Dispatch S-35 (extracts) TOKYO, 30 March 1941
I have the honour to report that articles in the Japanese press in the past few days show that the Japanese feel greatly flattered by the reception given to the Minister for Foreign Affairs, Mr.
Matsuoka, in Berlin.  The reports of his reception and of the speeches made by Herr von Ribbentrop  and himself have resulted in a great display of enthusiasm for the Axis cause. Japanese interests are regarded as essentially bound up with the success of German policy and a German victory is confidently anticipated. One of the results of such a victory will, it is considered, be the establishment of Japanese domination in 'East Asia'. 'East Asia' is, of course, a flexible term. It includes, according to circumstances, not only Manchoukuo and the South Eastern part of Asia as far as Malaya, but also, generally, the Dutch East Indies, and frequently Australia and the whole of the islands in the Western part of the Pacific, i.e., New Guinea, New Caledonia, New Zealand and Fiji. The successful establishment of the East Asia policy is regarded as involving the disappearance of British interests from this part of the world.
7. It does not, however, follow that the general policy to which I have referred will be put into operation.
In the first place there is, I am informed, a substantial section even of the Army which regards the present national policy as inflated and impossible and unwise, although this section is not at present in control.
Secondly, the position of the Government is not too secure. The Premier, Prince Konoye, is admired more for his virtue than for his intelligence and executive ability. The Government has been criticised to quite a considerable extent for indecision and confusion, though this criticism, it must be conceded, has been confined to internal policy.
Thirdly, the commercial, financial and industrial interests must be relied upon if Japan engages in any further belligerent adventures, and when the time for action came their doubts and hesitations would probably have a certain effect. As against this, however, it must be remembered that the Japanese Army has a habit of creating a situation from which the Government finds it impossible to withdraw, and so in effect the Army, by unauthorised action, really determines Government policy. Such action is not regarded as really irregular in Japan because the Army and Navy are not controlled by or responsible to the Government. They are controlled by and are responsible to the Emperor.
Fourthly, the actual economic situation in Japan is such that any responsible Government would, in my opinion, hesitate before committing the country to any major war. I have recently in my despatch No. S-27  given some information with respect to the economic position of the country. As I have said in that despatch, it is difficult to form an accurate judgment of the position, and it is of course a commonplace today that under the influence of war a nation becomes capable of efforts which a priori would be regarded as quite impossible. But the strain upon the internal economy of Japan is such that I am sure that it would be very difficult indeed for Japan, subjected to a long distance blockade by America, to maintain even a poor standard of feeding for the people of the country. The rice position is already causing serious anxiety. If imports of rice and of cereals otherwise than from the neighbouring parts of the Asiatic continent were prevented, the food position would become very acute. There are already queues at the food shops in Tokyo.
Fifthly, if Japan became involved in war with Great Britain or America, and had not succeeded in adjusting relations with Russia, there is little doubt that Russia would seize the opportunity to make some territorial gains in Manchuria and possibly elsewhere.
The fear of Russia is a constant element in the mind of the Japanese Government, as I have noticed on several occasions in conversations with Mr. Matsuoka.
Sixthly, the China affair is a very serious drain upon the military and economic resources of Japan. Any serious belligerent operation elsewhere would jeopardise the rather precarious gains which Japan has made in China, and, apart from this consideration, would increase the already very serious economic strains to which Japan is subject.
Seventhly, the fear in Japan of aerial bombardment is intense. The cities are largely built of flimsy wood, and a few incendiary bombs, especially upon a windy day, would work widespread havoc and destruction. The destruction would be incomparably greater than in European cities. Most streets are very narrow, the water supply is most inadequate, and it is most unlikely that any effective anti-aircraft defences would be in operation in most of the cities. Accordingly, an attack by a few bombing aeroplanes from aircraft carriers might have disastrous and decisive results.
It is impossible to believe that the Japanese military authorities are not aware of this position. Seven years ago, when I was in Japan, I became aware of their intense anxiety with respect to the possibility of air attacks from Vladivostok. The considerable development of aircraft carriers in recent years will certainly have increased that anxiety.
