46 Lord Caldecote, U.K. Secretary of State for Dominion Affairs, to Mr R. G. Menzies, Prime Minister
Circular cablegram M44 LONDON, 1 August 1940, 1.50 p.m.
My circular telegram D.391, paragraph 3.  Following for the Prime Minister:-
In connection with the recent arrests of British subjects in Japan, His Majesty's Ambassador at Tokyo recommended that we should be prepared for retaliatory action at short notice. H.M.
Ambassador was informed in reply that we were considering the possibility of arresting a number of suspected Japanese in British Territory under the Defence Regulations and that it was proposed that this should be effected quietly without any public statement, thus leaving the way open for a settlement by exchange. In reply, H.M. Ambassador said that he entirely agreed with the proposal for early arrest, and immediate adoption of this measure is now being considered.
(2) The proposals of H.M. Ambassador for subsequent action include (a) The progressive detention of Japanese Nationals whether in Great Britain, India, Burma or the Colonies.
(b) The delay in issue of licences on one pretext or another for the export of vital raw materials, machinery etc. For this to be effective, the collaboration of the Dominion Governments would be essential. Sir Robert Craigie considers that there should be no talk or threat of embargo -merely action, the effect of which the Japanese would quickly sense without having actual proof of retaliatory motive.
(c) As many difficulties and vexations as possible, short of actual detention, should be placed in the way of Japanese shipping.
(d) No facilities to Japanese should be granted which can reasonably be withheld and negotiations and discussions aimed at influencing the Japanese Government to more reasonable policies should be continued.
(3) Before considering further the suggestion in the preceding paragraph, His Majesty's Government in the United Kingdom would be grateful if they might receive urgently the views of the Dominion Governments upon them.