactics of irritation are indeed fully appreciated in Washington. As one instance, our information is that refusal of United States authorities to complete delivery of aircraft bought and paid for by Thai Government and held at Manila has had immediate effect of forcing Thailand into association with Japan in dealing with present dispute with Indo-China.

STEWART

1 Document 219.

2 Masatoshi Akiyama.

3 See Document 186, note 6.

4 Lord Lothian.

5 This appears to be an incorrect reference to the cablegram from the U.K. Dominions Secretary, Lord Cranborne, printed as Document 181.

6 See Document 204.

7 U.S. Secretary of State.

8 Document 216.

[AA:A981, FAR EAST 20B, i]