Accordingly, there are many reasons why responsible elements in Japan, and even the Army itself, would hesitate before running the risk of further war, and more particularly and especially a war in which the United States would be an enemy. I emphasise again that all Japanese fears and apprehensions would be greatly increased if the position of Soviet Russia were undetermined at the outset of such a conflict.
8. Although the Government, the press and the publicists of Japan speak very confidently of a German victory and of the Japanese CoProsperity Sphere in East Asia, there is, in my opinion, a considerable element of pretence or bluff in their emphatic assertions. The extravagant rejoicing over the rather commonplace efforts of Mr. Matsuoka in the Indo-China-Thailand mediation indicates something of the real uncertainty which underlies the bombastic pronouncements of policy to which I have referred.
The clear and definite refusal of the Dutch East Indies to be included in any Co-Prosperity Sphere under the leadership of Japan provoked angry recrimination at the outset. The chorus of objection and resentment however soon died down, and there is now a recognition that there may be some difficulty in establishing domination over the Dutch East Indies.
Various steps taken by other powers in February had a very valuable effect in reducing Japanese exaltation. The movement of troops to Singapore, the mining of the seas in the neighbourhood of Singapore, the air reinforcements in Malaya, the Australian expressions of determination to defend the country against any attack, and the American pronouncements, with later, the visit of American war vessels to New Zealand and Australia, all helped to modify the extravagance of Japanese ambition. It must, however, be recorded that Mr. Matsuoka's visit to Berlin has lighted the flame again.
9. The Japanese Government and people will, in my opinion, respect firmness rather than flattery, provided that the firmness is associated with frankness and courtesy.
When I have been speaking to Ministers and other Japanese leaders I have found no resentment at a clear statement of our invincible opposition to Hitler and to Germany, or of our unity with Great Britain. No objection has been taken to any step taken by Australia which is clearly associated with the war, even though that step may be disadvantageous to Japan.
If, on the other hand, a hesitating or diffident position were adopted, I am quite sure that the Japanese attitude would become one of threats and truculence. As I have previously reported, many people here have obviously been impressed by my description of the capacity of Australia to defend herself. If the Government of Australia firmly maintains the position that the country will defend itself against all attacks from whatever quarter, and will not submit to any dictated policy, and at the same time emphasises the unity of interest and of policy between Australia, Great Britain and other parts of the Empire, I am of opinion that such an attitude will go far to make Japan hesitate before undertaking a war against Great Britain.
Australia should, I think, be on her guard against any suggestion by Japan for a conference for the purpose of solving supposed problems. Such a proposal can always be presented as an appeal to reason, but my legal professional experience has provided me with many examples of cases where a party has no justifiable claim of any description but, with the pretence of reasonableness, offers to submit his claim to arbitration in the hope (frequently justified) that the admission that there is a claim worthy of consideration will lead to some result in his favour, either by concession from the other party or by a compromising award of a weak-minded arbitrator. Thus, for example, it is in my opinion, a great mistake for any Australian announcement to be made that Australia is not opposed to 'peaceful change in the Pacific'. Such statements only invite demands for a change, and make it difficult to refuse some form of conference or mediation or arbitration upon claims which can readily be invented from time to time.
It must always be remembered that it is the policy of Japan to protest that her intentions are peaceful. This means that they are peaceful as long as they are not opposed. If they are opposed, then it will be said that a new situation has arisen, and there will be not the slightest hesitation in resorting to force if it appears to be likely that the use of force will succeed. Even in China Japan professes that her intentions are entirely economic and peaceful in character. The argument is that everything would be peaceful if only China were sufficiently well advised and sufficiently 'sincere' to abstain from opposing Japanese aims.
In February last several public statements were made on behalf of the Government and of the War Council with respect to the situation in the Pacific. These statements expressed a desire for peace and friendship, but a determination to resist any aggression or dictation. In my opinion, Australia should have not the slightest hesitation in pursuing this policy firmly. I think that such a policy, expressed without apology or diffidence but with courtesy and a frank association of the policy with the vital interests of Australia, combined with an active prosecution of defensive preparations to which a certain amount of wise publicity is given, will be the best means available to Australia of preventing war with Japan.
10. I am sending copies of this despatch to the Australian Minister in Washington  and the Australian High Commissioners in London  and Ottawa. 
J. G. LATHAM