Following for the Prime Minister. 
Halifax  has telegraphed that the Secretary of State for the Navy, Knox, on 29th April summoned the British Naval Mission to the Navy Department and stated that he wished to consult them as to the views of the United Kingdom Government in the following proposition:-
What would be our views of the result if the United States were now to move the greater part of their Pacific Fleet into the Atlantic, leaving in the Pacific forces of the order of three or four battleships, nine cruisers and thirty to forty destroyers? It appeared from subsequent discussion with Colonel Knox that this proposition was made on the hypothesis that the United States would remain non-belligerent for the time being, and that the forces thus transferred to the Atlantic would not act more belligerently than those now employed on the Atlantic patrol.
Mr. Stimson , who was present at the discussion, raised considerations on a wider plane than the purely naval one and urged that such a move would produce a tremendous effect.
He suggested that the Japanese would take a long-range view and would interpret the movement of the United States Pacific Fleet to mean that the United States must be shortly about to enter the war and that, in consequence, the addition of the whole weight of her navy to a decisive theatre of the Atlantic would definitely foreshadow entry into the 'Battle of the Atlantic', and the defeat of the Axis powers.
Mr. Stimson suggested that, in these circumstances, the Japanese would refrain from any action for fear of being on the losing side in the long run, and he also stressed the psychological effect which the proposed move would have in encouraging the United Kingdom and her Allies, and correspondingly impressing the Axis powers and the heartening effect which this would have on the American people, owing to the importance of such a move.
At the close of the discussion, it was suggested by Colonel Knox and Mr. Stimson that the matter should be referred to higher authority in the United Kingdom.
The matter has been considered by the Defence Committee of Cabinet, who, for their part, heartily welcomed the proposal.
We are anxious to send very early reply to Halifax as to what line he should take. We feel, however, that it is of great consequence that, before any answer is given, the Governments of Australia and New Zealand, whose position is directly affected, should be consulted.
From the standpoint of naval strategy, it has always been considered by His Majesty's Government in the United Kingdom that the United States Pacific Fleet was unduly strong for the tasks which it was intended to fulfil in case of war with Japan.
The Admiralty therefore would welcome a strong reinforcement of the United States Atlantic Fleet from the Pacific Fleet.
On the other hand, they regard it as important that whatever part of the United States Fleet remains in the Pacific should be of sufficient strength and of the right composition to exercise the necessary deterrent influence on the Japanese. In particular, they consider that aircraft carriers are specially important for this purpose, as they are the only means of threatening the Japanese mainland and thus detaining Japanese Naval Forces in home waters.
This being so, the size of the Fleet which, under this new proposition, would be left in the Pacific seems to the Admiralty unduly small and they consider that, while the proposal should generally be heartily welcomed, the suggestion should be made that the desired effect in the Atlantic would be produced if the size of reinforcements proposed were slightly reduced.
Provided that the Fleet remaining at Hawaii is sufficient for the purpose, immediate movement of reinforcements to the Atlantic would, in the view of the Admiralty, have very great advantage, anticipating the opening moves of the war plan agreed upon in Washington, and Singapore discussions, of which you will be aware.
The arrival of a British Fleet at Singapore in the event of a war with Japan would thus be similarly advanced.
As regards the effect on Japan of such a step, we recognise that it might be held that the movement of large reinforcements from the Pacific to the Atlantic would be taken by the Japanese as the signal for them to undertake adventures to the southward. But, after careful considerations, we do not subscribe to this view. On the contrary, our opinion, like that of Mr. Stimson, is that any marked advance by the United States Navy into the Atlantic is more likely to deter Japan from entering the war than the presence of an unnecessarily large United States Fleet at Hawaii.
On weighing up all considerations, we feel strongly that the over- riding consideration is that the movement proposed should exercise a profound influence on the present critical situation in Spain, Turkey and in Vichy France, and might well transform the whole strategic picture in Western Europe, quite apart from the fact that it would clearly imply a definite advance by the United States towards direct participation in war.
On these grounds, we propose to reply to Halifax that he should strongly encourage United States action in this sense and that, at the same time, he should suggest that whatever force is left behind at Hawaii should be calculated to impose the greatest possible deterrent effect on Japan, and that aircraft carriers are specially important from this aspect.
We very much hope that we shall have the concurrence of your Government in taking this line. You will realize the vital importance to us all of not chilling America and making things harder for our friends in the States who are pressing for more forward action.
Of course, the question of what the United States do with their Fleet does not rest with us.
Grateful for earliest possible reply.