2 Mr R. G. Casey, Minister to the United States, to Mr R. G. Menzies, Prime Minister, and to Sir Frederick Stewart, Minister for External Affairs

Cablegram 507 [1] WASHINGTON, 9 July 1941, 1.10 p.m.

MOST SECRET

Following for the Prime Minister and Minister for External

Affairs.

My telegram No. 502. [2] I saw Sumner Welles [3] today. He

believes that the secret information available and the known

concentration of Japanese naval forces make it evident that the

Japanese have decided on a southward expedition probably in the

next fortnight. He believes the Japanese are pressing Germany to

press Vichy to agree to the Japanese occupation of air and naval

bases in Southern Indo-China. Sumner Welles says that Germany has

not yet agreed so to press Vichy probably because of the effect

that this would have on Weygand [4] in North Africa and on the

French public opinion in France. Japan naturally wants to get

Indo-China by agreement with Vichy and without fighting if

possible but Sumner Welles believes that Japan will take Indo-

China by force if necessary.

Sumner Welles believes that Japan would be content for the present

with Indo-China and some infiltration into Thailand, e.g., go no

further for the present.

If Japan gets Indo-China by agreement with Vichy and without

fighting, Sumner Welles was not prepared to say what the United

States would do. However, if Japan used force he told me that the

United States would place immediate and complete economic and

financial embargo on Japan.

Sumner Welles believes that they and/or we should avoid, as long

as possible, becoming involved in war in the Far East as well as

in Europe, although he clearly has little faith in our being able

to do so for long. He believes that their economic and financial

embargo would provoke Japan to war with them before long.

Sumner Welles is convinced of the uselessness of [their] warning

Japan further. He said that they have made such representations to

Tokyo that it is certain that Tokyo knows 'that United States

means business'.

Sumner Welles admits the possibility that the German hold-up in

Russia and American occupation of Iceland may deter Japan but he

is not hopeful.

CASEY

1 Repeated to the Legation in Tokyo as no 31.

2 149 Dispatched 6 July. On file AA : A816, 19/304/428.

3 149 U.S. Acting Secretary of State during Cordell Hull's

illness.

4 Delegate-General of the Vichy Govt in North Africa and Governor

of Algeria.

[AA : A981, INDO-CHINA 7, i]