391 Sir Frederick Stewart, Minister for External Affairs, to Sir John Latham, Minister to Japan

Cablegram 112 8 April 1941,

Understand that British Ambassador [1] will be consulting you on certain economic measures which United Kingdom Government have in contemplation as possible counter-action in event of further Japanese moves southward. Two suggestions which have been made in this connection are (a) placing of Mitsui, Mitsubishi, Okura on black list and (b) denunciation of Anglo-Japanese commercial treaty.

2. My preliminary view of these proposals is by no means favourable. In first place it is not clear whether contemplated measures would be in the nature primarily of a deterrent or a reprisal. If intended as deterrent they savour very strongly of hit or miss policy. It is certainly possible that one or both may have effect of turning Japanese industrialists against the policy of the Konoye Government but it seems at the least equally possible that their effect will be merely to harden Japanese opinion against ourselves. This is a question which your knowledge of internal situation may enable you to answer with more precision, but I feel that the effects would still be doubtful enough to invalidate the proposals as a deterrent.

3. If we are to regard the proposals as in the nature of reprisal then to my mind they appear quite inadequate. The mere blacklisting of one or more Japanese firms and/or the denunciation to take effect a year later of the Anglo-Japanese commercial treaty seems entirely out of proportion to the consequences involved for us in further Japanese moves southward at present stage.

4. In the second place and more generally the Commonwealth Government has been led to suppose from all recent communications from the United Kingdom Government that Anglo-Japanese relations have now passed out of the phase in which comparatively minor economic counter-measures could be regarded as reasonably likely to be effective. Measures contemplated appear to involve a reversion to policy of irritants and pinpricks to which we have always been opposed in dealing with Japan and which we had imagined had now been discarded. Unless there is in the near future a profound modification of Japanese policy, of which there is at present no evidence, southward expansion has now surely reached a point beyond which its further manifestations must be regarded primarily from a military and security point of view. It is hard to see what moves are now open to Japan in this direction which do not raise military issues or could be satisfactorily met by merely economic counter-action on our part, especially counter- action of a kind designed to be sectional in its application.

5. Furthermore, even if economic measures are still to be regarded as a useful weapon, I cannot understand why at this stage we are invited to consider purely unilateral action by the British Empire. At close of last year whole question of possible economic action against Japan was gone into with some elaboration by United Kingdom Government and we were encouraged in the assumption that whatever was done would be done on a considerable scale and with the co-operation of the Dutch and of the United States.

Discussions to this end were to be held in Washington and there were in fact preliminary exchanges of views with the United States administration. We have never been told that these discussions have been abandoned and it appears to me to be a most undesirable and retrograde step now to contemplate measures which besides being of dubious efficacy throw us back to the period when British and American policies in the Far East were still completely unrelated.

6. Glad of your early observations.

STEWART

1 Sir Robert Craigie. See Document 386.

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